Books could be closed on decades-old health insurance policies

Some group health policies written up to 40 years ago remain active, even though the insured could most likely find better coverage at a lower price. For insurers who have moved to offering other products, these policies are costly to maintain, but they are obligated to keep these policies enforced.

Rep. Greg Davids (R-Preston) and Sen. Vicki Jensen (DFL-Owatonna) sponsor HF3285/SF3047*, which sets out a procedure for an issuer with five or fewer covered individuals that are not part of the single risk pool to convert or not renew that policy. The bill passed the House 130-0 on Friday and now awaits action by the governor.

Rep. Greg Davids

This bill would benefit both the insurance providers and consumers, Davids said. “These companies need to be able to exit the market,” …. “folks, for some reason, are hanging on to the their policies even though the price is high and the coverage is low.”

During a House Commerce and Regulatory Reform Committee meeting earlier in session, Rep. Joe Atkins (DFL-Inver Grove Heights) said he is concerned there would be a chance “we would be taking good coverage away that they [policy holders] are getting at a good premium and replacing it with high-premium-low benefit coverage.” Davids said the bill is narrowly focused, and doesn’t foresee that happening.

Under the bill, an issuer not renewing coverage must notify the Department of Commerce commissioner 180 days before the effective date of the nonrenewal, and must provide the commissioner with a complete list of affected policyholders.

Written notice must be provided to each policyholder covered under the conversion policy at least 120 days before the effective date of the nonrenewal. This notice must include information on how to obtain individual or family health coverage and contact information for the state agencies regulating health insurance.