Essential Facts About Obamacare Bans Rescission

The post factum cancellation or denial of a health or medical insurance policy by a health insurance service provider due to any mistake or misinformation provided by a customer generally defined or termed as rescission or retraction.

What is rescission under Obama care health reforms?

The Affordable Care law nicknamed as Obama care and under the guidance of the then, President Barak Obama prohibited rescission and it made a mandatory fact for the health care insurance service providers. Obamacare bans rescission or in other term rescinding health coverage.

It often happens that health insurance service providing companies cancels an entire insurance policy if there is a very slight mistake also when a person or customer tries to buy or purchase a health insurance policy from an individual marketplace. Before the launching of the ACA legislation, an insurance service providing company could find a small detail like a mistake in an application, or exclusion of something simple could lead to cancellation of the policy.  Under the Patient Protection and Affordable Care law, the concept of rescission became illegal excluding certain cases of fraud or intentional misrepresentation of facts as prohibited by the terms of the plan or coverage. Since the year 2010, an honest or silly mistake no longer remained the criteria for cancellation of insurance policy.

Measures of Protection against rescission.

1. i) The insurance plan sponsor or provider may only cancel or terminate a policy of a member who is contributing or paying the premiums with a notice of the prospective date of termination of the coverage. This provides a limit on the liability of an employer to correct administrative errors.

1. ii) The health insurance service provider may not cancel the policy coverage if the member or customer paid policy premiums and contributed to the cost of the health insurance plan.

Was the practice of rescission a problem before the launch of Obama care?

Before the launching or advent of Obama Care people of the country were left with denied from health insurance coverage from the insurance service providers due to some mistakes happened while filling up application form for health insurance plans. Due to this reason, a majority would remain uninsured and used to pay high bills for medical service or treatments as a result of which many people would suffer. Many states in the United States of America took it upon themselves and passed laws against this to protect, but some states never passed any laws. But after the advent of the landmark health care reform law, Obama care the concept of rescission was made illegal that added comfort and relief to the customers or members.

The reasons that can cancel a plan or policy.

There are some reasons as mentioned in the law that cancel a health insurance policy are –

1. i) If a health insurance plan is not ACA compliant.
2. ii) If any kind of fraud is proven against the applicant.

iii) Non-payment of premiums.

The healthcare law of Obama care indeed helped the people of the country to achieve an affordable and enhanced health care services.