Early Renewal Provides A Good Alternative For 2014

Over the last few years, opponents of health care reform have often exaggerated – and sometime outright lied about – the potential negative aspects of the reform law.  This has resulted in a public that is often woefully misinformed about what the law does and does not do.  But the spin is not limited to just opponents of the law.  Sometimes ACA supporters spin things too.  This Huffington Post article from a few months ago is a good example.  The title, “Aetna seeks to avoid Obamacare rules next year” is designed to play on the general unpopularity (and over-estimation of perceived profits) of insurance companies.  When you read a little further, you find that Aetna is reaching out to brokers and insureds to let them know that Aetna will be allowing members to opt for an early renewal in December of this year – if they want to keep their current policy until December 2014.

Why is this being portrayed as a bad thing?

It is indisputable that people who are healthy, buy their own health insurance, won’t qualify for subsidies and prefer high deductible health plans are going to have higher premiums for ACA-compliant plans than they have now.  Some of these people don’t mind high deductibles.  They don’t consider their policy to be skimpy or junk insurance just because it isn’t ACA compliant.  You might have seen headlines about how only a tiny fraction of existing individual health plans meet the requirements that the ACA will impose next year, but that doesn’t mean that the existing Early renewal will provide many insureds with a good alternative to ACA compliant plans in 2014.plans are junk.  If you look closely, you’ll see that when it comes to basic medical benefits, a lot of individual plans offer coverage that is in line with ACA regulations.  But benefits like dental and vision coverage for children (required on ACA-compliant plans starting next year) are usually not part of individual coverage (Many plans allow applicants to select add-on dental and vision coverage, but a lot of people find that it’s more cost effective to pay for dental and vision out of pocket rather than paying for dental/vision insurance.  Remember, nothing is free.  And the more likely you are to use an aspect of your coverage, the higher your premiums will be in order to cover the cost.  So coverage for something like dental and vision checkups – which people plan to use – has to be priced accordingly).  In many states, maternity coverage is one of the most significant medical benefits missing from a lot of individual plans.  But in Colorado we’ve had maternity on all plans for more than two years now.

There are absolutely some bad health insurance plans on the market, with skimpy coverage, limited networks and lots of fine print.  But there are also lots of good quality health insurance plans and reputable carriers.  And there are plenty of people who are not going to qualify for subsidies next year (roughly half of the people who currently buy individual health insurance).  If those people currently have – and are happy with – a high deductible plan that is less expensive than what they would have to pay for an ACA-compliant plan, there’s no reason that they shouldn’t be able to keep their plan as long as possible in 2014.  The law requires coverage to be ACA-compliant when a policy renews in 2014.  Carriers that are offering early renewals in December are providing good customer service, especially for insureds who would otherwise have renewal dates early in 2014 and would at that point have no option other than starting to pay more for an ACA-compliant plan.

By the start of 2015, everyone who isn’t on a grandfathered plan (which are becoming less common every month) will be on an ACA-compliant plan.  And the demographic I described above will be paying more for their health insurance than they do now.  In some cases, quite a bit more (for example, healthy people who currently opt for $10,000 deductibles and won’t qualify for a subsidy).  Allowing them the option to postpone that change for a few additional months means that they save a bit of money on premiums and retain a policy that they like.  To vilify this option is an insult to their intelligence, basically telling them that they’re not smart enough to know what they really need, and that they will be much better off with an ACA-compliant plan.

It’s important to note that the carriers that are offering early renewals are not forcing their insureds to renew and keep their existing policy.  Everyone in the individual market will have the option to switch to an ACA-compliant plan in 2014 (open enrollment begins October 1, 2013).  People who want to keep their current plan will be able to do so for most of 2014 if their carrier offers an early-renewal option.  Not all carriers in Colorado are offering this option – stay tuned for another post coming soon with details about what each of the major carriers is offering its insureds.

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