Cancellation of Nongroup Health Insurance Policies (CRS Report for Congress)
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| Release Date |
Nov. 19, 2013 |
| Report Number |
R43314 |
| Report Type |
Report |
| Authors |
Bernadette Fernandez, Specialist in Health Care Financing; Annie L. Mach, Analyst in Health Care Financing |
| Source Agency |
Congressional Research Service |
Summary:
Congress has expressed interest in health insurance cancellations, in light of media reports stating that individuals have received cancellation letters. While cancellations are not a new industry practice, additional attention has focused on the more recent cancellations given that many of the insurance market reforms included in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) will become effective beginning in 2014. These cancellations and proposals to address them, including the Administration's recently announced transitional policy, have been discussed in recent hearings and are the subject of legislative proposals.
This report provides background information about health insurance cancellations, non-renewals and rescissions, including applicable federal rules under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and ACA. Given that the concern about insurance cancellations has largely focused on the nongroup market, this report discusses federal requirements and implementation issues that apply to nongroup coverage. One issue that is not addressed in this report is the Administration's authority to provide transitional relief (described below); the authority issue is addressed in the CRS Legal Sidebar, Obama Administration's "Fix" for Insurance Cancellations: A Legal Overview.
The nongroup market is often referred to as a "residual" market, because the primary function of this market is to make insurance available to persons who cannot obtain employer-sponsored insurance (ESI) and do not qualify for publicly subsidized programs. Consequently, the covered population for this market is relatively small. In 2012, approximately 10.8 million individuals had coverage through the nongroup market (3.4% of the total U.S. population).
