More ObamaCare Chaos -Americans Who Automatically Renew Their Policies Are In For An Unpleasant Surprise.

Arnold Ahlert / Canada Free Press

The Affordable Healthcare Act is apparently the gift that keeps on giving. A series of new revelations are highlighted by the idea that if you like your current ObamaCare plan you can keep it—but it will likely cost you more, and you may have trouble finding a doctor who will treat you.

A devastating expose by the National Journal reveals that Americans who decide to stick with their current ObamaCare plan “are at risk for some of the biggest premium spikes anywhere in the system. And some people won’t even know their costs went up until they get a bill from the IRS.”

At the heart of this daunting new reality are the taxpayer-financed premium subsidies that Americans receive to offset the true costs of their health insurance. Because of the way the law is written, many Americans will have to switch their plans to maintain their current costs. That in and of itself is a major headache, because it means another visit to the infamous HealthCare.gov website. Healthcare experts already question how many Americans will re-visit that ordeal, especially when the Obama administration has set up an automatic renewal process for one’s current policy.

Yet that current policy may end up costing enrollees considerably more because of changes in the law triggered, ironically, by increased competition among insurers that will bring lower-priced products to the marketplace. Newer plans offered by this competition will change the entire structure of subsidy payments because those subsidies are tied to what is called a “benchmark” insurance plan. As its stands now, lower-income consumers are only required to pay a certain percentage of their total income to acquire health insurance. The rest of the premium is paid by the government subsidy. Those who choose a more expensive policy pay the difference out of their own pocket.

In 2014, 3.4 million Americans opted for the benchmark plan, or one option cheaper. While these lower cost plans attracted most of the enrollees, they are also the ones for which insurers are often seeking above-average rate hikes. When those rates are raised and new cheaper plans enter the marketplace, they will become the benchmark options. As a result, all subsidy calculations will be based on the newer plans. Those who keep their current plan will not only be responsible for whatever rate hikes are implemented, but the entire price difference between one’s current plan and the new benchmark plan.

Those prices differences can be substantial. An analysis by Milliman, an actuarial and consulting firm, reveals that a premium increase of only 5 percent could trigger net cost increases of 30 to 100 percent for low-income consumers. A survey by Avalere Health, an advisory company that focuses on the business of healthcare, notes that such changes are already occurring. In the nine states they cite as examples, the benchmark plan will change in six, and the lowest price plans will change in seven. Caroline Pearson, vice president at Avalere Health illuminates reality. “The prices of the lowest-cost [plans] tend to be going up more,” she explained. “Most people, if re-enrolled, will be enrolled in a plan that has a premium increase.”

Yet it gets worse. The HealthCare.gov website is currently incapable of automatically recalculating the subsidies for which existing enrollees are eligible. In order to do that, customers must revisit the website and ask for the recalculations. Customers who auto-renew will get their existing subsidies—even though marketplace changes make it virtually certain they will the be wrong for millions of enrollees. “That’s the totally crazy part,” Pearson said. “They’re basically going to send them what they know to be the wrong subsidy.”

Enter the IRS

Enter the IRS. They will eventually calculate one’s correct subsidy. Those lucky enough to be eligible for a subsidy greater than the one they currently receive will be issued a tax credit. Those who received one that is too large will owe the IRS money. An example cited by Milliman of someone whose income and subsidy remains the same, and who simply renews their current plan in the new marketplace—thinking nothing has changed—may end up owing the IRS between $300 and $2,500 when their tax bill comes due. And until HealthCare.gov can re-calculate subsidies automatically, the onus is on the individual to figure out what’s happening.

Larry Levitt, vice president of special initiatives at the Kaiser Family Foundation, bets that most people will fail to take the initiative necessary to maintain their current costs. “There are lots of reasons to believe inertia will take hold here and people won’t switch,” he said. “Betting on inertia is certainly a reasonable bet here.” Such inertia had precedents. Seniors enrolled in Medicare’s prescription-drug benefit plans rarely change them, even if a better plan exists. The same inertia also exists among federal employees who enroll in insurance plans.

read more at CFP:

http://canadafreepress.com/index.php/article/65091