Is Your Annual Health Plan Automatic Renewal Dangerous?

Every year during Open Enrollment, millions of Americans apply for health insurance, or make changes to their current health plan coverage. Many of these Marketplace enrollees apply for and purchase a policy, then let their plan automatically re-enroll them year after year. Although this approach seems effortless and efficient, allowing your plan to automatically re-enroll you in coverage can set you up for disaster! It is critical for Affordable Care Act policyholders to re-apply each year, carefully review their coverage, and make changes if necessary.

Auto-Renew Could Equal Auto-Increase

A client of mine has been enrolled in a Marketplace plan with a big-name health insurance company in our state for many years now. This year in December, he got his auto re-enrollment letter in the mail with his new 2024 health insurance ID card. Since his income wasn’t going to change from 2023 to 2024, he asked me for my opinion on just letting the re-enrollment happen, and not creating or editing an application for 2024 coverage. I said absolutely not! Which was good advice, because on further inspection, his monthly premium would have increased by about $200/month if he had stayed on that plan. His premium tax credit amount (aka premium subsidy) wasn’t changing at all, so what was causing this dramatic increase in price?

“…on further inspection, his monthly premium would have increased by about $200/month if he had stayed on that plan.”

Carly Ziegler –  Licensed Health Insurance Professional
An insurance price increase notification surrounded by coins, calculator, and stethescope.

Health Plan Standardization Surprise

The culprit was Healthcare.gov’s effort to standardize plan options, and the fact that his insurance company was shutting down his prior plan and enrolling him into a different plan of their choosing. This standardization of plans was implemented to make plans more streamlined and easier to compare for consumers, which is a good thing. It turns out people were getting confused by the number of options available for them to choose from through the platform. Although this effort is in the best interest of enrollees, it’s critical to note that people like my client can end up unknowingly switching plans into a policy that costs them more and might have less suitable benefits. 

If he had simply accepted this re-enrollment, he would have been in for a bad surprise in January when his new plan went into effect. Instead of this outcome, he completed a 2024 application and chose a more suitable plan that minimized his premium rate increase.

The Insurance Death Spiral

Another situation that necessitates yearly evaluation from policyholders is grandfathered plans. If you purchased a health plan outside of the ACA Marketplace on or before March 23, 2010, and are still covered by it, you have what is referred to as a “grandfathered plan”. These plans can be risky, because it is easy for them to go into what we in health insurance refer to as a “death spiral”. This is when a health insurance plan is not getting any new younger or healthy enrollees to offset the cost of the aging population of policyholders. This causes a dramatic increase in the premiums of the plan, as the insurance company running it tries to continue to make a profit. 

Additionally, as premiums start to increase to cover the cost of medical care for the stagnant group of policyholders, folks that are healthy tend to drop off these plans in search of more affordable options. Since these grandfathered plans do not accept new enrollees, they are all inevitably going to end up in a “death spiral” at one point or another, unless the insurance companies simply elect to cancel them. If you’re on one of these plans, it’s critical to evaluate premium changes and plan suitability for your situation annually.

Evaluate Your Health Plan EVERY Year

If your current plan is experiencing large rate increases, your cost-sharing responsibility is increasing, or your plan benefits are decreasing, consider shopping around for a better option. There may be a plan outside of the ACA Marketplace that could save you premium dollars and meet your health insurance needs. Remember, private health insurance plans that are outside of the ACA do not have specific enrollment periods. If you are unhappy with your current plan, consider looking into these private health insurance plans and comparing them to your existing coverage at any time during the year. With a little bit of time and effort each year, you can ensure that your health insurance is working well for you where it counts.

Get Help Evaluating Your Plan

Fortunately there are tools for RVers to get help in this complex health insurance market. The agents at RVerInsurance.com are highly qualified, professional insurance writers with an intimate knowledge of the RVing lifestyle and the special considerations associated with it. Best of all, they are more than happy to speak with you and help analyze your current plan. Contact our agents and even give them a call at (800) 867-4330. They are there to help you!

Carly Ziegler

Carly Ziegler

Carly Ziegler is a licensed health insurance professional working specifically with RVers who travel and need proper insurance.