Should you auto-renew your 2017 coverage?
- In most states, you can’t pick a new plan after December 15
- Auto-renewal is an option in every state.
- If you received a subsidy, auto-renewal could be dicey.
- You may be eligible for auto-renewal, but ineligible for a subsidy.
- If your insurer is leaving the exchange, you could end up auto-enrolled.
- Your state-run exchange may have its own plan to auto-renew you.
- If you received subsidies for 2017, think twice about auto-renewal.
- 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, congratulations. You’ve almost certainly improved your health coverage over what you had prior to 2014, and if you’re eligible for premium subsidies, you might also be paying less for your coverage than you were back then.
But now that you’re enrolled, could you simply sit back, relax and hold on to the plan that you diligently researched?
In most cases, yes, assuming your plan will still be available in 2018. 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. And as described below, this advice is more important than ever for 2018 coverage. This is due to the way states and insurers are adjusting premiums to account for the Trump Administration’s decision to cut off federal funding for cost-sharing reductions (CSR), and due to the fact that people in most states will not be able to make changes to their coverage after December 15.
In most states, you won’t be able to pick a new plan after your coverage is auto-renewed
The open enrollment schedule is a big change for 2018 coverage. In all but nine states, open enrollment will end on December 15. This will be the first time that open enrollment has ended before the start of the new year. HealthCare.gov will process auto-renewals on December 16, which is the same schedule they’ve used in prior years. This makes sense, because December 15 is the deadline in most states to enroll or make changes with a January 1 effective date — so they wait until everyone has made their manual changes, and then process all of the remaining auto-renewals the following day.
But the difference this time around is that people won’t have an opportunity for a do-over. In past years, if the exchange auto-renewed your coverage on December 16 and you realized in early January that your premium had gone up more than you expected or your plan had changed or your provider was no longer in your plan’s network, you could go back and pick a different plan at that point, with a February or March effective date.
But that’s no longer an option for 2018 coverage. More than three million people let their coverage auto-renew for 2017. For some, it likely worked out fine. But some may have decided in January that changes to the coverage, network, or premiums meant that a different plan was a better option. And because of the way open enrollment used to be structured, they were able to make changes at that point, after receiving their first invoice of the new year.
It’s essential to understand that you won’t be able to do that this time around. If you don’t actively pick your own plan during open enrollment (by December 15 in nearly every state), you’ll be stuck with the plan the exchange (or your insurer, if you have off-exchange coverage) auto-renews for you, regardless of how the premium and/or benefits change. You won’t have an option to pick a different plan for 2018 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.
Auto-renewal is an option in every state
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. And for the first time, enrollees in every state will have access to automatic renewal during the open enrollment period for 2018 coverage.
Enrollees in Nevada and Oregon had to re-enroll for 2015 when their exchanges transitioned to the supported state-based model and began using HealthCare.gov. The same was true for Hawaii residents who had to re-enroll for 2016, and Kentucky residents who had to re-enroll for 2017. But in all four of those states, HealthCare.gov will continue to be the enrollment platform for 2018 coverage, so most current enrollees will be eligible for auto-renewal.
Insureds in Massachusetts and those receiving premium subsidies in Maryland and Idaho also had to re-enroll for 2015 due to changes in the enrollment software. And Rhode Island required everyone to manually renew their coverage for 2015. But in all four of those states, auto-renewal has been available since 2016.
2018 will be the first time that no states have changed their enrollment platform (either HealthCare.gov or a state-run platform), so auto-renewal – or auto-mapping if the existing plan is being terminated – will be available to most enrollees if they choose not to log back onto the exchange site and select a plan for the coming year.
If you received a subsidy, auto-renewal could be dicey
So auto-renewal will be available nationwide, with coverage and subsidies — both premium subsidies and cost-sharing subsidies — continuing into 2018 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 2016 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 2018, 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 2016 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 2018. (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.
- 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.
Insurer leaving the exchange?
You could end up auto-enrolled.
Auto-renewal has always been the default (for Healthcare.gov and almost all of the state-run exchanges) if the insured’s current plan will still be available in the coming year, or if the insurer has indicated that there’s a replacement plan that will be standing in for a plan slated for discontinuation. But for 2015 and 2016, there was no auto-renewal provision when insurers left the exchange altogether; people in those situations had to manually select a new plan or else be uninsured as of January 1.
But in the 2017 Benefit and Payment Parameters, HHS introduced an automatic re-enrollment hierarchy that they began using during the open enrollment period for 2017 coverage if an insurer left the exchange altogether.
The auto re-enrollment process basically prevents people from ending up uninsured on January 1 if their insurer is leaving the exchange and the enrollee doesn’t pick out a new plan during open enrollment. If your insurer is leaving the exchange, you’re strongly encouraged to log back into your exchange account during open enrollment and pick your own plan. But if you don’t, the exchange in most states can automatically assign you to a new plan.
There are at least 18 insurers that are leaving the exchanges in various states across the country at the end of 2017. These are situations where auto-renewal would not have been available via HealthCare.gov in 2015 and 2016, but is now available – albeit not recommended. (The best plan is to pick your own plan, rather than relying on the exchange to pick one for you.)
It’s worth noting that if your insurer exits the exchange, you would also qualify for a special enrollment period due to loss of coverage, which would begin 60 days before the end of the year, and continue 60 days after the end of the year. CMS confirmed by email that the special enrollment period would apply even for people who are automatically re-enrolled into a new plan by the exchange.
If your insurer is leaving the exchange, the best course of action is to pick a new plan before December 15, so that your new plan will pick up seamlessly on January 1 where your old one leaves off. But if you forget to do that, you will still have an opportunity to pick a new plan after the start of the new year, although you’ll need to indicate that you’re enrolling via a special enrollment period.
State-run exchanges can establish their own rules regarding automatic re-enrollment for people whose carrier is exiting the exchange, if they choose to do so. The language in the Benefit and Payment Parameters for 2017 says “Exchanges should and the FFEs will endeavor to…” implement automatic re-enrollment into plans from a different carrier if possible, assuming an enrollee does not return to the exchange to pick a new plan when his or her carrier is exiting the exchange.
Subsidy in 2017? Think twice about auto-renewal.
Although most exchange enrollees will be eligible for auto-renewal for 2018, consumers should be aware that letting their policies automatically renew might not be in their best interest, especially if they are receiving premium subsidies.
Subsidies are based on the benchmark plan in each area, which is defined as the second-lowest-cost Silver plan. But applicants are free to apply their subsidy to any metal level plan, which can mean they pay more or less than the percentage of income they would be paying if they selected the benchmark plan.
Over the last few years, the benchmark has switched plans more than once in most areas due to premium fluctuation from one year to the next. (In other words, you may have the benchmark plan this year, but that doesn’t mean your current plan will still be the benchmark plan next year.) And 2018 is also shaping up to have significant changes in benchmark prices. Although overall rates may fluctuate considerably, some carriers increase rates more than others, some reduce their rates, and carriers can enter or leave the market from one year to the next.
So although you might have selected the plan that represented the best value for 2017, that same plan might not offer the best value in 2018. 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.
This will be especially true for 2018, as states and insurers took differing approaches to handling the uncertainty surrounding federal funding for cost-sharing reductions (CSR). Some states instructed insurers to assume CSR funding will continue (although most of them have scrambled to add last-minute premium increases after the Trump Administration cut off premium subsidies just three weeks before the start of open enrollment). Other states instructed insurers to assume that CSR funding wouldn’t continue and provided guidance on how to add the cost to 2018 premiums. But some states left the issue to insurers to decide on their own — so the approach can vary even within a single state.
Insurers still have to provide CSRs to their eligible enrollees despite the fact that the Trump Administration has cut off federal funding (a move that may or may not hold up to the legal challenge that states are mounting). So with the funding cut off, premiums have to increase to make up the difference. The way that insurers adjust premiums to account for potential loss of CSR funding could result in silver plans in some areas costing more than gold plans, so it’s more important than ever 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!
Because of this, all enrollees are encouraged to come back to the exchange during open enrollment to compare all of their options for 2018 and make sure the information used to calculate their subsidies is current.
For 2016, a slightly larger percentage of renewing exchange enrollees actively selected a plan (as opposed to relying on auto-renewal) than had done so the year before. And that percentage grew again for 2017, when 5.3 million of the 8.4 million renewing enrollees actively selected their plan for 2017.
It’s definitely worth your time to reconsider your options for 2018. 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 2018, or with a different off-exchange plan. Some off-exchange plans’ premiums will 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 et your plan outside the exchange, pay close attention to make sure you select the plan that represents the best value for 2018. If you have a silver off-exchange plan in 2017, you might be better off with a plan at a different metal level for 2018, depending on where you live.
The ever-increasing cost of coverage makes premium subsidies (premium tax credits) increasingly important for keeping coverage affordable, 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).
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.