New Jersey is one of four states granted a waiver by the federal government to allow insurance companies to continue to offer low-benefit coverage plans for the next year.
The waivers will allow the state-mandated Basic and Essential Health Care Plan to continue to provide minimum coverage for about 75,000 residents. That’s even though the plan has annual coverage limits lower than those required by the new federal health-care law. Under the law, health plans must provide at least $750,000 in coverage for benefits such as hospital care, doctors’ services and prescription drugs.
Steven Larsen, director of the federal Center for Consumer Information and Insurance Oversight, said the waivers are a stop-gap measure to allow people to keep their basic, affordable insurance until state insurance exchanges are established in 2014.
“Until that time, we want people to be able to continue what they have today,” Larsen said. “Even though it is not comprehensive coverage, it is usually better than not having coverage at all.”
New Jersey insurance providers who sell plans on the individual market are required under a 2003 law to offer these basic plans.
“It was designed to provide health insurance accessibility for people who wanted some essential medical services but couldn’t afford them,” said Marshall McKnight, spokesman for the state Department of Banking and Insurance. According to McKnight, costs would have risen up to 40 percent if the plans offered more comprehensive coverage, so the state qualified for a waiver.
Private insurance providers around the country qualify for waivers by proving that the new minimum standards would significantly raise premiums or lower coverage rates.
In states such as New Jersey where a law mandates that companies offer these affordable plans, the state itself can apply for a waiver so it can continue to enforce the law.
According to the Center for Consumer Information and Insurance Oversight, about 2.4 million Americans, or about 1 percent of those who are insured, are in plans with annual-limits waivers this year.