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Improving Consumer Information - New Letters Make Health Insurance Choices Clear

A small percentage of consumers have been getting confusing letters from their health insurance company in the mail. New letters with clear information about how to keep an existing plan, new protections under the health care law and options available in the health insurance marketplace are likely to come soon.

Today, the Centers for Medicare & Medicaid Services (CMS) took a major step to give consumers across the country new, standardized information about their options and rights when it comes to health insurance. This effort is a direct response to the President’s concerns that the small percentage of Americans receiving confusing letters from their insurance companies need clearer information about how to keep an existing plan, or how to choose a new plan with new protections available in the health insurance marketplace.

Because of the Affordable Care Act, people with health insurance have stronger protections than ever before.  This means that consumers in new health insurance plans will no longer be charged more because of gender or a pre-existing condition, there will be caps on out-of-pocket costs, and plans will have to offer a basic package of 10 categories of essential health benefits.

These new market rules do not apply if you are in the same health plan you were in when the law passed, a so-called grandfathered plan.  Your plan does not need to meet these new requirements – and your plan is required to let you know that.  Additionally, these protections may not apply if your insurer takes the new option announced by the President last week.  This transitional policy allows issuers in states that permit it to renew health plans that were in effect on October 1, 2013, without adopting all of the 2014 market rule changes.  This helps give consumers in the individual and small group markets the choice of staying in their plan or joining a new Marketplace plan next year. 

Importantly, it is a requirement that insurers that take up this option notify their customers about their choices. To date, too many consumers getting cancellation notices have not been told why or about their rights and options.  This new required notice will provide clear information letting enrollees know that they can purchase coverage through the Marketplace, where they can potentially qualify for premium tax credits.  These notices tell consumers they have new options and rights to get quality, affordable health insurance.  And they tell consumers what protections they would give up to keep the plan they have.  In short, they give consumers the information they need to make the best choice, which may be keeping their old plans.

Specifically, the new letters will let consumers know that:

  • They can shop in the Marketplace, where all plans meet certain standards to help guarantee health care security; no one who is qualified to purchase coverage through the Marketplace can be turned away or charged more because of a pre-existing condition;
  • They may qualify for tax credits or other financial assistance to help with the cost of coverage; They may have options for getting new health insurance outside of the Marketplace, where most new plans provide the new consumer protections, but financial assistance is not available.
  • What protections are not guaranteed if they stay in their current plan; and
  • Where they can learn more about all their options. 

They also issued standard letters for those issuers who cancel their plans, without offering an option for renewal, that lets consumers know that they have new options they never had before.  We strongly urge every state insurance department and every health insurer to use these new notices.

These letters are just one more way the Administration is helping make it easier for consumers to get the information they need to secure quality, affordable health care coverage for themselves and their families.

Learn more more about cancellations and consumer rights and new choices