- Commissioners in 3 states have taken action against insurance companies
- Thousands of letters pressured policyholders, were incorrect or omitted exchange options
- Kentucky commissioner fined Humana $65,000 and ordered corrections mailed
- Missouri also looking at Humana letters; LifeWise prompts alert in Washington state
Consumers left angry and confused after the botched Obamacare rollout now have something else to worry about: misleading letters from insurance companies.
In Colorado, Kentucky and Washington, state insurance commissioners have come down on insurance companies for sending thousands of consumers letters that were either threatening, incorrect or omitted crucial information about the Affordable Care Act.
The biggest offender: Humana, a Fortune 100 insurance company.
Kentucky Insurance Commissioner Sharon Clark fined the Louisville-based company more than $65,000 after it sent more than 6,500 customers a letter Clark found "misleading."
The August letter said that customers had to choose one of two options within 30 days: Either legally extend their current policy through next year or choose a new, more expensive policy that complies with Obamacare. The letter never mentioned buying insurance through the new exchange.
And the 30-day window expired before the new state insurance exchange opened October 1, meaning that customers had to decide whether to take Humana's coverage before seeing what options would be available on the exchange.
A 63-year-old retired man in Kentucky who received the letter said he felt like Humana had put a gun to his head. He either had to renew his current coverage through the end of 2014 for about $280 a month or see his monthly premium more than double, to about $620.
"What they were telling me was I had to accept their choice to continue with no protection from preexisting conditions, to basically take their choices and go ahead before I knew the other options that were available through the exchange," said the man, who asked for anonymity to share personal information and speak candidly about a politically charged issue.
Clark called the letter "high pressure. When you're told you gotta do something in 30 days and if you don't do it we're going to make the choice for you, that's disconcerting."
But the letter was more than troubling, it was also illegal. Clark said Humana broke the law when it included a form with the letter that had not gotten the required approval from her office.
She said Humana officials worded the letter the way they did because "they were interested in keeping those policyholders. Also, I think, again, it was a lack of understanding of Kentucky law."
In addition to the fine, Clark required Humana to send customers a correction with a full range of options that included buying insurance from the exchange, working with a broker or even keeping their current coverage until it expires.
Clark said she fined the company a relatively low $10 per letter -- she could have gone as high as $1,000 per letter -- because she was trying to send a message.
"While that doesn't really seem like a very significant amount of money, that action the department took goes into a national database and it informs all the other states of a fine and an order that Kentucky took against Humana," she said. "So that alerts all the other states that their could be some problems."
And she worried that if she levied a bigger fine, Humana would just pass the cost along to their customers in the form of higher premiums.
In Colorado, Humana sent a similar letter that received an rebuke from state Insurance Commissioner Marguerite Salazar.
That letter told 3,400 Humana policyholders in Colorado that they had to make a decision within 30 days or risk losing their coverage. And just like in Kentucky, the 30-day window ended before the state exchange opened.
"I was disappointed to see a letter that appeared threatening and incorrect going out to consumers. The last thing we need is more confusion," Salazar said of the letter.
Her office required Humana to retract and resend the letter and to apologize to its policyholders.
And in Missouri, the state insurance department is looking into whether similar Humana letters there broke any laws.
"The department is aware of written correspondence between Humana and policyholders and is looking into the matter," said Chris Cline, the department spokesman.
Humana declined multiple interview requests, but in a statement said, "Humana has been reaching out to our individual insurance policyholders to let them know of their full range of coverage options beginning January 1, 2014 (when the Affordable Care Act's new insurance laws become effective)."
But Humana is not the only company to come under fire.
In Washington, LifeWise Health Plan drew the ire of regulators when it sent out a letter that made no mention of the state's healthcare exchange. In response to the misleading letter, the Washington insurance commissioner sent out a consumer alert to make sure people knew their options, said department spokeswoman Stephanie Marquis.
LifeWise spokesman Eric Earling said the complexity of health insurance reform means that they are unable to communicate all the details in a single letter.
"The first goal is, you're a customer of ours, here's what your options are with us, as one would expect," he said. "Our experience is our consumers are well aware there are other options for their business."