Why comparing coverage during open enrollment is a no-brainer

If you’ve been fortunate in 2021 to secure high-quality, low-cost individual or family health insurance coverage (or if you’re really fortunate, no-cost coverage) it might seem like a no-brainer that you should stick with what’s working.

But assuming your current health plan will continue to be your best option next year – and simply auto-renewing your coverage instead of exploring your options during open enrollment – could end up being a really bad decision. And since open enrollment is a limited window, it’s a decision that could affect your coverage and finances throughout 2022.

Very simply put, new plans available in your area – and their impact on health insurance subsidies – could make your great 2021 coverage not so great for 2022. Conversely, if there are new plans available for 2022, one of them might be a much better option than what you have now. There’s no better way to illustrate this than to share a few real-life examples of consumers who have shopped around.

ACA marketplace premiums are volatile for those who receive premium tax credits (subsidies) to help pay for coverage. That’s because every year, the amount of the tax credit is set against a benchmark plan – the second-cheapest Silver plan in a given area.  When the benchmark plan changes in a new year, so does the tax credit amount. A much cheaper benchmark plan can make your 2021 plan much more expensive in 2022.

Real-life examples

There’s no better way to illustrate the effect of year-to-year changes than to share a few real-life examples of consumers who have shopped around.

We’ve compiled four examples to illustrate how plan changes during open enrollment can help you come out ahead. These are real scenarios from real consumers with subsidized marketplace coverage (though their names and some details have been changed to protect their privacy).

#1. A new ACA plan spared her a huge premium increase

Dee is a 55-year-old single woman in Houston, Texas, and this year, she’s got coverage in the marketplace with a Silver plan from Molina, which costs her $41/month after her premium tax credit (subsidy) is applied. Dee likes the plan she had this year: It has a $0 deductible, $6 primary care copays, and a $2,800 cap on out-of-pocket costs, and she’s happy with that benefit structure.

But Dee’s renewal notification indicated that if she simply re-upped her current plan in 2022, it would cost her $152/month. That would be a big financial hit for Dee, whose income is just over 150% of the federal poverty level. So Dee decided to explore her options.

The good news for Dee is that – due to her income – she’s eligible for substantial cost-sharing reductions (CSR), which reduce the amount she pays out of pocket for medical expenses. So it’s wise that she enrolled in a Silver plan for 2021, as she would forfeit the CSR benefit if she picked a plan at a different metal level.

Given Dee’s income, the benchmark Silver plan is available to her for just a few dollars per month in after-subsidy premiums in both 2021 and 2022. (In both years, there are numerous plans that are priced above the benchmark plan. Dee can purchase any of them by paying the additional premium, as she did for her Silver Molina plan in 2021.)

New marketplace plans in your area could affect your costs

Several new insurers have joined the marketplace in Texas for 2022. When Dee was shopping for coverage last fall, there were 84 available plans, and 37 of them were Silver (with built-in cost-sharing reductions). For 2022, she can choose from among 202 plans, and 85 of them are Silver.

When new carriers enter a marketplace with plans that are priced below the existing plans, a new insurer can take over the benchmark spot, driving down subsidies for everyone in the area. That’s part of the issue in Dee’s case, as her subsidy is dropping from $678/month to $651/month.

But the other issue is that the unsubsidized price of Dee’s plan has increased by about $93/month. So not only is her subsidy smaller, but the price of her plan has increased as well.

Dee wanted to keep her doctor, so she narrowed down the other available plans based on whether they have her doctor in their networks. Ultimately, she settled on a Silver plan from Ambetter, which will cost $57/month in 2022 after her premium tax credit is applied.

The new plan has a $0 deductible and a $2,900 cap on out-of-pocket costs, and the $15 copay for primary care visits will still fit in her budget. It was clearly worth it for Dee to not simply renew her 2021 plan.

#2. Upgrading to Silver reduced his deductible

Dennis is single, 52 years old, and lives in Mesa, Arizona. In 2021, he’s been enrolled in Oscar’s Bronze Classic plan, which has no premium after his subsidy is applied. Naturally, Dennis likes the $0 premium, but the plan has a $6,000 deductible and an out-of-pocket cap of $8,000.

As is the case for Dee, there are a lot more plans available for Dennis in 2022. He can select from among 120 plans for 2022, as opposed to 65 in 2021.

Dennis’s plan is still available at no cost to him for 2022, but the deductible has increased to $7,500. Fortunately, Dennis decided to compare his other options before letting his current Bronze plan renew for 2022.

And the good news for Dennis is that his income makes him eligible for strong cost-sharing reductions if he upgrades to a Silver plan. (Again, CSR benefits are only available on Silver plans. If you’re eligible for CSR but select a Bronze plan instead, you leave that benefit on the table.)

After comparing plans, Dennis settled on a United Healthcare UHC Silver-C Value plan that will cost him $4/month after his premium tax credit is applied. It has a $0 deductible and an out-of-pocket cap of $2,850. And he’ll only pay $5 for primary care visits, as opposed to having to pay the full cost of all non-preventive care on his current plan until he meets the deductible.

Although his premium is increasing slightly – by $4 per month – his benefits will be considerably better in 2022, and he’s less likely to avoid a trip to the doctor’s office due to concerns about the cost.

#3. Her new plan had similar benefits – but a much lower premium

Bonnie, who lives in Lake County, Illinois, is single and 28 years old. Her $19,000 income makes her eligible for CSR, and she’s currently enrolled in a Silver BlueChoice plan that has a $0 deductible and an $800 cap on out-of-pocket costs. Bonnie pays $91/month for the plan, after her subsidy is applied.

There are 17 Silver plans available in Bonnie’s area for 2021, and she’s enrolled in the most expensive one. The benefits are worth it to her, but she’s thrilled to discover that she can get similar benefits for a lot less money if she switches plans for 2022.

As is the case for Dennis and Dee, there are a lot more plans available to Bonnie for 2022, with 37 different Silver options offered in her area. UnitedHealthcare is new for 2022, and she can enroll in their UHC Silver-C Advantage plan for just $4/month after her subsidy is applied. The plan has a $0 deductible, three free primary care visits and then $10 copays for additional primary care visits, and an $850 limit on out-of-pocket costs.

Bonnie needs to check to see if her doctor is in-network with the UnitedHealthcare plan, but if so, she’ll have very similar benefits with more than $1,000 in annual premium savings compared with her costs in 2021.

#4. Family kept their plan to avoid a provider switch

The Jones family lives in Atlanta, Georgia. They are currently enrolled in a CareSource Expanded Bronze plan, and their premium subsidy in 2021 is enough to cover the full $1,420/month premium.

The family decided to review their coverage options and found that Georgia’s marketplace has five new insurers offering coverage for 2022. The family can select from among 142 plans for 2022 – up from 59 plans in 2021.

The benchmark plan (second-lowest-cost Silver plan) is still offered by Kaiser in their area, but it’s a different plan and has a lower premium than the 2021 benchmark plan. (Average rates across all existing individual/family plans in Georgia have decreased by more than 2% for 2022.)

Premium subsidy amounts are based on the cost of the benchmark plan as well as the household’s income. For the Jones family, their household income has increased (from $77,000 in 2021 to $82,000 for 2022), which results in a smaller subsidy. And the cost of the benchmark plan has decreased, which also results in a smaller subsidy.

Including both of those factors, their monthly subsidy in 2022 will be $156 lower than their monthly subsidy in 2021. But the full-price cost of their plan is also decreasing a bit for 2022. Taking all of that into consideration, their after-subsidy premium for 2022 will be $139/month if they keep their current plan.

That’s a great price to insure four people, but it’s a lot more than the $0 they currently pay, so they’ve been considering their options during open enrollment. They found several lower-priced plans offered by Friday (new to their area for 2022), Oscar, and Kaiser.

A Kaiser plan stood out to them, as it would have a lower deductible ($5,000 for an individual, versus $7,700 on their current plan) and also a lower premium, at $85/month instead of $139. But they would have to switch to new doctors if they made that plan choice.

Ultimately, the Jones family decided that keeping their current doctors is worth the additional premium and out-of-pocket costs, and they renewed their CareSource plan for 2022.

This is a great reminder that there’s a lot more to health insurance than the premium. Although the Jones family has lower-priced options for 2022, they wouldn’t be able to keep their existing doctors with those plans. For them, it’s worth the additional premium costs in order to avoid having to switch doctors. Another family might make a different choice. That’s a very personal decision, and there is no right or wrong answer.

It’s critical to actively compare your plan options during open enrollment

The four examples we described here are a good overview of the type of options that people have during open enrollment, and the different decisions that people make. Some opted for lower-cost plans, while others decided to pay more in order to have better benefits or access to certain medical providers.

Three of the four enrollees we profiled have switched to different plans for 2022 or are considering doing so. Only the Jones family chose to keep their plan, and that was after careful consideration of the pros and cons of switching to a new plan.

Although open enrollment continues through January 15 in most states, you’ll need to select a plan by December 15 in most states in order to have it take effect January 1.

You might not make the same decision as your neighbor, and that’s fine. The important thing is to actively make a decision, rather than letting your plan automatically renew.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.