Health insurance companies may find major benefit in loophole in federal law
Health insurance companies throughout the U.S. have been working to find ways to avoid the costly implications associated with the federal Affordable Care Act. There are several provisions associated with the federal law that are expected to have a major impact on the cost of health insurance coverage, largely due to the fact that these provisions institute more regulations on insurers. Some health insurance companies seem to have found a possible way to avoid complying with the federal law for an entire year after it is enacted on January 1, 2014.
Insurers could avoid Affordable Care Act for a full year
The loophole, which was apparently discovered by insurers UnitedHealth and WellPoint, is fairly straightforward. Insurers can avoid complying with federal regulations be renewing policies before the Affordable Care Act is scheduled to take effect. Insurers are able to do this because they are legally bound to honor the commitments they make to consumers. Thus, if an insurer promises that a policy will remain a certain way, that insurer is required to honor this promise due to federal regulations.
Renewing policies before federal law is enacted may help insurers prepare for the future
Health insurance policies are not actually required to reflect the provisions of the Affordable Care Act until the federal law is official enacted on January 1, 2014. Therefore, the policies renewed before this time are not required to cater to the federal regulations introduced by the final enactment of the law. This is likely to provide insurers with significantly more time to prepare for the potential effects the law may have. It may also allow insurers to benefit from a full year of profits before having to address the potential costly issues associated with the federal law.
Insurers may be faced with backlash if they choose to take advantage of loophole
Neither WellPoint nor UnitedHealth have announced plans to participate in this initiative, although their doing so would be entirely lawful. There may be significant backlash in store for any insurer opting to take advantage of this potential loophole, most of which is likely to come from consumers that would consider the practice greedy and irresponsible. There is a chance that federal lawmakers will move to close the loophole in the near future.
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April 14th, 2013