The state and federal governments announced Friday that Health Republic policies will end Nov. 30 and those with the health insurance now have until Nov. 15 to buy a new plan for the rest of the year.
The federally backed health insurer was closed Sept. 25 because of financial problems. At the time, the state Department of Financial Services, New York State of Health and the federal Centers for Medicare & Medicaid Services said that all individual policies would remain in effect until the end of the year. Small group plans for businesses -- which, unlike individual plans, do not all have calendar-year policy terms -- also remained in effect.
But Friday afternoon, the agencies said in a release that a "review of Health Republic's finances has found that the company's financial condition is substantially worse than the company previously reported" and "that it is in the best interest of consumers to end all Health Republic policies -- both individual and small group -- on Nov. 30, 2015 so that customers can transition to new coverage after that date."StoryInsurer shutdown surprises brokers, doctorsStoryBig changes coming to NYS health exchangeLetter to EditorLetter: Loss of insurance troubling
Individuals who had a Health Republic plan on the exchange have until Nov. 15 to choose a new plan for the remainder of 2015. Employers with small group plans through Health Republic "should act as soon as possible to choose a new policy from another insurer," the agencies said.
Michael Fagan, a spokesman for Health Republic, attributed the latest changes to "the insurmountable financial gap created largely by the risk corridor program only paying out 12.6 percent of the $149 million Health Republic was owed for 2014."
The federal risk corridor program was intended to relieve financial risk of health plans operating on Affordable Care Act exchanges by taking funds from insurers with more successful businesses and distributing them to less successful insurers. But more sought payments for 2014 than paid into the program, so the government is paying only 12.6 percent of what it owes insurers.
Fagan said Health Republic has about 215,000 enrollees, 107,000 of whom are individuals on and off the exchange.
To help them, the NY State of Health has set up a special customer service hotline, 855-329-8899.
Navigators and brokers were stunned. To add to the confusion, open enrollment for 2016 coverage on the exchange begins Sunday.
Stacy Villagran, head of the navigator program for the Nassau-Suffolk Hospital Council, said they "will probably start to proactively contact our clients."
"People enrolled in Health Republic were prepared to pick a new plan during open enrollment for 2016, but it wasn't expected that they would have to pick a new plan in time for December 2015 and also renew coverage with a new plan for 2016," she said.
Jack Glanzer, president of The Granite Insurance Brokerage in Lynbrook, was speechless. "Wow, I can't believe this. This is bad. This is bad," said Glanzer who said he has several hundred individuals and small-business clients with Health Republic. One of his first worries: Would those who had paid their deductibles have to start all over again for coverage for the rest of the year?
DFS spokesman Matthew Anderson said the department is "working to ensure that the new health plans will not charge consumers for the amount of the deductible Health Republic customers already paid in 2015."
And Wendy Darwell, the hospital council's chief operating officer, said she was also "very concerned" about whether its 23 members will be paid for submitted claims.
Anderson said the department is "working to make sure claims are paid to the maximum extent possible."
Health Republic was one of 23 Consumer Operated and Oriented Plans (CO-OPs) created under the ACA to increase competition and offer low-cost health care. So far 10 have gone out of business. Health Republic was popular. Statewide, it has the second-highest percentage of individual and family enrollees on the exchange -- 19 percent -- and the highest percentage of the state's Small Business Health Options exchange -- 35 percent. More than 16,000 Long Islanders bought the insurance from the exchange.