A Common Gal Looks at ObamaCare, Part 7: Limits on Losing Coverage

A Common Gal Looks at ObamaCareI’m reading up on The Patient Protection and Affordable Care Act (PPACA, aka “ObamaCare”). That includes the act itself, amendments passed shortly afterward, and the recent Supreme Court ruling. It’s a lot of pages (906, 55, and 193 respectively), but I want to understand it. I’m documenting my read-through here. I am not a lawyer or a healthcare professional, just a common college-educated person. These are my thoughts, not advice to you. Read the act yourself like the free person you are. ;o).

No-No’s on Rescinding Coverage

The Patient Protection and Affordable Care Act (PPACA) has protections against the insurer yanking away coverage for no good reason. This is called “prohibition on rescissions.”[1] But there are limits. Your coverage CAN be rescinded if you:

  • Use fraud, and/or
  • Intentionally misrepresent material facts as prohibited by the plan or coverage. (Why do they use blah-blah language like this? What’s the difference in “plan” and “coverage”? Meh.)

They also have to give you prior notice. (I didn’t see any details yet about how MUCH prior notice, however.)

Notice that is ONLY talking about coverage being “rescinded[2]” (terminating the contract for insurance coverage from the beginning, as if the policy had never been issued) – it doesn’t mention cancelling your policy going forward from a certain date, or just failing to renew coverage. (Slippery dudes, aren’t these legislators.)

The way I’m reading “rescission” (the act of rescinding), it refers to the insurance company playing “take-back”: You get your premiums refunded, but you have to give back what benefits you got under the policy, as in anything the policy paid during that coverage period to your doctor, hospital, etc. Yikes.

No-No’s on Cancelling Coverage

Rescinding your coverage isn’t the only way your insurance company can give you the kiss-off: It can also cancel or fail to renew your coverage for certain reasons. For details on this, the PPACA points to two specific sections of ye olde Public Health Service Act: Section 2702(c) and Section 2742(b).  I wavered over a momentary impulse to tear at my hair at the thought of undergoing the tortuous (to me) process of looking something up in that gigantic act again, but I found a different and delightfully authoritative source without having to go bald in fits and snatches. The Internet is my SAVIOR sometimes.

Instead of locating those original texts, I cheated and read summaries in the Federal Register, which said, “These provisions generally provide that a health insurance issuer in the group and individual markets cannot cancel, or fail to renew, coverage for an individual or a group for any reason other than those enumerated in the statute.”

The Register then was nice enough to summarize those reasons, so here you go.

Why your insurer CAN cancel your butt (or fail to renew your policy covering said butt):

  • Nonpayment of premiums
  • Fraud or intentional misrepresentation of material fact
  • Withdrawal of a product or withdrawal of an issuer from the market (I assume this means their company no longer offers that kind of insurance … or the company itself withdraws from the market. You agree?)
  • Movement of an individual or an employer outside the service area
  • Cessation of association membership (applies to bona fide association coverage only)

For overachievers: You don’t have to hit all of these; one is enough.

Bona Fide Associations

That last one threw me for a loop. (The word “bona fide” always makes me giggle and think of Jethro Bodine trying to sound fancy about ciphering and such.) So I looked it up, with the help of our recurring guest, that good ol’ attention whore, the Public Health Service Act.[3] Basically, it just means groups that are formed for legit reasons, not solely to glom onto some insurance coverage. See details below if you want the fancy lawyer talk.

When you’re talking about a state’s health insurance coverage, a bona fide association has to meet all six of these criteria:

  • Has been actively in existence for at least five years;
  • Has been formed and maintained in good faith for purposes other than obtaining insurance (emphasis mine)
  • Does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee);
  • Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member);
  • Does not make health insurance coverage offered through the association available other than in connection with a member of the association; and
  • Meets such additional requirements as may be imposed under State law.

I’m going to go soothe my brain with a well-earned diet Coke now.

Other Posts on ObamaCare:

  • Part 1: Intro
  • Part 2: Types of coverage, no discrimination
  • Part 3: Exchanges and what they do
  • Part 4: Your cost limits and adjustments
  • Part 5: Deductibles and preventive care
  • Part 6: Four levels of coverage

Footnotes! We Have Footnotes!

[1] Section 2712.

[2] I don’t usually cite Wikipedia because, well – ew – but it can contain some good general information. This discussion of “rescission” (the act of rescinding) aligns with other definitions I read online and is much easier to read than most: http://en.wikipedia.org/wiki/Rescission.

[3] See Title XXVII of the Public Health Service Act, SEC. 2791. [42 U.S.C. 300gg–91] Definitions, (d)(3). You can find it here: http://www.nadp.org/Libraries/HCR_Documents/phsa027.sflb.ashx.


Filed under Healthcare, Politics