New Cautions Even If You Signed Up Last Year

The Obamacare health insurance marketplaces are no longer brand new, but the open-enrollment window for 2015, which begins November 15, will bring a new set of challenges for insurance shoppers.

Although the websites for enrolling in the marketplaces are in much better shape now than they were a year ago and millions of consumers have some experience choosing coverage, the potential for costly missteps remains in year two of Obamacare, officially known as the Affordable Care Act.

Here, the potential pitfalls…

LESS TIME

A new, tighter open-enrollment window means increased risk for missed deadlines and rushed decisions.

Last year, consumers had six months to sign up for coverage — October 1 through March 31 — and extensions pushed the final deadline into April in many states. This year’s open enrollment is half as long — November 15 through February 15 — and extensions are unlikely. In fact, if you want your coverage to start on January 1, you must enroll no later than December 15. That leaves you with just one month to sign up for coverage…a month that falls right in the heart of the holiday season, when many people’s attention is focused elsewhere.

Exception: You can sign up later if you experience a “qualifying life event,” such as marriage or divorce, or if you lose access to other health insurance.

REENROLLMENT MISTAKES

If you are enrolled in an Obama­care plan in 2014, you likely will be ­automatically reenrolled in that same plan for 2015 if you take no action during the upcoming open-enrollment period. Many people will no doubt take advantage of that rather than endure the tedious insurance-selection process again. Such inaction is a potentially costly mistake. Here’s why…

The plan that you are automatically reenrolled in might be significantly less appealing in 2015 than it was this year. Insurers are making major changes to the premiums and/or coverage networks of many plans for 2015. Example: According to a study by consulting firm McKinsey & Co., of the 19 states where complete filing data was available as of early September, 28% of silver plans (those on the second of four levels) will experience premium increases of more than 10%, compared with expected increases averaging about 5% for ­employer group plans.

Some insurers even seem to have priced coverage at unprofitable levels in 2014 just to build market share and now are increasing premiums sharply for 2015.

Example: BlueCross BlueShield of Tennessee set its prices very low in 2014 and ­captured 88% of that market. It has filed documents with the state asking to raise the rates of its marketplace plans by an average of 19% in 2015.

In other cases, insurers are adjusting or reducing their provider networks to cut costs. Your doctor or preferred hospital might not be in your plan’s 2015 network even if it is in the 2014 network. Insurers have learned that consumers shopping for coverage in ­Obamacare marketplaces choose mainly based on price. Eliminating relatively expensive health-care providers from coverage networks is one way for insurers to contain costs so that they can turn a profit despite relatively low ­premiums.

There might be more attractive new or improved plans available. McKinsey’s research indicates that about 50% more plans will be offered through Obamacare in 2015 than in 2014, though this will vary greatly by state.

Example: In Indiana, the number of insurers offering coverage through Obamacare will more than double, from four to nine, and the number of plans will increase by 130%.

Consumers are advised to review their insurance options each year, of course, but with the amount of change occurring in the marketplaces this is an especially bad year to simply ­reenroll. For help with evaluating the insurance options, see our article “The Obamacare Marketplace Maze” at BottomLinePublications.com/ObamacareMaze.

HIDDEN HIGHER COSTS

Most people who purchase coverage through Obamacare qualify for subsidies that help them pay premiums. (Use the Subsidy Calculator on the Kaiser Family Foundation website to see if you qualify — KFF.org/interactive/subsidy-calculator). Ways that you could lose part of your subsidy…

Lower premiums could lead to higher costs. This stems from the fact that in each Obamacare marketplace, a particular plan is designated as the “benchmark” to help calculate subsidies for all of the plans.

If the benchmark plan’s premiums have fallen below your plan’s premiums, you might have to pay 100% of the difference between the two. And you might not even realize that this has happened, especially if your plan’s premiums haven’t changed. Reason: Thanks to the influx of new plans and changing plan prices, there’s a good chance that a completely different plan will become your area’s new benchmark for 2015.

A study by the nonprofit Kaiser Family Foundation in 16 cities found that in those areas, 2015 premiums appear to be decreasing slightly for the benchmark plan.

Examples: The benchmark premiums are expected to drop by 10% or more in cities such as Denver, Providence and Seattle, reducing subsidies significantly in those cities in the process. The cost of the benchmark plan — and subsidy levels — appears poised to rise in other areas, including Nashville…Burlington, Vermont…and Portland, Oregon.

Your subsidy also might decrease or disappear if you earn more in 2015 than you did in 2014…or if you report fewer dependents on your tax return, perhaps because one of your children graduates from college and enters the workforce…or if your employer and/or your spouse’s employer offers group insurance coverage.

Penalties Rise

The penalty for not having health insurance coverage in 2014 was $95 per year per uninsured adult and $47.50 per year per uninsured child or 1% of household income, whichever was higher. In 2015, it will be $325 per uninsured adult and $162.50 per uninsured child or 2% of household income.

Exceptions: These penalties do not apply if you are uninsured for less than three months of the year…or if the lowest-priced insurance coverage available to you would cost more than 8% of your household income…and in a few other situations. (For details, see Healthcare.gov/exemptions.)