Insurer considerations related to ACA auto-reenrollment

The federal health exchange’s automatic reenrollment process was intended to simplify renewing policies. However, auto enrollment could also introduce unpredictability for insurers. This New York Times article examines how these issues will impact the exchange and quotes Paul Houchens offering some perspective in regards to the financial implications.

Here’s an excerpt:

Automatically renewing marketplace plans will be a mistake for many people, but it is an especially risky one for the 85 percent of people who qualified for some sort of subsidy. The Obama administration has chosen not to recalculate the value of tax credits for people who don’t return to the Healthcare.gov site.

If your subsidy should go down – either because you have received a raise since last year or because the benchmark plan in the market became cheaper – you could end up owing the government a lot more money than you think, and you won’t find out until tax time.

…Not everyone has to worry about these invisible price changes, especially if incomes haven’t changed. But in markets where federal rules apply and the benchmark is going down a lot, it pays to return to the marketplace before renewing. Places where that will be an issue include parts of Georgia, Indiana and Ohio – where benchmark prices are declining by more than 15 percent. For people in those areas, returning to the marketplace could prevent a surprise tax bill.

“The structure makes for a very competitive environment among the insurance carriers,” said Paul Houchens, an actuary at Milliman, who estimates that, in some cases, what looks like a 5 percent premium rise could actually mean an increase of more than 30 percent. “But,” he said, “I can see how it would create more confusion for consumers.”

To understand how the reenrollment process will affect premiums and potentially create financial barriers to coverage in 2015, read this healthcare reform paper.