Aetna announces it will stop selling child-only health insurance polices in most states in October

Aetna announced today that it would stop selling child-only individual health insurance policies after October 1, 2010. A child-only policy is one sold to [for] a child who is under the age of 19. Many parents who cannot afford to insure the whole family will buy a policy just to protect the health of their children.

The announcement affects only new business sales. Aetna policy holders who already own a child-only plan will not be impacted by new rule. Current policies will continue as written and these policies will also be renewable. Child-only polices had been written under the Aetna Advantage Plans for Individuals, Families and the Self Employed.

Is change in response to new federal law?


Under the Affordable Care Act, insurers who sold health insurance policies would be prohibited from excluding children with pre-existing conditions from coverage beginning in 2010.

Just after the signing of the new federal law, insurance company lawyers attempted to argue that children with pre-existing conditions would have to wait until 2014 for guaranteed issue coverage, just as adults do.

The Obama administration through Health and Human Services Secretary Kathleen Sebelius immediately announced that it would publish regulations making the change effective September 1, 2010.

The insurance industry grudgingly accepted the direction. Karen Ignagni, CEO of America’s Health Insurance Plans (AHIP), responded that the insurance industry would “fully comply” with the principles set forth in the Secretary’s letter. AHIP is a trade organization and political advocacy group that represents over 1300 insurance carriers.

Are insurance companies finding new ways to avoid the requirements of the federal law?

Aetna admits the reason for stopping the sale of child-only policies is to allow the company to handle the upcoming changes which resulted from health care reform. Specifically Aetna notes that the requirement to insure children under the age of 19 on a guaranteed issue basis with no guidelines as to coverage requirements has the potential to increase the cost of these policies and make them unaffordable.

What remaining options are available for child-only policies?

Aetna says that if an application for a child-only policy is submitted for an effective date of October 1, 2010 or later, the underwriters will suggest the following options for covering the child:

add the child as a dependent to a parent's plan,
apply to your state’s CHIP plan (if eligible), or
check with federal government for alternative options at www.healthcare.gov
Currently the federal website has no options to suggest for child-only coverage.

Aetna’s announcement has indicated that this policy will become effective on October 1, 2010 in the following states: AK, AR, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KS, KY, LA, MI, MO, MS, NC, NE, NV, PA, SC, TN, TX, VA, WV, and WY. A later announcement will establish the effective date for the change in CT, MD, OH, and OK

HHS permits insurers to establish open enrollment periods for child coverage

Responding to concerns that the new health care law’s prohibition on denying coverage to children with pre-existing conditions would significantly drive up costs, the U.S. Department of Health and Human Services (HHS) has clarified that plans may set up specific enrollment periods. Insurers had predicted that the non-discrimination coverage requirement that takes effect for most plans beginning on or after September 23 would result in parents enrolling their children only once they became sick.

Amid reports that many insurance companies were considering dropping child coverage altogether, the HHS on July 27 issued a fact sheet explaining, in question and answer format, how the prohibition on pre-existing condition exclusions applies to insurers offering coverage to children under 19 years old in the individual market. Specifically, the HHS clarified that:

Insurance issuers in the individual market may restrict enrollment of children under 19 to specific open enrollment periods – the number and length of such periods to be at the insurer’s discretion – if permitted under state law. Insurance issuers must abide by more stringent state laws, if applicable, that require issuers to maintain a continuous open enrollment period or regulate the number and/or frequency of these enrollment periods.

Child-only individual market insurance plans that existed on or prior to March 23, 2010, and that do not significantly change their benefits, cost sharing, and other features, will be “grandfathered” and thus exempt from the regulations prohibiting pre-existing condition exclusions.

The administration will issue new regulations if it determines that insurers are using their enrollment periods to limit coverage access, or if children with pre-existing conditions are being diverted inappropriately from Medicaid or the Children’s Health Insurance Programs (CHIP) to private insurance plans.