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

deertracker

Agreed!

grandmasgirl

Here we go again. Like I said, your comments are worth reading, but for some reason I still do. LEAVE IT TO YOU TO BRING RACE INTO THE PICTURE! You have to be a racist to use that excuse so much!

The Big Dog's back

A Conservative's main virtue is personal responsibility right? This is personal responsibility. Just like child support, some people need to be forced.

Erie Sniper

Wouldn't have to pay child support if the low-life would have actually been a good husband or father in the first place. Just like common sense, some people need to be forced to use it.

shucks

"..You have to be a racist to use that excuse so much!"...or belong to the Tea Party.

Peninsula Pundit

ZING!

The Hero Zone's picture
The Hero Zone

[release]

Big Dog, please identify where the "personal" comes in personal responsibility when a government is forcing you as a private citizen to enter into private contracts with private companies. Why is my ability to enter into private contracts, a private property right, infringed upon? How is it personal when you are told what to choose from by a small group of individuals hundreds of miles away who will never know nor care about you. Forget personal, how is that responsible?

My grief with the content of the tax aside, how about HOW the bill was passed. All the closed-door deals? Rushed? No reading it? Passing it as a budgetary item instead of a traditional law to avoid having to argue it? Where is my $2,500/year premium reduction I was promised?

It's amazing to hear this administration blame insurance companies, their VERY MEDIUM through which they are inflicting this law on us as the ones who are responsible for the cancellations. It is astonishing to hear politicians blame their constituents for being so stupidly duped by evil insurance companies, THE VERY MEDIUM THROUGH WHICH WE ARE COMPELLED BY LAW UNDER PENALTY TO PURCHASE COVERAGE, as to have gotten plans that until they tooted their own horn were "sub-standard". The Federal Government which runs many other failing projects actually thinks they can manage a private industry in which they do not participate and I doubt many have even worked in?

SEE?! People who don't even know you, will never meet you, and probably live nowhere near you let alone your city/state just know that what you bought was garbage based on what? What proof? Where are charges against insurance companies then for lying to people about the quality of their prior coverage? What, there are none? How odd! Why can't our central, distant authority know me and my personal circumstances?

Are there absolutely NO red flags nor hesitations you have about this tax? Nothing? This is as pure and clean as the wind-driven snow to have a central, distant authority failing to meet the needs of the citizens (in many other aspects let alone this one) as it will never be able to do? Ever? Never in history nor ever in the future of humanity anywhere? Or...is this time different? Why? How?

If you want an authoritative fist to rule your life because you can't do it yourself that is your business. But you can at least do those of us who don't want the drivel and pet projects of lifelong bureaucrats a favor and at least advocate for it to move to Columbus instead of D.C. At least then our promises of paradise can be confronted only 2 hours away and against 11 million others instead of 310+.

Our dystopia would have to compete against 49 others.

What is your end-game, Big Dog? What do you want? One-party rule? An all-powerful, non-termed government to make decisions for us? What is your utopia and how does this law fit into it (presuming you are participating in it as it seems our rulers don't have to for some reason)?

And as a P.S. - Shame on you for bringing race into something with which it has nothing to do. The color of the president nor the office he lives in are irrelevant to this discussion and many, many others that actually matter. Bringing that up is, going back to your point, a LACK of personal responsibility to discuss things civilly and rationally.

[/release]

The Big Dog's back

Race has nothing to do with it? What planet do you live on sappy?

The Big Dog's back

Oh, and sappy, For the umpteenth time, I wanted Medicare for all. (single payer)

The Big Dog's back

Also sounds like you want a Fascist Gov, where business and industry controls everything.

The Hero Zone's picture
The Hero Zone

Incorrect. Industry cannot rule people, only serve their needs, wants, and desires. A facist government is no better than any other totalitarian one. My dream government for the U.S.?

Representative Republic. The Federal government serves only to facilitate interstate commerce, provide national defense, and a few other inter-governmental services. Welfare and economic manipulation in its various forms not being one of them. The Federal government is rather inconspicuous and behind the scenes, being smaller and more efficient.

The states are where most of the major policy, including entitlements, are decided upon. Laws and regulations are made in state capitals that are closer and more accessible to the people. Each state, almost its own country, competes against the others for the benefit of citizen and company alike. Ohio taking care of Ohioans as best we can since we are more intimately familiar with the demographics, geography, and economic conditions of our population.

Decisions and representation are literally closer to home. Those we send to D.C. will be done through popular election for House members to represent the citizens on a national level. Those in the Senate are sent by state legislatures to represent the states on the national level. On top of that, service will be term-limited.

Tax Day will be the Monday before elections in November and the tax system will be "universal" with no exceptions/loopholes. Everyone pays, everyone benefits. On the Federal level it won't be so bad since they will require a minimum of your money to provide their services. It will be the State that may ask for more of your money to provide whatever services it offers.

Education would be a priority in tax use with a focus on life skills, financial literacy, and the options to specialize in a direction of your choice. But of course, that is a decision for Ohio to make and not impose on other states. If Indiana doesn't want their kids to be financially literate that is their decision.

The individual is empowered. The individual is educated. The individual is trusted to be a part of civil society and the tools are made available to do so. The individual chooses which faiths, markets, neighborhoods, schools, etc. they wish to interact with for the myriad and impossible-to-know reasons they want to. The economy works along the guidelines and principles of spontaneous order for most of its function.

Private charity in all its forms is encouraged. Public charity is more directly voted by those who will both receive and pay for it. There will be more direct accountability and stability than from a centralized state. If Ohio goes bankrupt for incompetence, unwieldy laws, or some other reason it doesn't take down the rest of the states because it is "too big to fail". If a politician in Columbus makes an error of judgment it will no less be a scandal or tragedy but it would only affect 11 million people instead of 310+ million.

This would also encourage a breaking-up of the two major parties, unless they wished to simply be national lobbyists. Ohio Republicans may actually be agreeable with Mississippi Democrats on many issues. It is less one-size-fits-all party structure (not that I want parties to be intrinsic to this government).

So there you have it Big Dog. My government. My "utopia" is not perfect, but "more perfect" because it empowers each of us, you and me, to be educated, civil, and follow your dream whatever it may be while presenting a stunning array of options, opportunities, and features that are customized to each state.

wowbagger

Big Dogs rational can be summed up with a quote.
"Unless a man has talents to make something of himself, freedom is an irksome burden. Of what avail is freedom to choose if the self be ineffectual? We join a mass movement to escape individual responsibility, or, in the words of the ardent young Nazi, “to be free from freedom.”"
There you have it.

Sam

When facts and logic fails the far left wackos revert to their racial card rants. I agree it is PERSONAL responsibility, something the far left wants to government to control.

Peninsula Pundit

Most unfortunately, the 'far right wackos' only rant when presented with facts and logic.

Darwin's choice

For all you believers....

google search... "obama i did not know" .... 508 million matches

Darwin's choice

The website is back up and running:

http://www.obamacaregov.us/

Be sure to hit continue to read through....

ladydye_5

The same people, making the same arguments. Don't you all get tired of fighting with each other? That is the problem with the country. THEM against US. What happen to the WE?

The Big Dog's back

One word, teabaggers! That's what happened.

wowbagger

The democrats always need someone or something to blame for their own ineptness, It is common for most to start calling names if they find no one to blame for it.

Erie Sniper

You sure use the word teabagger a lot. Are you catching or pitchin?

Darwin's choice

That should be spit or swallow.....

Darwin's choice

Troll.

shucks

Durwood is always the idiot

Darwin's choice

Good to see you're still wearing your azzhat robe queenie.

shucks

Another idiotic statement from the troll.

Darwin's choice

And yet another of your mind numbing posts. If you don't like what I post, don't read them, moron.

Moonbats like you are the reason this country is so dynamic.....

shucks

And yet, another idiotic statement from the king of the trolls.

If you don't like my replies to your mind-numbing posts...don't read them.

You show the intelligence of the non-thinking puppet you are.

shucks

"Moonbats like you are the reason this country is so dynamic....."

What's that supposed to mean? Kinda stupid - well, that's SOP for Dummies Choice.

How old are you - 14,15 ? Because you really don't sound too much older.

kURTje

I've yet to know Canadians flocking to America to escape their horrific health care. Let's not forget the seniors who used to go over to Canada for their maintenance drugs. (cheaper)

mikesee

Here is a area that people are not even complaining about!

"Even though the federal government is contributing a $500 subsidy"

Where do you supporters think this money is coming from? The money fairy? Once again our gov't has started another entitlement program that will not be sustainable! People, probably sooner than later, a huge tax increase will have to happen to fund these programs.

As I have said before obamacare will only produce record profits for insurance companies! This is exactly what Obama and his henchmen were whining about and then came up with this crazy plan.

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