NEW YORK (MainStreet) — If you were not happy with your health insurance plan last year, now's your chance to switch as open enrollment for health insurance plans for 2015 has just begun.
But, even if you were overjoyed with your health insurance plan last year, don't be tempted to let it renew automatically.
Passively letting your plan automatically renew can be a major mistake for so many reasons, advises Jonathan Wu, insurance analyst and CEO of Valuepenguin.com, a consumer finance site that specializes in helping consumers make decisions about insurance.
He says we all need to check our plan benefits and network carefully for changes and compare those against new 2015 plans on the exchanges.
New insurers are entering the marketplace
According to the Department of Health and Human Services, 25% more insurers are expected to add policies to the exchanges for 2015. Wu explains many large insurers were cautious in joining last year's exchanges with the roll-out of the Affordable Care Act. But, armed with last year's data to guide them on enrollment levels and premium pricing, more large insurers such as United Healthcare will be entering the marketplace in several states.
If you want more choices than you had last year, you may just find more insurers on the exchanges this year, depending on the state, advises Wu.
Your premium prices and out-of-pocket-costs may change
"Now that insurers have a better idea as to the costs they incur with each plan, many of the lowest priced plans may raise rates while many of the highest priced plans may lower rates," explains Wu.
In addition, according to healthcare.gov, the maximum out-of-pocket cost (MOOP) for any individual Marketplace plan for 2015 is $6,600 for an individual and $13,200 for a family, both increased from 2014 plans.
Wu says some plans will be making these adjustments to the MOOP and some will not, so you'll want to check whether your current plan is making changes and compare those to new plans.
Your subsidies may change
Just because you were eligible for a specific subsidy (any amount the federal government chipped in toward your premium) last year doesn't mean it will be the same this year, explains Wu.
Since subsidies are based on your income, if anything changed, your subsidy amount will change.
Also, if the plan you're considering renewing adjusted its premium up or down, you'll pay more or less out of your pocket for the premium even if your subsidy did not change. And, if you choose a more expensive plan this year, your subsidy amount will simply cover a smaller portion of that premium.
"The subsidies are calculated by setting a maximum price for the second lowest cost silver plan that is available in each area," explains Wu. "Because the plans are shifting in price, if you re-enroll without checking, you may find your premium payment for the same plan has changed because of your subsidy and it has nothing to do with your insurer or the premium price."
Do you qualify for additional cost sharing reductions?
If your income was negatively affected in 2014 and your earnings are now at 250% of the poverty level guideline ($29,175.00 income for a single and $59,625.00 for a family of four) or less, you will be eligible for further cost-sharing reductions to the deductibles, co-payments and maximum out-of-pocket costs.
"These additional cost-sharing reductions are only available on Silver plans and only available on the exchanges, but they cause a Silver plan to perform like Gold and Platinum plans for the same price," advises Wu.
If your income is above that level and you have private insurance or you have employer-sponsored health insurance, check the exchanges to use 2015 plan benefits and premium costs as your personal benchmarks before looking for a plan privately through a health insurance agent, some other type of online private exchange or even your employer's plan.
You may be making this common mistake
"Most people make the mistake in focusing solely on the premium, or amount you pay per month for the plan, to decide if a health insurance plan is affordable," says Wu. "Even though plans are ordered on most websites and the exchanges by premium price, there's more to it than just scrolling through the list of available plans looking at premiums only."
You want to check the plan's "summary of benefits" link and compare the premium cost in relation to other costs of using the plan, called out-of-pocket costs, such as the deductible, the maximum out-of-pocket cost and the co-pays or co-insurance amounts.
In addition, all plans may be making adjustments to their networks of doctors and hospitals as well as coverage for drugs.
Evaluate the deductible and maximum out of pocket costs first
A major out-of-pocket cost of using any health insurance plan is the deductible. That's because you have to pay up to this amount before your health insurance plan begins to pay anything for covered health services.
Another cost of using a health insurance plan is the maximum out-of-pocket cost, which actually protects families by capping out-of-pocket costs every year. Once you have paid up to that threshold including your deductible, copayments and any co-insurance, then your health insurance pays 100% of your healthcare costs for the rest of the year.
When you compare out-of-pocket costs in relation to the premium, you'll see the lowest premium Bronze and Silver plans may have the highest deductibles and highest maximum out-of-pocket costs. On some plans, the deductible matches the maximum-out-of-pocket cost so you'd never pay more than the monthly premium once you've reached that amount. Other plans have a maximum out-of-pocket cost several thousand dollars higher than the deductible.
Look at your healthcare needs for last year
Did you use many health care services last year such as treatment for an ongoing health condition or are you covering family members, each with different health needs?
If you use many healthcare services frequently, you'll want to lower your out-of-pocket costs for the deductible and the maximum out-of-pocket, co-pays or co-insurance. So, you may choose to pay a little more in premium to keep the costs of frequently using the plan lower.
But, if you do not use healthcare services often, a higher deductible, lower premium plan could be more cost-effective for you.
Finally, check the network
Another factor in affordability of any health insurance plan is its provider network, which details the location and providers in the plan.
Some plans are less expensive, because their network includes fewer hospitals, doctors and locations to choose from and may offer no coverage for using an out-of-network provider. Some more expensive plans have large or broad networks that extend beyond your state or even nationwide. If any of your covered family members live out-of-state or your health condition requires you to use an out-of-state hospital or provider, a larger network may benefit you. Some plans cover a percentage of an out-of-network provider's bill.
The plan's "summary of benefits" link will show you out-of-network coverage and you can further check a plan's "provider directory" link if you think you need to go out-of-network or need to keep seeing your regular doctors.
Once you've done a thorough analysis and comparison of the plans available to you on the exchanges, then you will know if you should automatically renew your current health insurance plan or buy a new health plan. You have until December 15 to decide on coverage that starts January 1, 2015.
--Written by Naomi Mannino for MainStreet