• Virginia Bureau of Insurance Encourages Health Insurers to Extend Coverage
  • November 28, 2013 | Author: Philip "Duke" de Haas
  • Law Firm: Troutman Sanders LLP - Richmond Office
  • As the rollout and implementation of the Affordable Care Act (“Act”) continues, states have been scrambling to respond to the latest curveball thrown by Washington, DC: the announcement by President Obama last week that “insurers can extend current plans that would otherwise be canceled into 2014, and Americans whose plans have been canceled can choose to re-enroll in the same kind of plan.”

    Attention immediately shifted to state insurance commissioners, as well as insurers and their customers, to find out whether and how this announcement could actually be implemented. Many states, such as Washington and Indiana, have already announced that they will not permit insurers to reinstate policies canceled due to the requirements of the Act. The reasons and politics differ in each state, and insurers will have to determine state-by-state whether they can reinstate canceled policies, whether they should reinstate such policies, and the impact of each option. Insurers and consumers will have to make many of these choices very quickly.

    In the aftermath of the President’s announcement, one of the issues with which states are grappling is the legal basis upon which insurers may reinstate canceled policies. For example, many states require prior approval of rates and forms, and obtaining such approval can be a lengthy process. There are additional complexities associated with retooling systems to reissue canceled policies, as well as analyzing the impact on, and pricing appropriately, the insurer’s policies that comply with the Act offered in a health insurance exchange, while continuing to service customers under policies that may be cheaper but do not comply with all of the Act’s mandates.

    In Virginia, the Bureau of Insurance (“Bureau”) has taken its usual deliberative approach to these complex issues. In 2013, the Virginia General Assembly enacted HB 1900, which becomes effective January 1, 2014. The General Assembly substantially rewrote Virginia law pertaining to health insurance to make it conform with the Act and to permit the State Corporation Commission and the Bureau to implement its provisions. As a result, insurers have been working furiously to prepare for the changed landscape on January 1, 2014. Now, Virginia regulators have had to reevaluate things in light of the President’s announcement and consider their options in light of Virginia law.

    In an announcement on November 20, 2013, the Bureau concluded that “it is unclear whether [it] has the authority under Virginia law to implement the President’s recommendation. What is clear is that Virginia insurance law does permit the Bureau to allow carriers to offer early renewal of existing insurance plans in the individual and small business group markets so that policyholders may continue existing coverage into 2014.” The Bureau concluded by stating that it will expedite approval of associated policy form and rate revisions necessary to allow the renewals.

    Now that the Bureau has spoken, insurers doing business in Virginia can consider and potentially add the renewal option to what they were considering as they plan for 2014 and beyond. Insurers should watch closely as the legislative session approaches as there may be additional changes considered and implemented for Virginia law.