EDITOR’S NOTE: As part of healthinsurance.org’s continuing coverage of the 2014-2015 Obamacare open enrollment period, we recently published a 38-page eBook, The Insider’s Guide to Obamacare’s Open Enrollment. Authored by contributor Louise Norris, the publication book is filled with advice written to help consumers more easily – and more quickly – navigate this open enrollment period.
This week, we’re pleased to launch a video series that expands on the topics in the eBook – but also explores topics that may not have been covered in the book. In the first segment of this new series, Louise addresses the topic of re-enrollment, explaining why auto renewal isn’t foolproof and running down the renewal options available in each state’s exchange.
We hope you enjoy the series and – if you have an open enrollment question that you haven’t seen answered in the eBook or in the pages of this site – drop us a note with your suggestion.
Hi there. My name is Louise Norris and my husband and I have had a health insurance brokerage in Colorado for more than a decade now and I’ve been writing about health insurance and health care reform since 2006 and I write for healthinsurance.org. I wrote an eBook that you can download for free from healthinsurance.org that is all about open enrollment – everything you need to know in this current open enrollment period.
One of the topics that comes up a lot is renewal for people who already got a plan in 2014 and are wondering what they need to do, going into 2015. You know, “Should I let my plan automatically renew?” … “Do I need to go in and pick a new plan?”… “What’s the story?”
And so I’m going to run through kind of how that works in each state and then the details of how it actually works and explain why it is probably not in your best interests in just about any case to automatically renew – even if it’s available to you.
Renewal options vary by state
So if you’re in a state that is using HealthCare.gov for 2015 and also used HealthCare.gov for 2014, chances are you do have access to automatic renewal. That’s the default for most enrollees. And then, in several of the state-run exchanges, it’s also the default but there are several state-run exchanges where it is not the default and so I have made a little list here.
And they are in three different categories because they have different things going on here, but in general, these are the ones where it’s not necessarily a default for most enrollees. Oregon and Nevada, both last year ran their own enrollment web site and this year are using HealthCare.gov, so you have to start again and enroll there.
Massachusetts also has totally changed their enrollment site so again you’re re-enrolling. Rhode Island has opted to have everyone manually renew just to make sure that you’re taking advantage of the option to check and make sure you do still have the plan that works best for you for 2015.
Idaho and Maryland – your plan won’t lapse if you do nothing in open enrollment but your subsidies won’t transfer over. Which means … 85 percent of people nationwide who enrolled in plans in 2014 had subsidies, so most people who enrolled do have a subsidy on their plan and I wouldn’t necessarily call it automatic renewal if your plan renews without your subsidy. So definitely in those states, you do not want to automatically renew – even if you know that you’re not going to lose your plan, you’re going to lose your subsidy.
DC, New York, Washington and Connecticut – automatic renewal is the default IF when you enrolled in 2014, you gave the exchange permission to check your tax returns going forward to keep on getting your subsidy eligibility information updated. So, if you didn’t give them that permission, then automatic renewal is NOT available.
So if you’re in a state-run exchange that’s not on this list, automatic renewal is the default for most enrollees.
Auto renewal: not a good idea for most enrollees
But for almost all enrollees, it is NOT a good idea and there are a variety of reasons for that. For starters, there are 25 percent more carriers offering plans in the exchanges nationwide for 2015 than there were in 2014. So that is great news all around, I mean, everything’s working the way it should: there’s more competition, there are more options for consumers to choose from, you know, that’s what we wanted from this.
But it means that if you don’t go back in and shop around, you don’t even know that those plans are there. You don’t know about the option to get them if you’re not shopping for them. And a big part of the reason you should not automatically renew has to do with subsidies and the benchmark plan. So I’m going to just take a few minutes to explain how this all works and hopefully clear up some confusion.
How the benchmark plan affects your subsidy
So basically the benchmark plan is the second-lowest-cost Silver plan in your area. And there are hundreds of benchmark plans because there are hundreds of rating areas all across the country – so everyone has a different benchmark and the benchmark plan from 2014 is not necessarily going to be the benchmark plan for 2015. It’s just the second-lowest-cost Silver plan so if a different carrier has a lower rate in 2015 that undercuts where the benchmark plan was before, all of a sudden you’ve got a new carrier offering the benchmark plan.
The way subsidies work – I have another little visual here that might help. So this is the amount of money – that based on your income that the ACA says you should have to pay for the benchmark plan in your area. Now, it’s different for – depending on your income this changes so I haven’t put an actual dollar figure on it, but in most cases, it is lower than the actual cost of the benchmark plan and that’s where the subsidy comes from.
So if the benchmark plan costs this amount of money and the ACA says you should have to pay this amount of money, the difference is the subsidy. You can take that subsidy and apply it to any Bronze, Silver, Gold or Platinum plan in your exchange but the actual number that they’re calculating is based on the cost of the benchmark plan in your area.
If the benchmark plan becomes less expensive
Now, let’s say for 2015, all of a sudden the benchmark plan is less expensive. The amount the ACA says you have to pay is still virtually the same – there are some slight changes; the percentage of income has gone up slightly but so has the poverty level so it’s sort of a wash. For all intents and purposes, it’s very very similar what you have to pay.
But if all of a sudden the cost of the benchmark plan has gone down, now all of a sudden THIS is your subsidy. Not THIS. So this is the subsidy you can then take and go and apply to any other plan – any Bronze, Silver, Gold or Platinum plan in your exchange.
So in the past, you always would – if you were in the individual market – you would get a notification that your price is going up and then you would go and you’d shop around and look and see if you could get a better deal. Now, your carrier could still increase their price but if your carrier increases their price AND the benchmark in your area goes down, it’s sort of a double whammy because all of a sudden your carrier is charging more AND the amount of subsidy you can apply to your plan has gone down.
Now obviously if you go back in the exchange and shop around, you can get that lower-cost plan but if you don’t go back in and look, then you might be caught unawares by the fact that your price is going to maybe go up more than you were expecting it to.
Now the flip side of this – it works exactly the same in reverse – if this were the 2014 benchmark plan and all of a sudden the benchmark in your area has gone up, everybody’s subsidies go up. But again, shopping around during open enrollment is how you find out what’s available and what it’s going to cost you. All of these numbers on this chart – they’re all automatically baked into the information you see when you go on the exchange and look at plans.
So the new plans will include the new subsidies and you’ll see exactly what you need to see but you won’t see it unless you go in and shop around.
Colorado as an illustration
So I want use Colorado as an example because it’s a perfect example of how this works. So here in Colorado, the ACA-created CO-OP has really undercut the market for 2015. They have slashed their prices and in virtually every area of the state they now have the lowest price plan and the second-lowest-price plan and so the benchmark plans have changed and we’re a perfect example of THIS happening. So where our benchmark plan was HERE last year, it’s gone down to HERE now.
So again this is awesome news for healthcare in general; that’s what we’re supposed to be doing here is cutting prices, reducing premiums. But it means that all of a sudden the subsidy does not have to be as high anymore in order to bring the cost of that benchmark plan down to the amount you have to pay. So people who don’t have that CO-OP plan – you know if you have one of the other plans and there are lots of them in our exchange – and if they just opt for automatic renewal, the amount of subsidy they’re going to get is going down for 2015.
Now, in a lot of cases, you might go in there and still choose to keep your current plan because maybe you like the provider network, you know maybe there are certain drugs covered on the drug formulary that just work for you … there are many reasons why you don’t necessarily want to just to a switch to a cheaper plan, but you should definitely go into it knowing exactly what you’re getting and knowing that at least you’ve looked at all of the options and you’ve picked the plan that works best for you in 2015.
Plan renewal deadlines
Now, in almost all states – in all but five states – you do have to make your plan decision by December 15th in order to get your new plan to start on January 1st. But this is a really busy time of the year and you’ve got a lot of things to shop for right now that aren’t health insurance.
If you don’t get around to it by December 15th and all of a sudden you get a bill in the mail for January and it takes you by surprise, and you are fighting all of this out at that point, you can still make changes. You have until February 15th to switch to a new plan for 2015. If you don’t get around to it by February 15th, you do have to keep the plan you have all the way until 2016 unless you have a qualifying event, which is something like having a baby, getting married – you know, a life change event, basically, so don’t put it off too long.
But you do have until February 15th to shop around the exchange and pick a new plan. So I think the take-away message is even though millions of Americans have an option to just let their plan automatically renew for 2015, it’s not the best idea. You just need to do yourself a favor and go back in and just take a few minutes to look and see what’s there – see what options you have – see what it’s going to cost you – and just know that you’re picking the plan that best fits your needs going into the new year.
So Merry Christmas and Happy New Year!