With the changing landscape of healthcare and the Affordable Care Act Individual Mandate just down the road, two leading health insurance carriers have announced they will no longer offer individual/family plans in California. Those carriers are Aetna and United Healthcare. Their decision to stop selling individual health plans in California will drastically affect current members in California. Part of this decision was attributed to “profit challenges”, two of the carriers reported.
Aetna and United Healthcare Existing Members
If you are currently on a health insurance policy with Aetna or United Healthcare, then most likely, you received a notice that your health plan will be terminated at the end of December 2013. Here are some options for you to consider:
• If your health plan was effective prior to March 23, 2010 when Healthcare Reform was enacted, your plan may be grandfathered. In that case, you might not be affected by the termination. As of May 2013, at least, Aetna and United Healthcare were planning to continue supporting grandfathered plans. Call the carrier or your insurance representative to get an update.
• If your policy is not grandfathered, you may want to stay put for now unless the price is unbearable or you want to improve your benefits or get established with a new provider now. If you would like to see other options now, please give us a call at 1-800-514-0958.
If you do switch plans now, bear in mind that in 2014, you may need to switch to a qualified health plan that complies with the Affordable Care Act law. Also in 2014, you may qualify for a government tax credit (which means the government could help with your insurance premium depending on your income level). To qualify for a tax credit, you’ll need to meet the income requirements and apply through a certified representative of the Covered California Health Insurance Marketplace. Quotes are available October 1st for a January 1st effective date.
• Become uninsured. This is not the recommend option, but it is an option. Not having health insurance may be an alternative if you’re in good health and rarely ever go to the doctors or take prescriptions. Just be aware, this is a risk because you can never plan on something not happening. If you tend to be accident-prone, play sports, ride a motorcycle or like bungee jumping, or certain health conditions run in your family, please strongly consider getting medical coverage or staying on your health plan. It could save you money in the long run.
Why did they do it?
With over 18 million members, Aetna is one of the largest insurance carriers in the United States. 1.5 Million of its members are in California. Of these, about 49,000 will be receiving cancellation notices. According to a spokesman, Aetna is no longer able to meet the needs of their individual health insurance customers in California and stay competitive. The company will continue to sell group, dental, and life insurance, as well as Medicare in California.
With a 2% share of the individual market, United Healthcare pointed to profit challenges and the difficulty in administering individual plans in a cost-effective way for their members.
What cost challenges does the Affordable Care Act pose for carriers?
The future stakes can seem too high. In 2014, carriers must insure high risk people with serious health conditions, and offer richer benefits on top of it. The plans must be affordable, so copayments and deductibles can’t exceed certain levels. Also, they must offer no-cost preventive services and not charge an arm and a leg for premiums. In addition, they must spend 85% of large group premiums or 80% of individual and small group premiums towards the healthcare of the patients, or pay rebates to the members. In short, carriers will be working harder and most likely making less… if any profit.
If you got a ‘Dear John’ letter from Aetna or United Healthcare, please feel free to give our office a call. We would be happy to provide you with the information that you need to find the plan that’s best for you today and in 2014.