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What can I do if I lose my health plan?

In recent weeks, Americans have learned President Barack Obama has wobbled a bit on his pledge that all policyholders can keep their current health insurance plans through 2014 and beyond.

Instead, millions of Americans potentially are at risk of losing their current coverage due to regulations in the Patient Protection and Affordable Care Act (ACA), also known as Obamacare.

Why can't I keep my plan?

U.S. health reform legislation requires that beginning in 2014, insurance policies must provide 10 categories of "essential health benefits."

what if I lose my health plan

Such benefits include maternity care, mental health services and prescription drug coverage.

Many health insurance plans have excluded those benefits in the past. For example, 62 percent of policyholders with individual health insurance in 2011 didn't have coverage for maternity care, according to the U.S. Department of Health and Human Services.

Because these essential health benefits now are mandatory, insurers are canceling old plans that don't include the benefits and replacing them with new, more comprehensive policies that carry a bigger price tag.

"The only reason consumers are getting notices about their current coverage changing is because the ACA requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today," reads a statement from America's Health Insurance Plans (AHIP), the health industry trade association.

A new wrinkle

On Nov. 14, President Obama added a new chapter to the insurance cancellation saga.

At a press conference, the president said his administration would allow insurance companies to keep individual customers on existing plans for one more year, even if the plans don't meet health reform requirements. 

However, the new promise comes with two big caveats. The administration isn't actually requiring insurance companies to rescind policy cancellations. In addition, the president is leaving it up to state insurance regulators to decide whether to allow people to keep their old plans.

If your plan is still among those slated to be canceled -- or if your insurance company decides to discontinue your policy for any other reason -- your insurer cannot cut you adrift suddenly, says John Rother, president and CEO of the National Coalition on Health Care.

"Insurance companies are required to notify subscribers in writing at least 90 days in advance of canceling or discontinuing their policy," Rother says.

That gives you time to look for a new policy. Most policyholders have three major options.

What are my options if I lose my plan?

1. Choose a new policy offered by your current insurer

If your insurance company notified you by mail that your policy is being canceled because it doesn't meet Obamacare requirements, you likely were offered an alternative policy from the same insurer.

"Insurance companies are including information on comparable policies -- or the closest alternative policies -- in their notification letters," Rother says.

The new policy will offer all of the benefits required under Obamacare regulations. As a result, it probably will be more expensive than the policy you now have.

Recent news reports have cited examples of people paying double -- or more -- for their new Obamacare-compliant policy compared to what they paid for their old policy.

Also, remember that if you purchase a policy directly from an insurer, you will not qualify for the federal tax subsidies that are a crucial part of making Obamacare policies more affordable.

However, consumers should remember that while the new insurance policy is likely to cost more, it may also offer better coverage, says Clare Krusing, an AHIP spokeswoman.

Rother says that even if your current insurance company offers you a new plan, you shouldn't necessarily jump at it.

"Don't be afraid to explore other options and other insurance companies before choosing a new plan," he says.

2. Purchase a policy on a state or federal health insurance exchange site

By now, everybody has heard about the nightmarish experience of consumers who have tried -- and repeatedly failed -- to log on to the federal health insurance exchange.

Jim Duffett, executive director of the Illinois grassroots organization Campaign for Better Health Care, understands how aggravating the errors have been for consumers.

"It definitely adds more frustration," he says.

However, Duffett believes the federal health exchange -- and the exchanges run by 16 states plus Washington, D.C. -- represents the best places for consumers to shop for a new health insurance policy.

"I think it's a more fair and balanced way for people to get insurance," Duffett says.

People who shop on the exchanges are able to compare plans from various insurers to find the best fit for their needs.

Crucially, people who purchase a policy through the exchanges also are eligible for tax subsidies that can significantly reduce the premium cost of their policy. You must purchase a policy through an exchange to qualify for this subsidy.

Individuals making less than about $46,000 and families of four with incomes below $94,200 qualify for the breaks, which are more generous for those whose incomes are lower.

The wonky federal website remains a major obstacle to securing a policy through the exchange. However, the Obama administration reported on Dec. 1 that many of the website problems had been fixed. In addition, people can still apply by phone or mail, although it may be more difficult to compare plans this way.

3. Buy a policy directly from a new insurer, or use a broker

Health reform is changing many things on the insurance landscape. But one thing remains the same: You can still purchase a policy directly from an insurance company, or find an insurance broker who will find a policy for you.

Duffett believes most people are better served buying on the exchange. That's true even if you don't qualify for a subsidy, he says.

However, he says buying directly from an insurer or through a broker can make sense for some people with higher incomes who want coverage now and are frustrated by their experience on the federal exchange site.

No matter which of the three above methods you choose, the best way to find the most affordable policy with the right coverage is to simply follow a tried-and-trusted consumer technique, Rother says.

"Shop around," he says. "As you would for any other major purchase, it's important to explore the many health insurance policy options to find the one that is best for you and your family."

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