Open enrollment for health insurance coverage in 2015 has begun. The health insurance exchanges are open for business. Let the chaos begin!
So far, the operation of the exchanges has been relatively smooth, but there is some confusion with respect to the plans themselves. Prices are quite volatile as insurance companies adjust their plans after analyzing the first full year of ObamaCare. The result is a crazy quilt of plan changes and different options.
Under these conditions, automatically renewing your own policy without reviewing your options is unwise for several reasons.
- Price Changes – Chances are good that your options are increasing, and that prices have changed in your area – perhaps raised or lowered, but changed nevertheless.
The New York Times created a color-coded map of the changes for the states covered by the federal exchange. Changes on the map range from an increase of 29.5% in Tama County, Iowa, to a 28.4% decrease found in several counties in Mississippi.
The Times study also found the free-market aspects acting as expected. Areas with few insurers were experiencing sharper increases in premiums – up by five percent or more in 89% of counties served by only one insurer, and over ten percent in approximately 25% of counties with only one or two insurers. Meanwhile, areas with increasing numbers of choices predictably have falling premiums.
- Subsidies – If you are receiving subsidies on your current plan and your income levels have changed, the amount of subsidies available to you may change.
Even if your plan and your income stay exactly the same, it is possible for your subsidy to change. The subsidy is determined by a particular benchmark plan in your area, typically the next-to-the-lowest priced silver plan. If the price of the baseline plan drops, the subsidy amounts decrease accordingly.
The same change could work to your advantage if the benchmark plan rises in price while your plan drops.
- Deductibles – Deductibles are rising in general, and rising deductibles do not necessarily correlate with lower premium costs. Make sure you compare deductibles as well as price with your plan options, and consider how likely you are to reach the deductible value.
- Coverage Changes – Coverage aspects of a plan can change from one year to the next – for example, with respect to the doctors that are in network or the prescription drugs that are covered. If you are currently satisfied with your plan, verify that the elements of the plan that you like will still be there next year.
Remember that while the open enrollment period lasts until February 15th, you need to be enrolled in a 2015 plan by December 15th for your 2015 coverage to be valid at on January 1st. It is in your best interests to review the plans as early as you can to avoid making snap decisions on your coverage, or leaving a gap in your coverage at the beginning of the year.
Expect yearly open enrollment to be an annual ritual from now on (barring any ObamaCare surprises from the Supreme Court and/or Republicans). As with any new system, it will take some time for the market to reach equilibrium, and most legislative changes will stir the pot up again.
Even if the market does reach some sort of balance, there will always be two good reasons to review your plan annually: your plan may change, and you could save money with an alternative. Why would you not consider money-saving options on something as potentially expensive as health care? It is too important to dismiss.