Should you auto-renew your ACA plan?
- In most states, you can’t pick a new plan after December 15.
- Your premium subsidy might change (maybe by a lot) in 2021, so pay close attention to how your after-subsidy premiums will change.
- If your plan is being discontinued, auto-renewal means your insurer gets to select your new plan.
- Auto-renewal is an option in every state.
- If you received a subsidy, auto-renewal could be dicey even if your subsidy isn’t going down.
- You may be eligible for auto-renewal, but ineligible for a subsidy.
- Renewing your current plan might not provide the best value.
- If you bought off-exchange, consider an on-exchange plan.
If you’re already enrolled in an ACA-compliant health plan through your state’s exchange, can you simply sit back, relax and hold on to the plan that you diligently researched last year?
In most cases, yes, assuming your plan will still be available in 2021. But relying on auto-renewal is not in your best interest. I’ve said this year after year – and it still holds true: It pays to shop around during open enrollment.
In most states, you won’t be able to pick a new plan after your coverage is auto-renewed
In almost every state, open enrollment will end on December 15 (Colorado, California, Pennsylvania, and DC have extended open enrollment; other state-run exchanges may follow suit). So in most of the country, you won’t be able to make a plan selection after December 15, unless you have a qualifying event that triggers a special enrollment period.
HealthCare.gov and the state-run exchanges will process auto-renewals on December 16, after open enrollment ends in most states. And as was the case for 2020, there will not be an opportunity for people in most states to go back and select a different plan after being auto-renewed.
If you don’t actively pick your own plan during open enrollment (by December 15 in nearly every state), you’ll be stuck with your plan for 2021, regardless of how the premium and/or benefits change. You won’t have an option to pick a different plan for 2021 unless you experience a qualifying event at some point during the year. So 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.
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, the average benchmark premium in the 39 states that use HealthCare.gov declined slightly, and premium subsidy amounts ended up essentially unchanged from 2018 to 2019 (they averaged $468/month in 2018, and $469/month in 2019). And for 2020, benchmark premiums dropped by about 4 percent in states that use HealthCare.gov. But nationwide, overall average premiums were essentially flat. Since premium subsidies are based on the cost of the benchmark premium in each area, subsidy amounts are slightly smaller in 2020 than they were in 2019.
For 2021, proposed rate changes aren’t yet available for most states. But in the states where the details are publicly available, insurers have proposed overall average premium increases of less than 3 percent. A lot remains to be seen in terms of how the COVID-19 pandemic will affect health insurance rate filings throughout the summer. But if rates stay roughly similar to what they are in 2020, premium subsidies will tend to be in roughly the same range as well. But as always, the specifics can vary considerably from one area to another, depending on whether new insurers move into an area and how existing plans adjust their premiums relative to one another.
The takehome message is that if the amount of your subsidy is dropping and your own plan’s premium is either increasing or dropping by a smaller amount that the reduction in the benchmark premium, your after-subsidy premium could increase. This can be especially true in areas where there are large reductions in average rates (here’s an example of how this worked in Colorado in 2020).
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 (for example, if a new insurer joins the market and undercuts the existing benchmark plan with a lower rate) 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. [As was the case in 2018 and 2019, new insurers are joining the exchanges in several states for 2021.]
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. In short, don’t auto-renew! Shop around to compare all the options available to you during open enrollment, and pick the one that provides the best value.
If your plan is being discontinued, auto-renewal will result in the exchange or your insurer picking a new plan for you
Unlike 2017 and 2018, insurers exits from the exchanges (or from the whole individual market in a given area) were very uncommon for 2019 and 2020, and that appears likely to continue to be the case for 2021. But insurers still sometimes discontinue some (or in some cases, all) of their plans and replace them with new plans for the coming year.
If your plan is being discontinued and you don’t select your own plan during open enrollment, auto-renewal will involve the 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 your insurer choose it for you.
Auto-renewal is an option for nearly everyone (Pennsylvania and New Jersey residents may have to take additional steps)
Although auto-renewal is not your best option, it’s better than having a default that results in people losing their coverage altogether if they don’t actively pick a plan during open enrollment. For 2018 and 2019 coverage enrollees in every state had access to automatic renewal, as each state kept its existing enrollment platform in those years. That continued to be the case in nearly every state for 2020, but Nevada has transitioned to having its own enrollment platform, and residents had to claim their accounts that were migrated over from HealthCare.gov.
Pennsylvania and New Jersey are planning to transition away from HealthCare.gov in the fall of 2020 and use their own new enrollment platforms instead (Pennsylvania’s transition process has been public and appears to be on-track; New Jersey has not been publicly releasing information about the transition, so less is known about their process or timeline). Residents in those states will need to pay close attention to notifications they receive from the marketplace with instructions on how to renew coverage or select a new plan for 2021.
For 2015, 2016, and/or 2017, some states made changes to their exchange enrollment platforms, including Nevada, Oregon, Hawaii, Kentucky, Massachusetts, Maryland, and Idaho. Some or all of the enrollees in those states had to re-enroll at least once during those years. And Rhode Island required everyone to manually renew their coverage for 2015, in an effort to ensure that people were actively picking the best plan to meet their needs for the coming year.
In early 2019, HHS had considered making changes to the auto-renewal process but ultimately decided to keep the auto-renewal process unchanged at least for 2020. The agency again considered making changes to the auto-renewal process for 2021, but abandoned that idea amid overwhelmingly negative public comments (the proposal had been to auto-renew policies without any premium subsidies if the premium subsidies would otherwise have covered the entire cost of the enrollee’s plan; HHS decided against implementing this proposal, so the auto-renewal process is unchanged for 2021).
Auto-renewal – or auto-mapping if the existing plan is being terminated – will thus available to most enrollees if they choose not to log back onto the exchange site and select a plan for 2021.
If you received a subsidy, auto-renewal could be dicey even if the subsidy amount isn’t declining
So auto-renewal is available to nearly all enrollees, with coverage and subsidies — both premium subsidies and cost-sharing subsidies — continuing into 2021 without enrollees having to do anything during open enrollment (although as always, the better option is to actively compare the available options rather than relying on auto-renewal).
But 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, all of which continues to apply):
- Enrollees who got a premium subsidy in 2019 and failed to file a tax return or reconcile their tax credit with the IRS will be eligible for auto-renewal of their policy into 2021, but without any subsidies. (In July 2015, the IRS noted that nearly 1.5 million taxpayers who received subsidies in 2014 had not filed a return and/or Form 8962 to reconcile the subsidy. The IRS continued to reach out to those individuals, and ultimately opted to continue 2016 subsidies for people who didn’t file Form 8962 for 2014, but about 57,000 people who simply didn’t file 2014 tax returns at all did end up losing their subsidies in 2015. The leniency that was granted to people who didn’t file Form 8962 for 2014 was a one-time free pass: going forward, subsidy recipients must always file a tax return and Form 8962 in order to reconcile their subsidies for the year that just ended. Failure to do so will result in a loss of subsidies for the coming year.)
- HealthCare.gov enrollees who are receiving a subsidy but whose 2019 tax return indicated an income at or above 500 percent of the federal poverty level (the cut-off for subsidy eligibility is 400 percent) will be eligible for auto-renewal but without any subsidies for 2021. (Enrollees can still receive premium subsidies if they manually renew their coverage, including going through the real-time financial eligibility determination again.) State-run exchanges are allowed to set their own rules on this, and it varies from state to state. But the subsidies still have to be reconciled on tax returns; if an insured receives subsidies and then ends up with an income above 400 percent of the poverty level, the full amount of the subsidy would have to be returned to the IRS.
- On the other end of the spectrum, if the records the government has on file indicate that your income is too low to qualify for a subsidy, your subsidy can be eliminated unless you actively provide the exchange with proof of the subsidy-eligible income that you’re projecting for the coming year.
- HealthCare.gov 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.
If you’re in any of the situations described above, 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.
Although you might have selected the plan that represented the best value for 2020, that same plan might not offer the best value in 2021. The amount of your subsidy could change if your area’s benchmark plan changes, and new plans might be available that offer lower premiums, different provider networks, or a better overall value.
Most states are handling the lack of federal funding for cost-sharing reductions (CSR) by having insurers add the cost of CSR to silver-plan rates. That has resulted in disproportionately large premium subsidies in many areas of the country since 2018 (because subsidy amounts are based on silver plan prices). Declining premiums in some areas for 2021 could result in shrinking subsidies. But the cost of CSR is still being incorporated into silver plan rates, and there will likely continue to be numerous counties where gold plans are less expensive than the benchmark silver plan as a result.
That makes it especially important to actively compare the various plan options available during open enrollment. It would be a bummer to auto-renew your silver plan and then find out later than you could have had a gold plan for the same price, or a bronze plan for free!
Because of this, all enrollees are encouraged to come back to the exchange during open enrollment to compare all of their options for 2021 and make sure the information used to calculate their subsidies is current.
It’s definitely worth your time to reconsider your options for 2021. You may end up keeping your current plan for the coming year. But you might find there’s a better option available, and open enrollment is your chance to switch to a different plan.
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 2021, or with a different off-exchange plan. Some off-exchange plans’ premiums include the added cost to cover CSR (if they’re also sold on the exchange, and this mostly applies to silver plans), so even if you get your plan outside the exchange, pay close attention to make sure you select the plan that represents the best value for 2021. 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. (Use our subsidy calculator to see if you’d be eligible for a premium tax credit).
And the advice to double-check on-exchange plans is particularly important for off-exchange enrollees in California, as the state began providing new state-based premium subsidies in 2020 that extend up to 600 percent of the poverty level. So people in California who didn’t qualify for any financial help via Covered California prior to 2020 might now qualify for premium subsidies.
It’s also worth noting that because of increases in the poverty level over time, a family of four can qualify for premium subsidies in the rest of the continental US with an ACA-specific modified adjusted gross income as high as $104,800 in 2021. In 2014, subsidy eligibility for a family of four stopped at just over $94,000. So even if you settled on an off-exchange plan in the past because your income was too high for a subsidy, it’s worth your while to recheck your subsidy eligibility in the exchange each year.
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.
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 healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.