Automatically renewing Obamacare plans may backfire
WASHINGTON — If you have health insurance on your job, you probably don't give much thought to each year's renewal. But make the same assumption in one of the health law plans, and it could lead to costly surprises.
Insurance exchange customers who opt for convenience by automatically renewing their coverage for 2015 are likely to receive dated and inaccurate financial aid amounts from the government, say industry officials, advocates and other experts.
If those amounts are too low, consumers could get sticker shock over their new premiums. Too high, and they'll owe the tax man later.
Automatic renewal was supposed to make the next open-enrollment under President Obama's health care overhaul smooth for consumers.
But unless the administration changes its 2015 approach, “they're setting people up for large and avoidable premium increases,” said researcher Caroline Pearson, who follows the health law for the market analysis firm Avalere Health.
Here's the issue, in a nutshell:
To streamline next year's open enrollment season, the Health and Human Services Department recently proposed offering automatic renewal to 8 million consumers who are signed up.
But the fine print of the HHS announcement said consumers who auto enroll will get the “the exact dollar amount” of financial aid they are receiving this year.
That's likely to be a problem for a couple of reasons, not to mention inflation.
First, financial aid is partly based on premiums for a current benchmark plan in the community where the consumer lives. Because more plans are joining the market and insurers are submitting entirely new bids for 2015, the benchmark in many communities will be different.
Second, financial aid is based on household income. If your income goes down, you are entitled to a bigger health insurance tax credit. If it goes up, you get less. The 2014 amounts could well be out of date and incorrect for many people. Financial assistance is also affected by age, family size and where people live.
And that doesn't get into another motivation for consumers to shop around: Premiums and choices for 2015 are changing, so your current plan may no longer be a good deal.
Open enrollment starts on Nov. 15, and consumers who already have a policy will have just about a month to renew or make changes to avoid a break in coverage on Jan. 1. Millions of new customers are also expected to try to sign up for the first time.
Administration spokesman Aaron Albright says all consumers are encouraged to contact their health insurance exchange to update any changes in personal and financial details. You can do that at any time before the open-enrollment crunch.
However, you will have to wait until the fall to change to a new plan for next year.