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Should I let my individual health insurance plan automatically renew?

If you have a health plan in the individual market, you can probably just let it auto-renew for the coming year without doing anything during open enrollment. But this is generally not in your best interest.

If you have a health plan in the individual market, you can probably just let it auto-renew for the coming year without doing anything during open enrollment. But this is generally not in your best interest.

Should I let my individual health insurance plan automatically renew?

If you have a health insurance plan in the individual market, on-exchange or off-exchange, you can probably just let it renew for the coming year without doing anything during open enrollment. But this is generally not in your best interest. It’s much better to actively compare the available plans during open enrollment (November 1 to January 15 in most states).

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You might decide to renew your existing coverage, or you might end up switching to a different plan. But one of the reasons the ACA’s health insurance exchanges were created was to foster a sense of competition and choice, and to encourage Americans to comparison shop for their health coverage. You can’t do that if you passively let your current coverage auto-renew.

When does auto-renewal of a health plan happen? and the state-run exchanges generally process auto-renewals on or around December 16. In most states, the deadline to pick a new plan with a January 1 effective date is December 15, so the auto-renewals are processed soon after that, for people who haven’t actively selected their own plan for the coming year.

For 2018 through 2021, open enrollment ended on December 15 in most states. That meant that in most parts of the country, people couldn’t make a different plan selection after their existing coverage was auto-renewed, unless they had a qualifying event that triggered a special enrollment period.

But starting with the open enrollment period for 2022 coverage, the enrollment window in most states has been extended through January 15. HHS noted that this was partly to ensure that people whose coverage is auto-renewed would still have a chance to pick a different plan if the auto-renewed plan’s benefits or pricing were to catch a person off-guard at the start of the new year. This could happen, for instance, if a person doesn’t closely read the notices they get from the marketplace and/or their insurer in the fall, leading up to open enrollment.

State-run exchanges (ie, states that don’t use can still choose to keep their enrollment deadline at December 15, and HHS has given them the option to do this. For 2023 coverage, Idaho ended open enrollment on December 15, 2022. But in most of the country, changes can still be made until at least January 15.

Understand, however, that plan changes made after December 15, in nearly all states, will take effect February 1, rather than January 1 (there are some states with later deadlines for a January 1 effective date). So if a plan auto-renews and then you select a new plan in the latter half of December or in early January, you’ll have your auto-renewed coverage for January, and then your new plan would take effect in February. This is why it’s important to pay attention to the information that the exchange and your insurer send you in the fall, and make whatever changes you want to make by December 15.

If I expect my subsidy to change, should I auto-renew my plan?

Your subsidy amount can change; if it decreases, auto-renewal could result in higher premiums. In 2017 and 2018, benchmark premiums rose considerably, which meant that premium subsidies got much larger. But for 2019, 2020, 2021, and 2022, average benchmark premiums declined each year, leading to reductions in subsidy amounts for people whose household income stayed at the same percentage of the poverty level.

For 2023 coverage, full-price premiums increased modestly in most states. And across the 33 states that use, average benchmark premiums increased by 4% for 2023. But benchmark premiums don’t always increase when the overall average premium for existing plans increases — especially in states where new insurers are entering the market. That can sometimes lead to a reduction in premium subsidies, if the new insurer undercuts the premiums of the existing insurers. The introduction of new insurers into your market is also a perfect opportunity to see if any of the new insurer’s plans might be a better fit for you than the plan you currently have – but you won’t know unless you actively compare the available options during open enrollment.

There can be significant changes in the benchmark premiums in a given area, even if the overall rate changes in the area are modest. And sometimes the benchmark premium decreases despite the fact that overall average rates increase. If that happens, premium subsidies decrease – since they’re based on the cost of the benchmark plan – and after-subsidy premiums increase. So even if your plan’s rates don’t end up increasing significantly, your after-subsidy premium could still increase significantly if the premium subsidy in your area goes down.

It’s also important to note that if your plan is being discontinued and you don’t select your own plan during open enrollment, auto-renewal will involve the exchange or your insurer enrolling you in the plan that’s most similar to the plan you already had. In some cases, this may be the plan you would have picked anyway, but actively selecting your own plan during open enrollment means that you get to choose your plan, rather than letting someone else choose it for you.

The American Rescue Plan’s (ARP) subsidy enhancements will continue to be in effect through 2025, thanks to the Inflation Reduction Act. These higher subsidies were already incorporated into 2022 premiums, so while the normal subsidy fluctuations will occur in 2023, subsidies will continue to be larger than they would have been if ARP subsidy enhancements had been allowed to expire. And some families will find that they’re newly eligible for subsidies, due to the “family glitch” fix.

Is HHS making changes to the auto-renewal process?

Yes, HHS has proposed some important changes to the auto-renewal process, although they do not affect 2023 coverage and would take effect (if finalized) starting in the fall of 2023, for coverage effective in 2024.

Under current rules, if a person’s plan continues to be available in the exchange and the person does not return to the exchange to actively renew it or select a new plan, the existing plan is automatically renewed for the coming year. And if the enrollee’s plan will no longer be available, the current protocol involves moving the person into a plan at the same metal level and product type (HMO, PPO, EPO).

But HHS has proposed that as of the 2024 plan year, eligibility for cost-sharing reductions (CSR) and provider networks should also be taken into consideration. Specifically:

  • If a person is eligible for CSR but enrolled in a bronze plan that will continue to be available, the auto-renewal process would switch them to a silver-level plan (with CSR benefits) if one is available with a similar network and with equal or lesser premiums after the premium subsidy is applied. This is because bronze plans do not include CSR benefits, and people who are CSR-eligible will have lower out-of-pocket costs with a silver-level plan, if and when they need medical care.
  • If a person is eligible for CSR and enrolled in a bronze plan that will no longer be available for the coming year, the automatic re-enrollment process would follow the same protocol, moving the person to a silver-level plan with a similar network and equal or lesser premiums
  • If a person is not eligible for CSR, the current auto-renewal process would continue to be used, with the addition of network considerations: If their current plan continues to be available, it would be automatically renewed. If not, they would be automatically re-enrolled into a plan at the same metal level, same product type, and most similar network.

State-run exchanges would have the option to follow this protocol or continue to automatically renew bronze plans even if the enrollee is CSR-eligible. HHS is also soliciting comments on whether a person who is eligible for the weakest level of CSR benefits (73%, as opposed to 87% or 94%, which would be the case if the person’s income is between 200% and 250% of the poverty level) should be automatically re-enrolled into a gold-level plan (if one is available with an equal or lesser premium and a similar provider network) instead of a silver-level plan. In some areas, gold plans are less expensive than silver plans, and the benefits of a gold plan can be more substantial than 73% CSR silver plans.

As is currently the case, enrollees would continue to have the option to select their own plan, either by December 15 for a January 1 start date, or by January 15 for a February 1 start date. But HHS notes that 28% of returning enrollees using were auto-renewed into coverage for 2022, so a significant number of people do rely on auto-renewal, and many of them would be impacted by the new protocol if it’s finalized.

Note that although HHS (under the Trump administration) had previously considered the possibility of auto-renewal without any premium subsidies if the subsidies would otherwise have covered the entire cost of the enrollee’s plan, they ultimately abandoned that idea amid overwhelmingly negative public comments. The changes that HHS is now considering for 2024 are designed to make coverage and care more affordable.

Auto-renewal might result in a loss of your premium subsidy

Although auto-renewal is available to nearly all exchange enrollees, there are some caveats that are particularly important for people with premium subsidies. Details were clarified in April 2015 with CMS guidance on re-enrollments, along with a re-enrollment notice published in August 2015, and the 2017 Benefit and Payment Parameters published in early 2016. But note that there have been some COVID-related changes as well:

  • enrollees who didn’t provide the exchange permission to obtain updated tax return data for use in the annual subsidy eligibility determination process will be eligible for auto-renewal of coverage but without subsidies. (A subsidy can still be obtained if you return to the marketplace and verify your updated financial information). State-run exchanges can set their own rules regarding enrollees in this situation.
  • In most years, but not for 2023 coverage, enrollees who got a premium subsidy the previous year and failed to file a tax return or reconcile their tax credit with the IRS are eligible for auto-renewal of their policy, but without any subsidies. Note that this normally applies for all years, but it has been suspended for 2021, 2022, and 2023, due to the COVID pandemic. So a person whose coverage auto-renews for 2023 can potentially continue to receive premium tax credits even if they have failed to reconcile a prior year’s premium tax credits with the IRS. In the rulemaking for 2024 and future years, HHS has proposed a more lenient approach than simply resuming the pre-COVID rules: If finalized, the new rules would call for subsidies to only be terminated if the applicant has failed to reconcile their premium tax credit for two consecutive years. HHS notes that this is a compromise solution designed to reduce the number of people who lose their advance premium tax credit (and usually, their health insurance) after a single year of failing to reconcile, while also preventing people from incurring large multi-year debts for erroneous premium tax credits that potentially have to be repaid to the IRS.
  • In prior years, subsidies were eliminated on auto-renewals where the most recent tax return indicated an income of at least 500% of the poverty level, or an income that was below the poverty level. But neither of these is applicable for 2023 coverage. The American Rescue Plan eliminated the income cap for subsidy eligibility (this rule change is currently set to expire at the end of 2025), so some households are eligible for subsidies even with income well above 500% of the poverty level. And in 2021, a judge overturned the rule that eliminated subsidies for auto-renewed policies when an income tax return indicated an income below the poverty level. So auto-renewals in those scenarios will not necessarily result in the elimination of premium subsidies for 2023. But again, it’s always in your best interest to actively renew your coverage or select a new plan, rather than relying on auto-renewal.

If you’re in a situation in which your subsidy will be changing for the coming year, you’ll receive a notice from the exchange regarding your renewal. If that happens, it’s vitally important that you communicate with the exchange to make sure that your information is updated and accurate.

If I have an off-exchange plan or pre-ACA plan, should I let it auto-renew?

If you have an ACA-compliant plan that you purchased outside the exchange, it’s worth checking again during open enrollment to see whether you’d be better off with a plan through the exchange for 2023, or with a different off-exchange plan.

This is especially true now that the American Rescue Plan has greatly enhanced the premium subsidies that are available, and extended subsidy eligibility to more people. If the last time you shopped for on-exchange coverage was during the open enrollment period for 2021 plans (or earlier), you may not be aware of the additional subsidies that are now available.

The vast majority of buyers now qualify for subsidies, which can only be used with on-exchange plans. So it’s particularly important that you comparison shop in the exchange during the open enrollment period in the fall of 2022, before deciding to renew your off-exchange plan.

If you do decide to keep your off-exchange plan, keep in mind that some off-exchange plans’ premiums include the added cost to cover cost-sharing reductions (if they’re also sold on the exchange, and this mostly applies to silver plans) So you’ll want to pay close attention to make sure you select the plan that represents the best value for 2023. In some cases, you might find that bronze or gold plans provide a better value, if you’re in a state where the cost of CSR is added to silver plan rates both on- and off-exchange.

Premium subsidies (premium tax credits) are crucial for keeping coverage affordable for millions of people, but they’re only available if you buy your coverage in the exchange. You can have the tax credit applied to your premium to reduce the amount you pay each month, or you can pay full price and claim the whole tax credit on your tax return. But either way, you can only get the tax credit if you have on-exchange coverage. So for people with off-exchange coverage, open enrollment is a great time to reconsider whether you’d be better off with a plan through the exchange.

If your plan is grandmothered (purchased after the ACA was signed into law but before the bulk of the ACA’s provisions took effect in January 2014), it may be eligible for auto-renewal or it may not, depending on where you live and what health insurance carrier you have. The same is true of grandfathered plans, which can continue to renew indefinitely, but with renewal at the discretion of the insurer.

If you’ve kept a grandmothered or grandfathered plan for all these years, it’s more important than ever to compare your on-exchange options during the open enrollment period for 2023 coverage. Again, the subsidies are much larger and more widely available than they used to be. So even if you checked within the last few years and found that keeping your existing plan was the best option, that might not be true anymore. You might find that you’re eligible for subsidies in 2023 — even if you weren’t a few years ago — but you’ll have to switch to an on-exchange health plan in order to claim the subsidy.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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