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 2020, 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 (for Nevada residents, data has been migrated from Healthcare.gov but enrollees need to claim their accounts).
- 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 2020. 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 (six states and DC have extended open enrollment, and Idaho is giving residents one additional day since the 15th falls on a Sunday; some of the other state-run exchanges might also extend the enrollment period for 2020 coverage). 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 2019, there will not be an opportunity for people 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 2020, regardless of how the premium and/or benefits change. You won’t have an option to pick a different plan for 2020 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).
For 2020, benchmark premiums dropped by about 4 percent in states that use HealthCare.gov. But nationwide, overall average premiums are essentially flat. Since premium subsidies are based on the cost of the benchmark premium in each area, subsidy amounts will be smaller in 2020 than they were in 2019.
Rate changes vary considerably from one area to another, but 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.
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. [Keep in mind that new insurers have joined the exchanges in at least 19 states for 2020, potentially resulting in a new benchmark plan.]
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 that continues to be the case for 2020. 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 (Nevada residents need to claim their accounts that have been migrated from HealthCare.gov)
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 will continue to be the case in nearly every state for 2020, but Nevada has transitioned to having its own enrollment platform which is being used for enrollment in 2020 health plans (from 2015 – 2019, Nevada was a state-based exchange that used the federal enrollment platform; they have transitioned away from using HealthCare.gov and are instead using the Nevada Health Link website for enrollment). Nevada worked with HHS to migrate application data before residents started using the new website, but Nevada residents with 2019 coverage through HealthCare.gov need to claim their accounts on the Nevada Health Link website (details were sent to each enrollee about how to do this, and more information is available here).
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.
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 2020.
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 2020 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 2018 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 2020, 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 2018 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 2020. (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 2019, that same plan might not offer the best value in 2020. 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 2020 have resulted in shrinking subsidies, but the cost of CSR is still being incorporated into silver plan rates, and there are still nearly a third of the counties in the US 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 2020 and make sure the information used to calculate their subsidies is current.
It’s definitely worth your time to reconsider your options for 2020. 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 2020, 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 2020. 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.
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).
And the advice to double-check on-exchange plans is particularly important for off-exchange enrollees in California, as the state is providing new state-based premium subsidies that extend up to 600 percent of the poverty level. So people in California who didn’t previously qualify for any financial help via Covered California might find that they do qualify for subsidies in 2020.
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 $103,000 in 2020. 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.