November 20, 2013 by Tony Novak
Eight insurance companies that previously issued individual health insurance policies in Maryland received a warning letter today from the state Attorney General. Those eight companies include CareFirst of Maryland Inc., CareFirst BlueChoice, Group Hospitalization and Medical Services Inc., Aetna Life Insurance Co., Kaiser Foundation Health Plan of the Mid-Atlantic States Inc., Mega Life and Health Insurance Company, Celtic Insurance Company and United American Insurance Company.
The warning letter addressed the form and content of the policy cancellation notices that were previously sent to policyholders:
1) Should provide the 90-day notice required by Maryland law, as well as comply with all regulations set forth by the Maryland Insurance Commissioner;
2) Should include a statement, when applicable, that the insurer had the option to renew the policy for one year, but chose not to do so.
3) Should prominently mention Maryland’s health exchange; the availability of other health plans on the exchange, including those offered by other insurers, and; the availability of tax credits and other subsidies that lower premiums.
4) Should not automatically enroll individuals in a new plan outside Maryland’s health exchange.
5) If letters identify or suggest a new plan offered by the insurer as an option and any comparisons are made between the current plan to be canceled and that plan, comparisons must not only include actual premiums and deductibles, but also the scope of benefits covered, coverage of pre-existing conditions, and the availability of tax credits and subsidies.
6) If letters identify or suggest a new plan offered by the insurer outside the exchange as an option, they must include information on all plans offered by the insurer on the exchange, including information on actual premiums, deductibles, scope of benefits covered, coverage of pre-existing conditions, and the availability of tax credits and subsidies.
It appears that the Attorney General wants insurance companies to promote Maryland’s health insurance exchange despite market indications that most customers will obtain insurance from other sources.
Since the cancellation notices were sent prior to the Attorney General’s letter, it is unclear whether ant additional action is required by the insurance companies. To our knowledge, none of the companies intend to continue previously issued individual health insurance policies into 2014 but rather intend to issue all new policies in state and private exchanges after January 2014.
The cancellation notices that Freedom Benefits‘ customers received generally only address the policy cancellation itself and do not address any of the other items listed by the Attorney General. We do not know if the insurers will send a second letter to address the Attorney General’s alleged deficits in the first notification. One commercial insurance company executive who brought the issue to our attention said that the carrier does not wish to be involved in the promotion of the state insurance exchange policies that are now drawing the wrath of consumers facing higher premiums, large deductibles and lack of personal service. It seemed likely that this large insurance company would make the minimum effort necessary to comply with both state and federal law.