Sticker shock often follows insurance cancellation

Some receiving word they're losing coverage because their policy doesn't cover benefits required under Affordable Care Act
Associated Press
Nov 3, 2013

Dean Griffin liked the health insurance he purchased for himself and his wife three years ago and thought he'd be able to keep the plan even after the federal Affordable Care Act took effect.

But the 64-year-old recently received a letter notifying him the plan was being canceled because it didn't cover certain benefits required under the law.

The Griffins, who live near Philadelphia, pay $770 monthly for their soon-to-be-terminated health care plan with a $2,500 deductible. The cheapest plan they found on their state insurance exchange was a so-called bronze plan charging a $1,275 monthly premium with deductibles totaling $12,700. It covers only providers in Pennsylvania, so the couple, who live near Delaware, won't be able to see doctors they've used for more than a decade.

"We're buying insurance that we will never use and can't possibly ever benefit from. We're basically passing on a benefit to other people who are not otherwise able to buy basic insurance," said Griffin, who is retired from running an information technology company.

The Griffins are among millions of people nationwide who buy individual insurance policies and are receiving notices that those policies are being discontinued because they don't meet the higher benefit requirements of the new law.

They can buy different policies directly from insurers for 2014 or sign up for plans on state insurance exchanges. While lower-income people could see lower costs because of government subsidies, many in the middle class may get rude awakenings when they access the websites and realize they'll have to pay significantly more.

Those not eligible for subsidies generally receive more comprehensive coverage than they had under their soon-to-be-canceled policies, but they'll have to pay a lot more.

Because of the higher cost, the Griffins are considering paying the federal penalty — about $100 or 1 percent of income next year — rather than buying health insurance. They say they are healthy and don't typically run up large health care costs. Dean Griffin said that will be cheaper because it's unlikely they will get past the nearly $13,000 deductible for the coverage to kick in.

Individual health insurance policies are being canceled because the Affordable Care Act requires plans to cover certain benefits, such as maternity care, hospital visits and mental illness. The law also caps annual out-of-pocket costs consumers will pay each year.

In the past, consumers could get relatively inexpensive, bare-bones coverage, but those plans will no longer be available. Many consumers are frustrated by what they call forced upgrades as they're pushed into plans with coverage options they don't necessarily want.

Ken Davis, who manages a fast food restaurant in Austin, Texas, is recovering from sticker shock after the small-business policy offered by his employer was canceled for the same reasons individual policies are being discontinued.

His company pays about $100 monthly for his basic health plan. He said he'll now have to pay $600 monthly for a mid-tier silver plan on the state exchange. The family policy also covers his 8-year-old son. Even though the federal government is contributing a $500 subsidy, he said the $600 he's left to pay is too high. He's considering the penalty.

"I feel like they're forcing me to do something that I don't want to do or need to do," Davis, 40, said.

Owners of canceled policies have a few options. They can stay in the same plan for the same price for one more year if they have one of the few plans that were grandfathered in. They can buy a similar plan with upgraded benefits that meets the new standards — likely at a significant cost increase. Or, if they make less than $45,960 for a single adult or $94,200 for a family of four, they may qualify for subsidies.

Just because a policy doesn't comply with the law doesn't mean consumers will get cancellation letters. They may get notices saying existing policies are being amended with new benefits and will come with higher premiums. Some states, including Virginia and Kentucky, required insurers to cancel old policies and start from scratch instead of beefing up existing ones.

It's unclear how many individual plans are being canceled — no one agency keeps track. But it's likely in the millions. Insurance industry experts estimate that about 14 million people, or 5 percent of the total market for health care coverage, buy individual policies. Most people get coverage through jobs and aren't affected.

Many states require insurers to give consumers 90 days' notice before canceling plans. That means another round of cancellation letters will go out in March and again in May.

Experts haven't been able to predict how many will pay more or less under the new, upgraded plans. An older policyholder with a pre-existing condition may find that premiums go down, and some will qualify for subsidies.

In California, about 900,000 people are expected to lose existing plans, but about a third will be eligible for subsidies through the state exchange, said Anne Gonzalez, a spokeswoman for the exchange, called Covered California. Most canceled plans provided bare-bones coverage, she said.

"They basically had plans that had gaping holes in the coverage. They would be surprised when they get to the emergency room or the doctor's office, some of them didn't have drug coverage or preventive care," Gonzalez said.

About 330,000 Floridians received cancellation notices from the state's largest insurer, Florida Blue. About 30,000 have plans that were grandfathered in. Florida insurance officials said they're not tracking the number of canceled policies related to the new law.

National numbers are similar: 130,000 cancellations in Kentucky, 140,000 in Minnesota and as many as 400,000 in Georgia, according to officials in those states.

Cigna has sent thousands of cancellation letters to U.S. policyholders but stressed that 99 percent have the option of renewing their 2013 policy for one more year, company spokesman Joe Mondy said.

Cancellation letters are being sent only to individuals and families who purchase their own insurance. However, most policyholders in the individual market will receive some notice that their coverage will change, said Dan Mendelson, president of the market analysis firm Avalere Health.

The cancellations run counter to one of President Barack Obama's promises about his health care overhaul: "If you like your health care plan, you'll be able to keep your health care plan."

Philip Johnson, 47, of Boise, Idaho, was shocked when his cancellation notice arrived last month. The gift-shop owner said he'd spent years arranging doctors covered by his insurer for him, his wife and their two college-age students.

After browsing the state exchange, he said he thinks he'll end up paying lower premiums but higher deductibles. He said the website didn't answer many of his questions, such as which doctors take which plans.

"I was furious because I spent a lot of time and picked a plan that all my doctors accepted," Johnson said. "Now I don't know what doctors are going to take what. No one mentioned that for the last three years when they talked about how this was going to work."

Comments

The Hero Zone's picture
The Hero Zone

You inflict upon everyone under tax penalty something that many may not want nor need. It is done under the presumption that that are all paying for other people not paying a hospital.

So, please Big Dog, explain that. How are you, presumably an Ohio resident, paying for someone in South Dakota not paying their hospital bill? Talk down to me using clear examples, large font, and mental pictures since I am clearly not past a fifth grade level of comprehension and critical thinking.

The Big Dog's back

How do you cover your losses?

The Hero Zone's picture
The Hero Zone

In most cases, I eat my losses (and offer a lecture on what such behavior is bad and destructive). It is a risk of doing business. I am not compelled to do what I do. Interacting with the public opens you up to risk. For the risk, there is potential but not guaranteed reward. Someone can come into my store tomorrow and shoot me when I otherwise could have just been at home not doing what I do. But, I like what I do and while I don't like being shot, it s risk I must assume. Same with theft. Property damage.

Fortunately, like with hospitals, my losses/shrinkage is a minimal part of my books.

But where there is a fallacy in saying that you pay for hospital losses is you making the presumption that a hospital's money is the government's first and theirs second. Let's say they, like I, "write off a loss". So that means I am presumably paying less in taxes because of the discount I get from theft/nonpayment/charity (which I DO give away product to various nonprofit charities as I am not a heartless person). Presuming that the taxes I would have paid on that are somehow yours (if you were the government) first and that you are owed everything you think I should pay but don't for uncountable circumstances is absurd.

I don't know if you have kids, it's none of my business. But let's say you give your minor son $20 for good grades. Did that increase your household income you report by $20? Did you pay taxes on that $20 of presumably generated income? If you didn't, did you rob "us" of the tax on that income? Do we need to come after you for that for unfairly not contributing?

Again, whose money is it we're talking about? The government's or your's/your business's? Do you not own your money...your proof of your physical and/or intellectual contributions to society? That's why we get this absurd "cost" to the shutdown when everyone still received pay for the work they did or otherwise would have provided. Does a government write laws expecting 100% return on participation and funding? Wow...must be nice! Are our margins so thin that in the case of something like a 17% "shutdown" of the government for two weeks that we are somehow in financial collapse?

Must be nice to never have to expect to go through lean times. Any retailers or restaurateurs on here reading this want to talk about fall in this area? Say, oh, late August through mid-November? Are you all guaranteed 100% returns every day of every season? Cedar Point managers, are you out there? Does a rainy day collapse the company because you don't get what you expected to? If so, why in the heck did you make your year (or longer) projections off of 100% funding of every day you were open? Who hired you?

So, just because an entity isn't producing as much tax as someone in a distant place THINKS they should doesn't mean the system is being robbed. In fact, I don't believe there is anything in the ACA that prevents this same practice from happening! So now we have gone through all the pain, frustration, and arguments to solve absolutely nothing all while allowing someone behind a desk to tell us our money is the government's first and not ours because we aren't producing to their far-removed and detached speculations.

= = = = = = = = = =

On a separate note:

1. How does the ACA prevent policy lapses?
2. How does the ACA get people to pay money they owe a hospital or insurer when they already don't have the money nor interest in doing so?
3. What prevents someone from buying a policy after X diagnosis, getting it treated, then dropping it only to renew it again when needed? Does that not game the system or deny "us" tax services?
4. If 10% of the population who could have coverage didn't have it for whatever reason, how is this going to convince them or make it more "affordable"? It's not the best option, but why not just expand a government health service to them (which I won't even get into the hassle, rejection of service, extreme debt, and diminished payments those programs offer to those who accept them).
5. Do you have so much faith in our government and the track record it has had over the last century or longer that you are 100% convinced they can actually manage a functional, efficient system for three hundred and ten plus million people from almost every conceivable walk of life, financial circumstance, geographic location, and medical requirement? Especially from a distant, centralized office?

anthras

Now I hear that many will pay less with the subsidies well who is going to pay the subsidies "THE REST OF US"

Kottage Kat

There u go
Amen and ditto

Sam

Typical of this regime, they lie to pass the Unaffordable Care Act, then they punish the working middle class to cater to the free government hand out crew who votes for them.
Question, piddle puppy are you buying the government insurance, or are you on a private supplemented pension funded plan, maybe you are a "self centered teabagger".
The "entitled group" are not the good hard working folks who pays and work for what they have, the "entitled group" are those who think they are entitled to everything and the taxpayers and government should provide it to them at little or no cost..

grandmasgirl

sam: good reply. I agree with you. I am one of the lucky ones who worked for 43 years and am now getting medicare at a cost of $105 a month and paying close to $200 a month for supplemental insurance. I also pay close to $75 for drug coverage. That's a bargain price compared to what other middle income people are paying. I am also lucky to be in fairly good health so I don't see the doctor more than twice a year. As far as "Big Dog" goes, I learned quite a while ago that his comments are not worth reading. Obama can do no wrong in his sight. I still read his comments just to realize how smart I really am and how others don't have a clue.

Peninsula Pundit

'I still read his comments just to realize how smart I really am and how others don't have a clue.'
Well, aren't you special.

The Big Dog's back

g g,So you are for Medicare for all (single payer)?

kURTje

Welcome to our world. The article says much. Entitled group now having to deal with things those behind them endure daily. (Unless you missed the free food hand-out)

Licorice Schtick

Obamacare was a compromises. Something without all those leaches would have been better. The Canadian approach (single payer) would be better, but we've been brainwashed to think Canadians hate there healthcare, even though they love it. Medicare for Everyone would be good, too.

looking around

"But the 64-year-old recently received a letter notifying him the plan was being canceled because it didn't cover certain benefits required under the law."

He will be eligible for Medicare this year then it's a different story, there is no mention of his wife's age but if she is not 65 she should look at single coverage for herself until she catches up to him.

mikesee

So it's ok if he has to pay an extra $6000 in premiums for one year to keep his new crappy coverage?

Hey, at least he will get maternity coverage!

looking around

"Philip Johnson, 47, of Boise, Idaho, was shocked when his cancellation notice arrived last month. The gift-shop owner said he'd spent years arranging doctors covered by his insurer for him, his wife and their two college-age students.

After browsing the state exchange, he said he thinks he'll end up paying lower premiums but higher deductibles"

Obviously if the policy he had did not meet the standards set by law more coverage needed to to be extended be it by the company he has had or the exchange plan. Just as with any insurance auto, home etc. the way they make the premium look affordable is to raise deductibles.

That said, the holes the new policy closes may be far more desirable even with higher deductibles versus the cost of the uncovered care.

looking around

" their policy doesn't cover benefits required under Affordable Care Act "

I wish the media would list exactly what was not covered that these company's would rather terminate the coverage rather than step up to the plate. The problem with low coverage high deductible plans are that the insurance company is banking on that their pockets will never be reached. Sans an all out catastrophic event in the insureds health they simply pay and pay with no return. Much like any other form of insurance. These burial and final debts insurance plans are a notorious scam that seldom pay anything out.

It is a necessary evil for one to CYA for events that could bankrupt yourself and family, but it would be nice to see laws that would force these insurance plans to be more proactive in health care to prevent post high cost care rather than keeping the insured from seeking early treatment and checkups.

I think the Affordable Health Care Act is a good starting point, but obviously the insurance company's are waging a war of their own. If they don't want to play ball, I'm all for riding heard on them.

Erie Sniper

The Affordable Care Act isn't a CYA choice that consumers are choosing to make, they are mandated by law to do this which results in higher premiums and deductible ($770 to $1275 and $2500 to $12700). To say that the things that need to be covered (by law)but aren't covered by the current insurance makes up the cost difference is crazy. Why do I need coverage for something that I will never need? Keep the government out of life. If you need government assistance fine, but don't tell me that I need it!

The Big Dog's back

Do you understand what the definition of insurance is?

Erie Sniper

Yes I do. I have insurance. I pay a premium for my insurance. I pay a deductible for my insurance. Why would I want something that is demanded by the government that is going to cost me more money?
If the government demanded that you buy their version of a gallon of milk, that costs more than double the price you pay now, would that be okay with you?

The Big Dog's back

Not the same comparison. Nobody is responsible if you don't buy the milk. If you suffer a catastrophic medical event without proper coverage who pays?

Erie Sniper

It is a great comparison for exactly what I said. Why pay more for something that I can get at a cheaper price. Do you ever buy anything that is on sale, or do you always want to pay the higher price?
Responsible for what, your catastrophic event that you keep bringing up, that MIGHT happen, and that is already covered by my insurance? I should be allowed to have MY CHOICE of what insurance I pay for and not be told that I now have to buy what the government says I have to.

The Big Dog's back

You are not getting the same thing, you're getting more. So you have unlimited coverage? Not!

Erie Sniper

You don't get it and obviously never will. How would I be getting more? You have no idea what I have. Why would I want something that I will never need, maternity leave coverage? Still my point is that its more expensive and being forced onto people.
You're s-t-o-o-p-u-d!

Peninsula Pundit

In an odd twist to your statement, the price of milk WILL be doubling soon. Why should the govt pay a farmer for dairy supports? If milk goes to $8 a gallon, like they've mentioned it will if Congress let's dairy price supports end, that's what it costs, right? To co-opt a line from these boards: 'Why should the lactose-intolerant help subsidize a commodity they cannot use?'

Erie Sniper

Your comment is totally irrelavent. Anyways, the government should not be subsidizing anything. The corn susidies have raised the prices for everything, just so that we have to buy ethanol to put into our fuel tanks, which results in lower miles per gallon, costs more and increased wear on your vehicle. The government does more damage than good to everything they touch!

Pterocarya frax...

This article is just more proof that the media is not liberal as all the right wingers try to claim. From the article:

"the Griffins are considering paying the federal penalty — about $100 or 1 percent of income next year —rather than buying health insurance"

That means their income is $10,000/year. We don't know her age so I guessed at 62, and we know his is 64. With those ages and income of $10,000/year the Delaware health exchange website says they are eligible for Medicaid and don't need to buy a plan at all. The possibility exists that they lied about their income so I changed it to $25,000/year. At that income and ages Delaware says they could get a silver plan with max out of pocket of $4500/year and premiums of less than $100/month after tax credits, for both of them.

In other words, either they or the author...most likely both...are not presenting the entire story on purpose. These people are eligible for a better plan for a lot less money than they have been paying.

This author should be ashamed of herself.

looking around

Pterocarya frax.... Thank you for pointing out the facts!

Peninsula Pundit

Great critical, investigative comment.
Wish the other side of this issue would employ some of that.
Might tamp down some of the wild ASSertions we read here.
Yeah, that ol' left-wing media strikes again, I tell ya.

sash

The first thing I caught was that they said they went to the state exchange. Penn doesn't have a state insurance exchange. Figured they must live in Maryland because they said they wouldn't be able to use their Delaware doctors and both NJ and Penn citizens would get insurance off the federal exchange. The Maryland state exchange has some of the lowest rates in the country. I did the same as you and assumed his wife was 62 and checked out rates on the federal and state exchange. Found Bronze family plans as low as $366 a month and a better Silver plan for $702($5000 family deductable/20% copay). The $12,700 deductable they claim isn't a deductable, but the maximum allowable out of pocket expenses which includes deductables and copays. Those are straight rates with no credits. Reminds me of some guests on Hannity last month who were bemoaning their costs/loss because of the ACA. A reporter, I think with Forbes, followed up on their stories for more details and found they were almost complete nonsense. One claimed to be an employer who had to cut his employees to part-time because of ACA requirements. The reporter found that the man employed 4 people and his "requirement" under ACA was to notify them that they could get insurance through healthcare.gov. So...$.30 to print and post a notice? The man admitted there were other reasons he cut hours, but then hung up on the reporter and refused to talk to him again. Another woman could have gotten the same policy, from the same company, on her state exchange for nearly $400 dollars a month less than what she was going to pay purchasing it directly. Her only response was that she wasn't getting any government insurance. BC/BS is the same company whether you buy direct or through an exchange. I'm sure there are a lot of people who will end up paying more for insurance they feel they don't need, but it doesn't help their arguments when the media showcases people that either lie outright, or are too stubborn or dumb to take advantage of the exchanges.

looking around

Thank you again for the facts!

The Big Dog's back

You would think this is something we all could agree on, personal responsibility for insurance. But the right wingnut crowd hates that Black guy at the WHITE house so much, they won't agree with anything he does.

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