Cancelled Health Insurance Policies

• December 22, 2013
• Paul Neiffer

Amid a wave of controversy over health insurance policies that have been cancelled this year, the Department of Health and Human Services announced Thursday, December 19 that those with cancelled policies will not need to pay the individual mandate penalty in 2014. Those who have received notices in recent months will receive a hardship exemption from the penalty for one year if they don’t enroll in coverage in 2014.

Such people who have received notice that their policies are being cancelled are also eligible to buy a catastrophic-type plan. Previously, under the Patient Protection and Affordable Act, these catastrophic plans were only available to people under the age of 30. Now, people of any age who had their insurance policy cancelled for 2014 can enroll in a catastrophic plan. For those whose insurance was cancelled because it was too “bare” compared to the minimum essential benefits mandated by the PPACA, a catastrophic plan may be an option.

This announcement followed President Obama’s announcement in November that if your plan was cancelled, you can keep it for an additional year after it was widely publicized that many Americans were angered about receiving notice that their plans would not comply with the PPACA rules. In many states, regulators didn’t allow insurers to re-offer these cancelled plans.

As we approach the halfway point of the open enrollment period, it seems that more people are successfully accessing the exchanges. Open enrollment in the exchanges closes for the 2014 year on March 31, 2014 but for coverage to be effective on January 1, 2014 open enrollment must be completed by Monday, December 23, 2013.

Special thanks to Kiely Strohmaier in our Moses Lake, Washington office for this post.

Paul Neiffer, CPA

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