Canceled Insurance? Pre-ACA Plans Still Available, Could Save You Money

Some Californians whose policies have been canceled are finding relief in a surprising place: from insurance companies that aren't offering plans on the Covered California marketplace.

Earlier this year, Aetna announced it would bow out of the state's individual market — effective Dec. 31. Cigna is staying, but is not offering any products on the exchange. Right now, both companies are accepting new customers into pre-ACA plans. Aetna plans are available to Costco members only until Dec. 15; Cigna is offering pre-ACA plans through Dec. 23.

Anne Gonzales, a Covered California spokeswoman, confirmed that a carrier not offering plans on Covered California "could offer a non-compliant plan through 12/31/2013 but it would need to become compliant when it renews next year." So, consumers can enroll now, but when the policy comes up for renewal in 12 months, the plans would need to come into compliance with the ACA -- and premiums would almost certainly go up.

Jason Andrew, CEO of Stone Meadow Benefits in Redwood City, says he has "tons of letters on my desk" from clients who have received notice that their policies were canceled. The policies they have been offered are "all more expensive and not as good of coverage," he says.

One of Andrew's clients is Mary McEvoy Carroll of Menlo Park. Carroll, 61, had been paying $375 per month for a Health Net plan, with a $4,000 deductible, which is now being canceled. Her new ACA-compliant options ranged from $625 to $761 per month for a bronze plan. Andrew helped Carroll sign up for a Cigna plan, and her new premium is $553 per month, with a $4,900 deductible. Andrew says this plan covers "annual wellness and preventive at 100 percent just like ACA compliant plans" and has "no less coverage overall."

Carroll says she had supported the ACA, and tries "to be a good person, but 'this is for the greater good philosophy' is hard to swallow when it has a large personal impact."

But buyer beware -- Andrew says that Cigna will likely have a rate increase in early 2014. In California, no regulatory agency has the authority to reject rate increases. ACA-compliant plans can only change rates once a year. For consumers buying plans now on Covered California, their rates are guaranteed for all of 2014.

[Related: KQED's Guide to the ACA -- Just for Californians]

In addition, pre-ACA plans are all subject to medical underwriting, a practice no longer permitted under the Affordable Care Act, starting Jan. 1.

Carroll called the underwriting process "irritating and time consuming." She said she needed to dig up all her health records from the last 10 years, "then you get a phone call and you are asked ridiculous questions. I use a prescription cream for reduction of facial hair. It's not covered by insurance, but you have to admit to it." The nurse who had called Carroll asked if she'd every had psychiatric counseling for the condition.

"Can you imagine? 'Doctor, doctor, my facial hair is worrying me?" Carroll said with an astonished laugh.

Check If You Are Eligible for Subsidy First

About 900,000 Californians have had their policies canceled because they do not comply with the health benefits required by the ACA. On Thursday, the Covered California board voted unanimously that the cancellations will stand, no extensions will be permitted, as President Obama had requested last week. Canceled policies will terminate on Dec. 31.

Of those 900,000 people, about one-third of them are eligible for subsidies. People can determine if they are eligible for a subsidy in seconds using a calculator on the Covered California website. "If you're subsidy-eligible," said Andrew, "you're really going to benefit by enrolling in the exchange."

In addition, about half of the remaining 600,000 people have so-called "skinny" coverage and would likely benefit by enrolling in an ACA-compliant plan. Leesa Tori, senior advisor to Covered California, told the board on Thursday the story of a frustrated consumer whose premiums were doubling. It turned out that his coverage was so limited he "was not really insured against the financial strain" of an accident of a serious diagnosis. After crunching the numbers, the consumer will actually pay about the same in premiums as he is paying now in total costs and get better coverage, Tori said.

But if you're in the ACA 1 percent — that's how many Californians have had their policies canceled and will pay more for comparable coverage — you might want to investigate these other options.

This post has been updated: While Cigna is not participating in the Covered California marketplace, the carrier is remaining in the California individual market after Dec. 31, 2013.