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Friday, December 6, 2013

Cancellation of Nongroup Health Insurance Policies - R43314

Bernadette Fernandez
Specialist in Health Care Financing

Annie L. Mach
Analyst in Health Care Financing

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.
1 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.
3 One issue that is not addressed in this report is the Administration’s authority to implement its transitional policy (described below); the authority issue is addressed in the CRS Legal Sidebar, Obama Administration’s “Fix” for Insurance Cancellations: A Legal Overview.

Date of Report: November 19, 2013
Number of Pages: 11
Order Number: R43314
Price: $29.95

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