Insurance customers on HealthCare.gov will be automatically enrolled in their current plans for 2015 unless they buy new coverage through federal and state-run online exchanges, the Obama administration announced.
The Health and Human Services Department’s proposed rules are meant to reduce potential drop-off for any of the 8 million Americans who, the administration said, selected a health plan during the first open enrollment period under the Affordable Care Act, popularly known as Obamacare.
The proposed rules, subject to a 30-day comment period before going into effect, were drafted in consultation with the National Association of Insurance Commissioners and other stakeholders, Modern Healthcare reported.
Although auto-enrollment tends to be standard fare in the private insurance sector for everything from health and auto to homeowner’s insurance, Obamacare’s subsidy design complicates matters, said Edmund Haislmaier, a senior health research fellow for The Heritage Foundation.
Obamacare provides subsidies to eligible Americans, typically based on certain income requirements, to help lower insurance premiums for health plans they bought on the online exchanges.The proposed rules keep enrollees’ subsidies at the same level in 2015 as this year.
“If enrollees fail to update their information, in most cases they would forego a marginally larger subsidy amount for 2015,” Haislmaier predicted.
The exceptions would be Americans with Obamacare plans who had an increase an income or saw a decrease in their 2015 premiums. In those instances, their correct subsidy amounts for 2015 would be less than what they received in 2014.
Those minor changes can become a real headache for consumers at tax-filing time, when they have to reconcile any income or premium changes to the level of subsidies received. For some, that could result in a tax bite from the Internal Revenue Service.
In cases where HHS has access to tax return information for Obamacare consumers who appear to have an income increase that disqualifies them from subsidies in 2015, HHS proposes that the exchanges notify the customers that their subsidies automatically will end Dec. 31 if their income eligibility isn’t “redetermined.”
It’s more effort for consumers than should be needed, Haislmaier said:
What’s unfortunate is that had Obamacare not created this unnecessarily complicated subsidy design in the first place, taking steps to ‘streamline’ the process as HHS is doing now wouldn’t be necessary. … {A]ny of the simpler health care tax credit designs that Heritage and other conservatives have proposed over the years would also have subsidized coverage, but without creating all of these issues.
New analysis also indicates that Obamacare customers might not even go the auto-enrollment route for 2015.
Avalere Health LLC, a Washington-based advisory services company, found that many consumers in exchange plans who receive subsidies will face substantial premium increases unless they switch insurance plans in 2015.
“Most enrollees in 2014 chose a plan based on their monthly premium,” Elizabeth Carpenter, director at Avalere Health, said in the report. She added:
However, the lowest-cost plans in 2014 may no longer be low cost in 2015. Before consumers renew their 2014 plans, they should consider the trade-off between continuity of care and lower monthly premiums.