Many Americans are searching frantically for new health insurance this open enrollment period — but not by choice. If you received notice that your insurance company is dropping your policy, you may be a little panicked. Fortunately, your fear may be unwarranted.
In 2013, there was similar anxiety when many existing health plans were found to be noncompliant with the Affordable Care Act’s mandatory benefits. Officials were unable to project how many plans would be canceled during that open enrollment period, which fueled consumers’ fears of losing coverage.
How Many Cancellations Are Expected?
Putting an exact number on this year’s cancellations remains tricky: States approach noncompliant plans differently, and health insurance companies don’t need a specific reason to stop offering a certain plan. While fewer plans will be axed in 2014 than in 2013, thousands of Americans have already received cancellation letters, alerting them that their coverage won’t be extended into 2015.
“The number of cancellations will be far less than last year,” says Katherine Hempstead, director of health insurance coverage for the Robert Wood Johnson Foundation. “And this time the cancellations are largely driven by carriers deciding for business reasons that they are better off discontinuing these policies.”
In other words, unlike last year, many of these soon-to-end policies comply with the ACA’s mandates, but they no longer make business sense for insurance companies to keep around. Still, some are noncompliant plans that were given extensions by the Obama administration.
Regardless, cancellation “doesn’t mean consumers will necessarily be worse off,” Hempstead says.
Legal Protections Mean You Have Time to Shop
Insurance companies can’t leave consumers high and dry. Under the 1996 federal Health Insurance Portability and Accountability Act, or HIPAA, they are required to give policyholders at least 90 days’ notice of the cancellation. Further, the carrier must offer the option to purchase another policy.
Most cancellations will be effective at the close of the calendar year. To avoid an interruption in your coverage, you must enroll in your new plan by Dec. 15, 2014. But even if you miss this deadline, open enrollment under the ACA lasts until Feb. 15, 2015, and as long as you’re not uninsured for three months or more of 2015, you won’t have to pay a penalty for not being covered.
Switching Plans Could Save You Money
Among consumers who switched to ACA-compliant plans during last year’s open enrollment, 46 percent said they ended up paying lower premiums under their new policy, according to a survey from the Kaiser Family Foundation; 39 percent said they paid higher premiums after the switch. Respondents largely said the benefits of their new plans are comparable to those under their old plan.
It may be tempting to accept the plan offered by your carrier, but Hempstead warns there could be a better deal out there. “They may well be offered an ACA-compliant policy by the same carrier. However, [consumers] should not automatically accept that offer before checking out what else is available on the marketplace,” she says.
Shopping for health insurance on the federal marketplace or state exchanges can seem intimidating — especially after the troubles of last year’s open enrollment. However, there have been far fewer complaints so far in the 2014-2015 open enrollment period, .
Scout the Best Deal and Best Policy for Your Needs
Shopping for new health insurance isn’t only a matter of comparing price tags, particularly when the list price may not be what you ultimately pay. Under the ACA, you could be eligible for lower premiums or lower out-of-pocket costs with a qualifying income.
Both the federal marketplace and state exchanges will walk you through determining your eligibility for such cost-lowering benefits when you shop plans. This eligibility is based on your estimated income for the coming year. If your income is between 100 and 400 percent of the federal poverty level, you could qualify for lower premiums through the premium tax credit. If it’s less than 250 percent of that level, you could get help with out-of-pocket expenses such as deductibles and copays.
“Consumers facing cancellation should definitely see whether they are eligible for a subsidy,” Hempstead says. “And then they should really look at the benefit designs of the plans that are out there — not just the premiums, but also provider networks, prescription drug coverage and other features that may be relevant.”
Those other features include cost-sharing responsibilities, such as deductibles, copayments and coinsurance; covered benefits; and how all these plan specifics figure into your expected 2015 health needs.
Receiving a cancellation notice from your health insurance carrier can be nerve-racking. But don’t assume the worst. You may find that the scrapped plan wasn’t the best available, and the cancellation is a blessing in disguise.
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