Issue Brief , Regulatory Analysis | Aug 7, 2014

Addressing the Financial Impact of Renewals: Why Many Enrollees Could Benefit from Shopping

Wakely Consulting Group – Julia Lerche and Aree Bly

As the 2015 open enrollment period approaches, one of the most significant challenges faced by marketplaces stems from the complicated nature of premium subsidy calculations, which may lead to potentially large swings in consumers’ after-subsidy premiums and tax liability implications.  While marketplaces are attempting to make the renewal process as smooth as possible for consumers by facilitating auto-renewals into Qualified Health Plans and, in the case of the FFM, rolling over 2014 Advanced Premium Tax Credits (APTCs) into 2015, this approach could potentially be detrimental to some consumers, depending on factors such as income changes, premium variation, or a change in the benchmark plan.  State agencies, marketplaces, and stakeholders will want to carefully balance the competing imperatives of ensuring continuous coverage while protecting consumers from tax liability, and in some cases, avoidable premium increases.  This issue brief, prepared by Wakely Consulting Group, explores these issues and provides suggestions for how to mitigate confusion and empower consumers, and was recently presented alongside a consumer impact analysis presentation providing scenarios in order to explain the potential impact of rate changes on consumers.