When Obamacare insurers leave NJ

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Q. What does it mean now that some insurance companies are dropping out of Obamacare in New Jersey? What if I already have a policy with one company that’s leaving?
— Insured for now

A. Health insurance is complicated in the best of circumstances. If you’re in the market for a plan and your insurer leaves the state, it can get even tougher.

When the Affordable Care Act — Obamacare — was being negotiated, elected officials came to a compromise to create “co-ops” instead of having a “Public Option,” said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.

“Co-ops are non-profit insurance companies that were established to create more competition in certain areas in the country, New York and New Jersey being two states to `get’ a co-op,” Gaelick said. “These co-ops were created using billions of taxpayer money with the intent for them to repay taxpayers back within five years.”

Gaelick said the complex Obamacare laws also called for those co-ops that were making money to re-distribute that money to the co-ops that were not or had a higher risk population. What’s happened, he said is that 16 of the 23 co-ops created are already out of business, and it was just announced that the State of New Jersey was taking over control of Health Republic of NJ, and shutting them down on Dec. 31, 2016 because of its “hazardous financial condition,” Gaelick said.

That leaves six co-ops, all of which lost money in 2015, Gaelick said.

Then there are commercial insurance carriers — the big name companies you’ve probably heard of.

“When a commercial carrier such as Aetna pulls out of the Obamacare `Exchanges’ or marketplace, they are not going out of business, just pulling out of a market area that they were likely losing money,” Gaelick said. “Oscar also announced they’d be withdrawing, leaving very few carriers left in this area.”

So what happens to someone covered by a carrier that either pulled out of the market or became insolvent and went out of business?

Because there are no “pre-existing condition clauses” allowed under the Obamacare law, there are “open enrollment” periods, Gaelick said.

He said this is also complex but to simplify, you may only enroll during certain times of the year.

“In the individual market — non-group sponsored — the open enrollment periods earliest enrollment date is Jan. 1 unless a `triggering event’ occurred, creating a “special enrollment” period, allowing you to enroll then,” Gaelick said.

Some examples of a triggering event would be getting married, having or adopting a child or losing benefits involuntarily.

“When a company drops out of a market, that would be considered an involuntary loss of coverage and allow you to pick a new plan, a new carrier,” Gaelick said. “So, provided you do this, you would have no interruption of coverage and no exclusion for any pre-existing condition.”

Because the law is tricky and complex, and losing your carrier can be very stressful, consider consulting with a professional who is very knowledgeable with the rules.

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This post was first published in September 2016.

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