Q. I enrolled in a plan through the exchange during the last open enrollment, and I’m happy with my coverage. Do I have to go through all that again, or can I just keep my current plan and let it renew for next year?
A. In most states, you can let your policy auto-renew. More details about the renewal process are in our new Insider’s Guide to Obamacare’s Open Enrollment. (It’s a free download.)
But auto-renewal isn’t always available, as some carriers exit the market from one year to another, and exchanges can alter their enrollment platform (for example, Hawaii switched to Healthcare.gov for the 2016 open enrollment period, which meant all of their enrollees needed to re-enroll through Healthcare.gov).
Even if you’re among the majority of enrollees for whom auto-renewal is available, it’s typically not the best option for most people.
You might get “mapped” to a different plan
In some cases, health insurance carriers make changes to their plan designs or network structure, and “map” current enrolles onto the most similar new plan. If you allow your plan to auto-renew, you might find that your coverage is slightly different in the coming year, or that your network has changed. Returning to the exchange to actively shop among the available options ensures that you have a hand in deciding what coverage you have from one year to the next.
If your plan is still available without changes (as is typically the case), you’ll be able to let it auto-renew – but at least you’ll know that you made sure it’s still the best option to meet your needs.
Subsidies can change from year to year
As of June 2015, nearly 84 percent of the people who enrolled in the exchanges during the first open enrollment period got premium subsidies to offset the price of their coverage. (Only 46 percent of exchange enrollees in 2014 were aware that they were receiving premium subsidies, despite the fact that 85 percent had subsidies. So if you’re in doubt, double check with the exchange or your carrier.)
Those subsidies are based on the price of the second-lowest-cost Silver plan in your area (the benchmark plan), as it relates to your household income. So they vary considerably from one area of the country to another, and from one household to another. And they can also change from one year to the next as carriers adjust their prices and compete with one another.
The Kaiser Family Foundation has published an analysis of changes in premiums for the benchmark plans in 15 metropolitan areas in 2016. In most areas, the after-subsidy premiums were unchanged from 2015, because the subsidies are designed so that they make the after-subsidy cost of the benchmark plan a consistent percentage of an applicant’s income, evening out the premium disparity that goes along with enrollee age and location. (The higher your income, the higher that percentage is.)
But if you look at the pre-subsidy data in the KFF analysis, you’ll see significant changes in some areas, although that’s only part of the story. Keep in mind that this study is simply looking at the benchmark plan in 2015 and comparing it with the benchmark plan in 2016. They are not necessarily the same plan or even from the same carrier.
The plan that was the benchmark plan in the current year could be increasing its premium, but if another carrier takes its place as the benchmark plan for the coming year and has a premium that is lower than the benchmark premium in the current year, all you’ll see is that the premium for the benchmark plan is going down.
If that happens and the new benchmark plan is less expensive than the prior year’s benchmark plan, subsidies don’t have to be as high in order to bring the benchmark premium down to the levels called for in the ACA.
Subsidies change with benchmark plan price
Of course, subsidies vary tremendously from one enrollee to another, since pre-subsidy premiums depend on age, location, and family size. But regardless of your situation, if the benchmark plan in your area for the coming year is priced lower than the benchmark plan in the current year, average subsidies in your area will be lower in the coming year, no matter what plan you choose.
If the benchmark plan in your area is increasing in price (meaning average subsidies will increase too), there may be a plan that will offer you a better value than the one you have now, due to changes in how other carriers are pricing their plans, and adjustments they may have made to their plan designs or network arrangements.
Regardless of what happens with the benchmark premium, there are slight adjustments to the percentage of income you’re expected to pay for benchmark coverage, and to the poverty level threshold (note that the poverty level guidelines used to determine subsidy eligibility are for the year prior to the plan effective dates; so for plans with 2017 effective dates, the 2016 poverty level guidelines will be used). These changes will have a very minor impact on your net premium though; the primary factor will be the premium change for your own plan combined with changes for the benchmark plan.