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Md: Insurers may renew non-compliant plans

Some of the 73,000 Marylanders who received health insurance cancellation notices might be able to keep those plans through the end of 2014 after all, according to a bulletin released Tuesday evening by the Maryland Insurance Administration.

Whether or not people can keep plans that don’t meet minimum federal standards established under the Affordable Care Act depends on whether their insurance carrier decides to offer customers the option to renew early. The MIA clarified Tuesday that insurers are, in fact, allowed to offer an early renewal option under Maryland law but are not required to do so.

It’s unclear which insurance companies, if any, will choose to offer early renewal for non-compliant plans sold in Maryland. CareFirst BlueCross BlueShield, the state’s largest insurer, said Tuesday it was working on its response to the announcement.

If customers choose to keep the same plan, they must renew it before 12 a.m. on Jan. 1. Because the MIA did not anticipate that these plans would be available next year, it did not approve rates for them for 2014. So as a practical matter, the extensions must take effect during 2013, and would only be valid for one more year.

Insurance Commissioner Therese M. Goldsmith said in the MIA bulletin that insurers must inform consumers of certain key points: that they can instead buy a policy on the state-run exchange; that policies sold there will likely provide more robust coverage; and that tax credits are available to help consumers pay for plans bought on the exchange only.

Companies must also inform consumers that, as with any policy renewal, there’s no guarantee that premiums for the non-compliant plans will stay the same, Goldsmith said.

Last week, after President Barack Obama announced his decision to allow people with plans that don’t meet minimum federal standards to keep those plans for another year, state regulators across the country scrambled to figure out whether that would even be possible. Many states, including Maryland, had amended local laws and regulations to align with the federal Affordable Care Act, which established the minimum standards.

Maryland officials had been unsure whether the commissioner could enforce those provisions at her discretion. Tuesday’s bulletin clarifies that Maryland law permits early renewal even for policies that don’t comply with all of the provisions of the ACA. Insurers can only offer these plans to people who were holding the policies when they were discontinued; they can’t be sold to new consumers.

The MIA’s clarification does not remove other uncertainties facing insurance companies, however. And one question that’s top of mind for some advocacy groups is whether allowing people to keep their non-compliant plans would weaken the new insurance exchanges.

Some of those organizations, such as the National Association for the Self-Employed, released statements last week criticizing the Obama administration’s decision. Some experts worry that allowing people to keep their current policies will reduce the number of people — healthy people, in particular — who enroll in plans sold on the exchange. If fewer healthy people enroll, that could skew the risk pool and possibly drive up premiums.

Jim Donelon, president of the National Association of Insurance Commissioners, also voiced concern.

“The NAIC has been clear from the beginning that allowing insurers to have different rules for different policies would be detrimental to the overall market and result in higher premiums,” Donelon said in a statement. “… This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.”