Noncompliant health plans get extra time
If you have health coverage that doesn't meet federal minimum requirements you can keep it for two years before upgrading to a plan that complies with Obamacare standards.
The Affordable Care Act, or Obamacare, mandates that everyone – with a few exceptions – have health insurance in 2014 and that policies meet minimum coverage requirements. This means insurance companies were supposed to discontinue noncompliant plans and that those covered under these plans would have to buy new policies. That's changed now that the Department of Health and Human Services (HHS) announced a two-year extension for noncompliant plans.
Two-year reprieve for noncompliant health insurance plans
The two-year reprieve comes in the wake of controversy following reports last fall that 3.5 million people received cancellation notices from their health insurers because their policies failed to meet Obamacare minimum coverage requirements. The administration first responded by allowing insurers to renew noncompliant plans for one year.
Now the HHS says that renewal option will be extended for another year. Transitional policies will be allowed until January 2016, according to a bulletin issued by the Centers for Medicare & Medicaid Services. Health insurance companies renewing noncompliant plans must notify policyholders about other medical insurance options and explain that their current policy excludes coverage and protections included in compliant plans.
Obamacare's criteria for essential health benefits
Uniform minimum coverage criteria created under health reform is designed, in part, to eliminate so-called junk policies that carried low premiums but provided very limited coverage. In addition, Obamacare plans have caps on out-of-pocket costs and don't set limits on annual or lifetime care.
Under health reform, all plans must include coverage for the following, among others:
- Maternity coverage
- Chronic disease management
- Rehabilitative services and devices
- Prescription drug coverage
- Mental health and substance abuse treatment
- Preventive and wellness services
- Pediatric vision and dental services
- Certain cancer screenings
Health insurance options beyond exchanges
Regardless of what type of plan you prefer, Obamacare requires that the uninsured have coverage by the March 31 deadline or pay a penalty. The fine in 2014 is $95 or 1 percent of an individual's taxable income, whichever is higher. Next year, the fine is $325 and it jumps to $695 by 2016.
Keep in mind that open enrollment dates have been set for purchasing individual health plans for this year. The open enrollment period for 2014 health plans ends March 31. If you miss the deadline you have to wait for next year's open enrollment – Nov. 15, 2014 to Jan. 15, 2015 for a 2015 health plan. Note that people who get married, have a child, lose their insurance, move to an area with different health plans or experience a household change affecting their financial ability to buy coverage may sign up for policies outside the open enrollment period.
You can shop for coverage through the government-run exchange in your state, which lists plans sold by private insurers, or you can buy health insurance directly from a health insurance company.
United Healthcare, Humana, Aetna, Cigna and Coventry aren't participating at most of the exchanges but are still selling individual health insurance. You can shop for an individual plan by working with an insurance agent or by contacting one of the companies directly. Plans sold off the exchange may have a wider variety of options for benefits and in-network doctors than those on the exchanges, which offer more standardized coverage.
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's. Follow him on Twitter @destoups.