Health Insurance Auto-Renew: What You Need To Know

Health insurance plans can auto-renew, but it's recommended that people actively compare available plans during the open enrollment period. This is because insurance companies often change their offerings from one year to the next, and auto-renewal may result in a higher premium. In the US, the yearly open enrollment period is November 1 to January 15, with auto-renewal taking place on or around December 16. After auto-renewal, people can still change plans until the end of the open enrollment period, but any changes made after December 15 will take effect from February 1.

Auto-renewal may result in a loss of your premium subsidy

Auto-renewal of health insurance is generally not in your best interest. It is much better to actively compare the available plans during open enrollment. If your premiums are subsidized, auto-renewal could result in a higher premium if subsidies are declining in your area.

• Health insurance marketplaces have made adjustments to the auto-renewal process, which may not be beneficial to you. For example, if you are enrolled in a plan outside the exchange and your carrier is leaving the market, there will be no entity to pick a new plan for you, and you will be uninsured unless you pick your own replacement plan.
• If you are eligible for cost-sharing reductions (CSR) but enrolled in a bronze plan that will no longer be available for the coming year, you may be auto-enrolled into a silver-level plan with the same network and equal or lesser premiums. This could result in a loss of your premium subsidy if the silver plan has higher premiums than your previous bronze plan.
• If you have not provided the health insurance marketplace with permission to obtain updated tax return data for use in the annual subsidy eligibility determination process, you will be eligible for auto-renewal of coverage but without subsidies.
• If you have received a premium subsidy in the previous year but failed to file a tax return or reconcile your tax credit with the IRS, you may be eligible for auto-renewal of your policy but without any subsidies.
• If you are expecting your subsidy to change for the coming year, you may need to communicate with the exchange to ensure your information is updated and accurate.
• If you have an off-exchange or pre-ACA plan, it is worth checking during open enrollment to see if you would be better off with a plan through the exchange, as premium subsidies are crucial for keeping coverage affordable and are only available with on-exchange plans.

You can be switched to a different policy, company, or metal level

If your health insurance plan is renewed automatically, you may be switched to a different policy, company, or metal level. This can happen if your current plan is discontinued or if your insurance company stops offering plans for the following year. If your insurance company is no longer offering plans, you will be enrolled in a plan with a different insurance company.

If you are eligible for cost-sharing reductions (CSR), you may be switched to a silver-level plan if you were previously on a bronze plan. This is because silver-level plans offer CSR benefits, which can lower your out-of-pocket costs if you need medical care. However, if you prefer to have an HSA-compliant plan, you may need to actively select an HSA-eligible plan during open enrollment, as switching to a silver plan will make you ineligible for an HSA.

It's important to note that insurance companies cannot move you to a different plan based on your health or how much care you use. If your plan is renewed automatically, you will receive a letter notifying you of any changes. You will also have the option to change plans during the Open Enrollment Period, which typically ends on January 15 in most states.

Cost changes to current plans

Health insurance premiums are subject to change, and there are a variety of factors that influence these fluctuations. Firstly, premiums are determined by the type of plan selected, with Platinum, Bronze, and PPO plans typically being the most expensive. Platinum plans, for instance, have high deductibles but low co-pays, making them suitable for individuals anticipating high out-of-pocket medical expenses. In contrast, Bronze plans have lower premiums but higher co-pays and are thus more suitable for those expecting minimal health expenses.

Secondly, premiums are influenced by the demographics of the insured population. Younger and healthier individuals are generally cheaper to insure than older individuals with chronic health conditions. The number of hospitals in a state can also impact premiums; fewer hospitals may result in reduced competition, leading to higher premiums.

Additionally, premiums can be influenced by the rates that insurance companies negotiate with hospitals, doctors, and other medical providers. Prescription drug spending also plays a significant role in premium costs, especially with the rising costs of medications for chronic conditions.

It is important to note that premium costs may also be mitigated by federal subsidies. The American Rescue Plan mandates that health insurance premiums cannot exceed 8.5% of a household's income, and subsidies are provided to those earning less than 400% above the poverty line.

Finally, it is worth mentioning that premium costs can vary based on whether an individual purchases their insurance through the Marketplace or off-exchange. On-exchange plans may offer more competitive rates and provide access to subsidies, while off-exchange plans may include additional costs to cover cost-sharing reductions in certain states.

Overall, while premium costs may fluctuate, individuals can take advantage of various options, such as subsidies and different types of plans, to manage their healthcare expenses effectively.

You could miss out on discounts

If you let your health insurance auto-renew, you could miss out on discounts and end up paying higher premiums. It is important to pay attention to any changes in your subsidy amount, as this can significantly impact your after-subsidy premiums. For instance, if you are enrolled in a plan outside the exchange and your carrier is leaving the market, there will be no entity to pick a new plan for you, and you will be uninsured unless you select your own replacement plan.

Auto-renewal may not always be in your best interest, as it eliminates the opportunity to compare available plans and make an informed choice. The ACA's health insurance exchanges were created to foster competition and choice, encouraging Americans to shop around for the best health coverage. By passively letting your current coverage auto-renew, you may be giving up the chance to find a more suitable and cost-effective plan.

Additionally, if your health insurance plan auto-renews, you may miss out on potential discounts offered by other insurers. New insurers entering the market may offer more competitive rates, which could result in a reduction in premium subsidies. By actively comparing available options during the open enrollment period, you may discover opportunities to lower your health insurance costs.

To avoid missing out on potential discounts, it is advisable to actively review and compare health insurance plans during the open enrollment period. This period typically runs from November 1 to January 15 in most states, providing an opportunity to make informed decisions about your health coverage for the coming year.

Changes could come as a surprise

While auto-renewal of health insurance plans is possible, it is not always in your best interest. Changes to your plan could occur, and these could take you by surprise if you are not vigilant.

Firstly, premiums can change. If your premiums are subsidised, auto-renewal could result in higher premiums if subsidies are declining in your area. In 2022, premiums went down by about 3% in most states, but this is not always the case. For 2023 coverage, full-price premiums increased modestly in most states, and the same was true for 2024.

Secondly, insurance companies can change or end the plans they offer in the marketplace. Some Affordable Care Act insurance carriers even drop old plans or leave the marketplace, and new carriers can also join the marketplace. If your plan is discontinued and you don't select a replacement plan during open enrollment, auto-renewal will involve the exchange or your insurer enrolling you in a plan that is most similar to the one you already had. In some cases, this may be the plan you would have chosen anyway, but by actively selecting your own plan during open enrollment, you get to make that choice yourself.

Thirdly, your status can change. Changes in work, family, income, disability, or the state you live in can all affect your insurance plan. If anything has changed in the past year, it is important to update your information before 15 December, and then choose a plan that best meets your needs and budget.

Frequently asked questions