It Pays to Shop for Health Coverage

Melissa McChesney

Open enrollment for 2016 health insurance through the Health Insurance Marketplace starts on November 1. Health plan subscribers who are currently enrolled in a Marketplace plan soon will begin to receive notices on how they can renew their health coverage for 2016.

Everyone who is currently enrolled in a Marketplace plan is given the option to be automatically re-enrolled in their existing coverage for next year. During last open enrollment, approximately 523,000 Texans re-enrolled in Marketplace coverage. About half were automatically re-enrolled in their existing coverage and the other half actively selected a plan for 2016.

It Pays to Shop Again

Automatic enrollment in the same coverage may be the easiest renewal option for consumers, but it is often not the best option. Last year, the U.S. Department of Health and Human Services stated that for 2015, 7 out of 10 people enrolled in coverage could have found a plan with a lower premium if they had shopped again for insurance. Also, each year new insurance options may be added to the Marketplace and the consumer’s current plan may make changes to the premium, deductible, or to their provider network. Actively choosing a plan increases the consumer’s chance of enrolling into the plan that best meets their needs.

In addition to enrolling in the best plan, when consumers actively renew their coverage they can provide updated household and income information, which will allow the Marketplace to calculate a more accurate subsidy amount and reduce the likelihood that consumers will have to pay back some of their subsidies on their 2016 tax return. Even if you want to keep your existing coverage, actively renewing your coverage will make sure the Marketplace has up-to-date information on your income and household.

Updates to the Automatic Renewal Process

If a consumer decides to automatically re-enroll in the same plan for 2016, it’s important to understand the automated process and potential consequences. For the 2016 open enrollment period the Marketplace will use more and better income data to determine if a consumer is still eligible for subsidies, and the subsidy amount will be adjusted based on new information. This is a big improvement to the Marketplace system compared to last year and will hopefully reduce the likelihood of consumers having to pay back subsides on their 2016 taxes. This year the Marketplace will determine subsidies for auto-renewals using:

  • Income data from a recent 2015 application (for example: from a recent change report or application/renewal for coverage in 2015)
  • Updated IRS income data
  • Income data from most recent application (likely the income data from their 2014 application) adjusted to a 2016 level based on expected income growth

Also, when determining the subsidy amount the Marketplace will use updated federal poverty level guidelines and updated second-lowest-cost silver plan information, which is used to get a more accurate subsidy amount.

Some consumers who do not actively renew their coverage may be at risk of losing their subsidies. Like last year, in certain circumstances individuals who choose not to actively renew their coverage on the Marketplaces will be automatically renewed into the same coverage but without subsidies. This will happen if:

  • The consumer did not give the Marketplace permission to access their tax records for renewal purposes
  • Their income based on tax records exceeds 500% of the federal poverty level

and NEW this year:

  • The consumer did not file their taxes and reconcile their premium subsidies for the 2014 tax year

To avoid any potential issues and ensure 2016 plans meet families’ needs, Marketplace enrollees should actively re-enroll through the Marketplace.

Consumers who want to actively renew must do so by December 15, 2015 for their coverage to start on January 1, 2016. If a consumer misses the deadline and she is automatically re-enrolled, she can still go into her Healthcare.gov account and make updates to her plan selection until the end of open enrollment on January 31, 2016.

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