Dec. 20—The Obama administration reversed its longstanding opposition to delaying the qualifying coverage deadline when it dropped penalties for policyholders whose coverage is cancelled because of the healthcare law. 

The decision came in a low-profile letter to Democratic senators Thursday night, which was only four days before the deadline for people to buy qualifying coverage and avoid tax penalties for lacking qualifying coverage on Jan. 1. 

The latest change in the coverage requirements of the Affordable Care Act (ACA) applied a “hardship exemption” in the law for those whose individual coverage policies were cancelled by insurers because they did not meet the law’s cost or coverage requirements and who have been unable to obtain coverage in new government-run insurance marketplaces. Those marketplaces, also known as exchanges, have been unable to enroll many of the applicants due to widespread and ongoing technical failings. 

U.S. Health and Human Services Secretary Kathleen Sebelius wrote the senators that those consumers also would be allowed to buy catastrophic plans in the marketplaces, which were previously limited to applicants less than 30 years old. Such plans cost an average of 20 percent less than other marketplace plans, but also require much greater patient cost sharing. 

“To avoid any confusion on this point, and to make sure consumers can make decisions that are in their best interest, we will supplement our existing call centers with a dedicated phone number and specialists to assist with any questions in this area,” Sebelius wrote the senators about the delay and eligibility for catastrophic coverage. 

Sebelius wrote that the change was due to the “small number of consumers” whose plans were cancelled and were unable to replace the coverage with marketplace plans. But estimates for cancelled individual market plans in recent weeks indicate that 3 to 5 million people could be affected, while only about 365,000 people selected health coverage in marketplace in October and November. 

Reactions Differ 

The change drew praise from the Democratic senators. 

“We are pleased that the administration appears to have responded to the concerns we’ve raised,” the senators, who included Sen. Mark Warner (D-Va.), said in a written statement. “As a result, this clarifies an option that will help those consumers who have had their plans cancelled transition more smoothly into the marketplace.” 

However, the latest in a series of recent administrative delays of key ACA provisions drew concerns from insurers. The leading health insurance advocacy group, America’s Health Insurance Plans, issued a statement that the partial delay of the individual mandate “could cause significant instability in marketplace and lead to further confusion and disruption for consumers.” 

Hospital efforts to identify coverage for new patients after Jan. 1 also may see an impact from the latest ACA change. 

“Obviously, anything that could serve to reduce coverage is concerning for hospitals and health systems,” said Chad Mulvany, director of healthcare finance policy, strategy, and development for HFMA. “HFMA will continue to monitor the impact of the administrative changes on coverage expansion.”


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.

Publication Date: Friday, December 20, 2013