Warding off the specter of election-year health insurance cancellations, the Obama administration Wednesday announced a two-year extension for individual policies that don't meet requirements of the new health care law.
The decision helps defuse a political problem for Democrats in tough re-election battles this fall, especially for senators who in 2010 stood with President Barack Obama and voted to pass his health overhaul.
The extension was part of a major package of regulations that sets ground rules for 2015, the second year of government-subsidized health insurance markets under Obama's law — and the first year that larger employers will face a requirement to provide coverage.
Hundreds of pages of provisions affecting insurers, employers and consumers were issued by the Treasury Department and the Department of Health and Human Services. It will likely take days for lawyers and consultants to fully assess the implications.
The cancellation last fall of at least 4.7 million individual policies was one of the most damaging issues in the transition to a new insurance system under Obama's law. The wave of cancellations hit around the time that the new HealthCare.gov website was overwhelmed with technical problems that kept many consumers from signing up for coverage. It contradicted Obama's promise that you can keep your insurance plan if you like it.
The latest extension would be valid for policies issued up to Oct. 1, 2016. It builds on an earlier reprieve issued by the White House.
Other highlights of the regulations include:
— An extra month for the 2015 open enrollment season. It will still start Nov. 15, as originally scheduled, after the congressional midterm elections. But it will extend for an additional month, through February 15 of next year. The administration says the schedule change gives insurers, states and federal agencies more time to prepare. This year's open enrollment started Oct. 1 and ends Mar. 31.
— New maximum out-of-pocket cost levels for 2015. Annual deductibles and copayments for plans sold on the insurance exchanges can't exceed $6,600 for individuals or $13,200 for families. While not as high as what some insurance plans charged before the law, cost sharing remains a stretch for many.
—An update on an unpopular per-member fee paid by most major employer health plans. The assessment for 2015 will be $44 per enrollee, according to the regulations. Revenues from the fee go to help insurers cushion the cost of covering people with serious medical problems. Under the law, insurance companies can no longer turn the sick away. The per-person fee has been criticized by major employers. It is $63 per enrollee this year, and is scheduled to phase out after 2016. Some plans, including multi-employer arrangements administered by labor unions, will be exempt from fees in 2015 and 2016.
—Treasury rules for employers and insurers to report information that's crucial for enforcing the law's requirements that individuals carry health insurance, and that medium-to-large employers offer coverage. Although officials said the reporting requirements have been streamlined, businesses see them as some of the most complicated regulations to result from the health care law. The Internal Revenue Service will collect the information, because it is in charge of dispensing tax credits for individuals and small businesses to buy coverage as well as levying fines on those who fail to comply. The individual mandate is already in effect; the employer requirement begins to phase in next year.
—Notice of a potential delay, optional for states, in a promised feature of new health insurance markets for small businesses. The feature would allow individual employees — not the business owner — to pick their coverage from a list of plans. The health insurance exchanges for small businesses have been troubled by technical issues this year. Small Business Majority, a group that supports the health care law, said it's disappointed. The administration says no final decision has been made.
It's not clear how many people will actually be affected by the most closely watched provision of the new regulations, the two-year extension on policies that were previously subject to cancellation. The administration cites a congressional estimate of 1.5 million people, counting those in individual plans and small business policies.
About half the states have allowed insurance companies to extend canceled policies for a year under the original White House reprieve. The policies usually provided less financial protection and narrower benefits than the coverage required under the law. Nonetheless, the skimpier insurance was acceptable to many consumers because it generally cost less.
The National Association of Insurance Commissioners, which represents state regulators, was skeptical of the change.
"Creating two tiers of plans — the compliant and non-compliant — could result in higher premiums overall and market disruptions in 2015 and beyond," said NAIC president Adam Hamm, who is North Dakota's insurance commissioner. Although Hamm is a Republican, the NAIC is nonpartisan.
Separately, the House on Wednesday voted to delay for one year the penalty faced by individuals under the law if they fail to sign up for health insurance. It was the 50th time Republicans have forced a vote to repeal, gut or change Obama's health overhaul.