Consumers who have started researching health insurance plans for 2016 could be in for a surprise to discover that their current option vanished completely.
Many insurance companies are constantly readjusting to market demands by adding new products and even “taking old plans off the market,” said Nate Purpura, vice president of consumer affairs at eHealth.com, an online health insurance exchange based in Mountain View, Calif.
“A lot of health insurance companies are still trying to find their footing in the reformed health insurance marketplace created by Obamacare,” he said. “As a result, thousands of Americans have been advised that their health insurance company will no longer offer their current plan in 2016.”
Some plans are disappearing altogether, and the options may never return. In Texas, for example, the Blue Cross Blue Shield PPO is being discontinued for at least 380,000 people, said Jack Hooper, CEO of Take Command Health, an online health insurance exchange based in Dallas. Consumers need to check to see what the default option will be, because in this case, people who do not purchase another plan will be renewed automatically into a HMO plan.
“We are big advocates for people not auto-renewing and taking time to shop around,” he said. “The plan they roll you into is not the same.”
Options When Your Plan Disappears
As they eliminate one plan, some insurance companies will offer consumers an alternate option that they can transfer into. While it is worth considering it, it is best to spend some time researching the coverage and comparing it to new ones on the market.
“Don’t imagine that it’s the only option available to you because you have plenty of other choices,” Purpura said.
The new options that are available for 2016 might wind up as a better choice for you, depending on how often you go to the doctor and how much can afford to spend each month. Open enrollment does not end until January 31, 2016, so you have time compare and contrast all the options.
If your current plan expires on December 31, you will need to purchase a plan by December 15 in order for your coverage to start by January 1. Consumers who enroll in a health insurance plan by Jan. 15 will have their coverage begin on Feb. 1, 2016.
For consumers who wait until the last minute to enroll on January 31, 2016, their plan will not take effect until March 1, 2016. Unless you qualify for a special enrollment period such as moving or getting married, once you miss the deadline, you can not purchase health insurance in 2016.
Watch the Higher Tax Penalty
The tax penalty for eschewing health insurance doubled in 2016. The Affordable Care Act requires Americans to purchase qualifying health insurance coverage, so if you wind up uninsured for two consecutive months or longer in 2016, you could face a tax penalty of $695 per adult and $347.50 per child or 2.5% of your taxable household income, whichever amount is greater. The previous fine was $325 per adult and $162.50 per child or 2% of your household income.
Don’t Forget to Apply for a Subsidy
Unless you indicated last year that you wanted your subsidies to be automatically recalculated for 2016, reapplying is your best bet. Otherwise, you could lose your subsidies on January 1.
“These subsidies can make coverage more affordable, but we recommend that everyone reapply for subsidies just to make sure they’re getting the correct subsidy amount,” Purpura said. “This can help you minimize the risk of having to pay some of your subsidies back at tax time.”
Consumers who have seen their income rise may not qualify for subsidies and should expect to see their insurance premiums increase significantly by 10% to 20% or more.
“Some folks may see little to no increase, but it’s another reason that it’s a good idea to get out there and shop for 2016 coverage,” he said.Even for people who received only a slight increase in their salary, they need to ensure the amount is updated when they apply for a subsidized plan to receive the correct tax credit, said Heather Kane, CEO of public exchange marketplace for UnitedHealthcare, the Minnetonka, Minn.-based health insurance company.
“That could result in a higher than necessary premium or the need to pay back any advance payment of the premium tax credit,” she said.
People who are using the exchanges to purchase their plan will see more choices being offered, Kane said.
In 2016, UnitedHealthcare plans will be available on 34 state exchanges, up from 23 exchanges a year ago.
“The plans change every year, so it is a good idea for people to take the time to evaluate their options during each open enrollment period,” she said.
Check Out Additional Costs
When you are reviewing other plans, pay close attention to the out of pocket costs whether it is for a simple doctor’s visit about a lingering cold or prescription drugs you need. These can add up quickly and often are confusing – any co-pay amounts you shell out for are not counted toward your deductible, Hooper said.
Co-pays for some medical visits like a trip to the emergency room are often quite expensive. Many plans being offered this year require $500 or $1,000 co-pays for just one visit to the ER. Co-pays only count toward the maximum out of pocket amount.
“If you have a plan with a $1,000 deductible and get a $1,500 ER bill, which is the average for x-rays and minor breaks, you think you're just paying $500, he said. “In reality, you pay a $500 co-pay, then $1,000 towards your deductible. You're going to get a bill that is three times what you're expecting.”
Check before you head to an appointment to see if your doctor takes your insurance and confirm with the insurance company as well before you are hit with a large bill. Many health insurance exchange providers have a database so you can search for your doctor’s name when you are shopping for a new plan.