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Auto-Renewal Not the Best Option for Enrollees in Federal Insurance Marketplace

People who bought private health insurance last year through the federally run marketplace could pay more than they should next year unless they return to the marketplace to renew coverage, our new paper explains.

That’s because they will be automatically re-enrolled in the same plan in 2015, with the same subsidies to help pay for coverage, unless they choose a plan through the marketplace during the open enrollment season, which began November 15.

The federal marketplace, which operates in the 34 states that don’t have a state-based marketplace (see map), provides auto-renewal as a backstop to ensure that people who don’t return to the marketplace don’t lose coverage.  But auto-renewal won’t account for factors that affect the level of people’s subsidies and can change from year to year, such as a household’s size or income and premiums for health coverage.  As a result, many people who auto-renew will receive subsidies that don’t reflect what they’re eligible for.

The only way for consumers to ensure they receive the correct level of benefits is to provide updated information to the marketplace and have their eligibility re-determined.