Healthcare Plan Renewal Loophole Divides CA Insurers

Interesting article in today's LA TImes regarding whether or not the state will allow any carrier selling California individual & family health plans in 2014 to reset a December 2013 renewal on non-compliant non-grandfathered health plans to "ride it out" for all of 2014.

The Covered California health plan solicitation requires those plans providing exchange coverage to terminate their non-grandfathered individual health plans by the end of 2013.  Any carrier not participating in Covered California that intends to sell plans outside of the exchange is not bound by this solicitation rule.

The primary concern with this strategy is that carries who do not terminate in 2013 may cherry pick young healthy people and offer them the option to keep potentially lower plan rates for an extra year.  Given that the participation of these same young healthy individuals is critical to the success or failure of Covered California in the short term, this could create a large problem down the road.  

Many of these young healthy people will be subsidy-eligible to buy from Covered California and would lose out on a year of subsidized health insurance by electing to play this extended renewal game.



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