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Health Care

Some Insurers Didn’t Give Customers Enough Warning Before Ending Plans

Here’s a story you may have missed in the blitz of news on health plans being canceled because of the Affordable Care Act: Some insurers didn’t give their customers the 90-day notice required by law that their policies would be terminated.

That’s the case in California, where 104,000 Anthem Blue Cross (WLP) policyholders facing cancellation at yearend will have the option to extend their plans at current rates through the end of February, the state’s insurance commissioner, Dave Jones, announced this week. A week earlier, 115,000 Blue Shield customers in California got a similar reprieve.

President Obama, seeking to quell the anger over cancellations and win back nervous Democrats, today announced that he’d allow insurers another year to sell current customers policies that don’t meet the ACA’s standards.

That might give the roughly 1 million Californians facing canceled plans a chance to renew for another year. In a press release on Monday, before Obama’s announcement, Jones said he opposed the cancellations but that he didn’t have the legal authority to stop them. Now it will be up to insurers to decide whether to extend the policies.

Under federal law, insurance companies must give their customers 90 days’ notice if they’re going to cancel a health plan. That’s why many of the breakup letters landed in mailboxes in September and early October, announcing cancellations effective Dec. 31.

In California, Anthem said a “computer glitch” was responsible for not giving customers adequate notice. Spokesman Darrel Ng declined to comment on whether the company would extend policies beyond February.

It’s not clear whether insurers in other states also failed to give consumers enough time to deal with cancellations. (The National Association of Insurance Commissioners has no information on this, a spokesman says.) In California, at least, insurers’ mistakes exacerbated the cancellation mess the Affordable Care Act created.

Tozzi is a reporter for Bloomberg Businessweek in New York.

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