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

From the Grave

Hey, I didn't vote for him.

Licorice Schtick

The media is rife with horror stories like this and most of it is poppycock. Some old cheap policies were nearly worthless, with crazy exclusions, foot-dragging payouts, low caps, and no docs willing to participate. Most people will see cost decreases, especially total cost after claims. In the atypical cases where people pay more for coverage, they will probably have a lower overall health care bill because they'll pay less out-of-pocket, due in part to higher caps. The caps on your coverage were a hidden cost of the old cheap policies. Obamacare caps insurance company profits, not your coverage.

anthras

I did have a very good policy and was very pleased with it, Very little out of pocket and they did pay the claims quickly,

Just read a article from "US News and World report" advising that some of the top hospitals are opting out of Obamacare. The Cleveland Clinic advised that out of all the Obamacare exchanges they would only cater to Medical Mutual of Ohio.

Also the topic has been the cost and coverages of the different policies but what about the millions of workers that will be part time in lieu of full time ? Many of the prevous full time jobs had a decent health coverage and now they will be regulated to part time with no health benefits so that means less hours equals less pay and now in lieu of company health care they will have to purchace it out of pocket.

mikesee

licorice, the point is that is what those people wanted!!! More and more doctors and healthcare facilities are opting out of participation in the ACA. What good does it do for a person to have the best coverage in the world if they have to drive 3 hours to get to their doctor?

usea611

----Google is paying 80$ per hour! Just work for few hours & spend more time with friends and family. Yesterday I bought a top of the range Lancia after having made $9458 this month. Its the most-financialy rewarding I've had. It sounds unbelievable but you wont forgive yourself if you don’t check it out http://goo.gl/w7ceUX

There you go again

I didn't vote for him either. Maybe next time folks will listen to us "wack job" right wingers!!!!

Pete

Never happen. The bottom feeding parasites in this country will perpetually demand others pay more so they can have "free" things. It is so deeply a part of their mental illness that it cannot be fixed.

The Big Dog's back

Typical self centered teabaggers. "I'm in good health, I don't need all that coverage". Until they need it. Then who is suppose to pay? The rest of us because the hospital "writes it off"? Hospitals never write anything off, somebody pays. The rest of us.

mikesee

Typical DUMBOcrap. Can't comprehend what they read. This couple had insurance, wants insurance, needs insurance. But the idiot who wanted to implement Obamacare (I am sure you know him) LIED to every and anyone just to get this passed. A $500 per month increase in premium plus a HUGE increase in deductible. Sure that's reasonable (sarcasim). Dumba$$es. My hope is that everyone that voted for our current president loses their insurance and has to pay 5 times as much for new insurance.

SamAdams

"Until they need it...?" Really? And when, pray tell, is a man going to need prenatal care? For that matter, when is somebody like ME going to need it? (None of your business, but pregnancy isn't a possibility for me. So why should I have to pay extra for "free" contraceptives? Why should pregnancy be a covered charge for ME?)

Insurance isn't a "one size fits all" kind of deal, but that's what Obamacare is, only with higher deductibles and all sorts of "freebies" that AREN'T.

The poor were already qualified under Medicaid. The retired elderly? Medicare. Obamacare is doing NOTHING but destroying the healthcare and health insurance industries, and jacking up our effective taxes (I know it's a tax because John Roberts SAID it's a tax). It's just that, now that a lot of people have seen what it's doing to premiums and coverage, they know it as well as I do.

You can sit there all smug with your employer-provided benefits for another year. But wait 'til THAT mandate kicks in, and you'll almost certainly feel my pain for yourself. Unless, of course, you're an exempted union member (have you bothered to ask yourself WHY unions and many others of the Democrat base are being exempted, by the way?). In that event, I hope you enjoy your job and your freebies while they last because, given the unsustainability of overall government entitlement spending, they won't be lasting long!

The Big Dog's back

sam, was everybody's home hit by a tornado? If not you shouldn't have to have insurance that covers tornadoes right? Have you ever had an emergency medical condition while driving a car and ran into and did damaged to something? If not, why should you have to pay for that coverage? Get my drift?

Sam

Driving is a privilege not a right, only if you CHOOSE to drive would auto liability insurance be mandatory. I can't be forced to buy auto insurance by the government if I don't drive. If someone chooses not to have health insurance they should have that right. If they incur major medical costs they are still financially responsible to pay them. Your theory of the hospital "writing them off" is false they file a civil action against the individual, obtain a judgment and pursue garnishment of wages and other civil remedies. Yes I get your "drift" far to the far left..

looking around

Sam some who drive opt not to have insurance this is where no fault comes in. You can't get blood out of a turnip with civil action so who pays? Same with health service debts. You may choose to drive or not but as long as your breathing fresh air on this earth you are pron to health issues needing medical services that will result in debt. They can spend money to take you to court civilly and probably settle on a percentage of the debt after your bankruptcy, but they will pass along their losses to the rest of us. Get it?

anthras

In many states liability insurance is not mandatory a person just has to comply with the state's financial responsibility laws. Ergo if you can prove that you have enough assets that you could be financially responsible to cover an accident you would not need to purchace insurance

looking around

I don't think many people with enough money to hold a bond to be self insured would be dumb enough to do it, it's cheaper to buy the insurance. Being responsible is mandatory by law either way.

anthras

It may not be a wise choice however it is not something that government forces them to do as they do have a choice.

mikesee

So doggie how would you feel if the gov't said everyone has to carry $5,000,000 in homeowner insurance coverage? That $20,000 dollar house that you live in is now insured at $5,000,000 and your premium is adjusted for that. Seem fair? Wow, I should send that thought to your hero.

The Big Dog's back

And sam, answer the question as who is suppose to pay if they have a catastrophic health problem costing millions that their previous insurance wouldn't cover?

Sam

Great logic for all 60 plus women now having full contraceptive and paid abortion coverage, or non drinkers having booze counseling paid for, you might know about that. As for the tornado coverage on my homeowners insurance, if I don't have a mortgage that's my choice, oh I forgot the government must choose anything for me. Still didn't your answer if by your or definition if you are a tea bagger? Are you on the government exchange or on a funded pension plan, if the government plan is so great why don't you change?

The Big Dog's back

If it was single payer I would go on the Gov plan. If I had a fly by night insurance company I would go on the Gov plan. But I have a choice. OH MY GOD, a choice!

SamAdams

Okay, Big Dog, here's a challenge for you: Go to healthcare.gov and research the costs for insurance coverage. Use your own information. Whatever the premium is per the Website, add about another 50% since, in many cases, the site is quoting premiums as much as HALF of the actual costs. Then come back here and tell us what a GREAT and AFFORDABLE deal you could get! I won't hold my breath.

The Big Dog's back

Oh, and you're right, you didn't answer.

Sam

typical far left winger, you still didn't answer are you on a funded pension plan health insurance and why don't you switch right now if the unaffordable care act is so great?

looking around

Sam? mortgage paid no insurance? whats your address? Bet your steps get real slippery in the winter! CHA CHING!

Peninsula Pundit

'Obamacare is doing NOTHING but destroying the healthcare and health insurance industries....'. With the huge increases in premiums and deductibles, how do you figure that this plan destroys health insurance companies? To the contrary of your statement, insurance companies are going to make out big time. The president is supporting an industry and all you can cry about is how it's going to affect you. C'mon, it supports business! Pull out yer wallet and quicher crying.

SamAdams

Actually, the pre-existing conditions mandated coverage alone will hurt insurance companies. Between that and the "freebies," it's understandable the rates went way up. I'm not questioning that. What I AM questioning is why I have to have coverage for things it's literally not possible for me to ever use.

Big Dog's tornado example is a terrible one. Is it possible for my home to be hit by a tornado someday? Yes. Is it possible for me to get pregnant? No. See the difference NOW?

With my auto insurance and my homeowner's insurance, I choose my level of coverage such as the deductible amount and just how comprehensive the coverage should be. Why not with my health insurance? With my auto insurance, if I'm a terrible driver with a history of tickets and/or accidents, my premium is higher. Why not the same thing with pre-existing health conditions?

There's no difference between FORCING you to get earthquake or flood insurance coverage for your house when you live in a close-to-zero risk area, and FORCING you to get health insurance at a level you don't want and/or with provisions you'll never need. What Obamacare does is MAKE you get earthquake insurance and, while you're at it, pay for your NEIGHBOR's earthquake insurance, too.

As for me complaining about how it affects me, of COURSE I am! Isn't that what people like you were complaining about when you thought your hospital bills were "padded" to make up for those who couldn't/wouldn't pay? Did you just pull out your wallet and quicher crying? In my case, I can pull out my wallet and cry all I want to (or YOU want me to). It's still not going to make the premiums even CLOSE to affordable.

sash

Like most people, you've been paying for coverage you will never use for years. As a woman, I will never have any need for a PSA test for prostrate cancer nor will I ever need a prescription for viagra. I have never needed, nor do I anticipate ever needing alcohol or drug counseling, but they are also included in my coverage. My plan may not break down a per item cost, but you can be sure all of these benefits are counted when they determine my premiums. Same song, different verse.

mikesee

Come on sash my two sons are so happy to have maternity coverage! bahaha.

The Hero Zone's picture
The Hero Zone

Big Dog, can I have you write me a check next time some kid steals something from my store? Otherwise I will have to write it off. Or will I have to pay as an intrinsic hazard of owning a business, providing a service, or otherwise interacting with other people? We can't have that! Even though hospitals only write off somewhere around 5% of their cases, that is just 5% too much. There should be NO risk in anything anywhere to anyone, hmm?

I will provide you an itemized list and a bill. Thanks for doing your part to preserve our society. Make all checks payable to "The Hero Zone". If you don't, I will impose a tax penalty on you for not being personally responsible for my hazard. It's only fair and civil.

SamAdams, if you have suffered a loss of something in the matter of the course of your own business you should send Big Dog an invoice, too. He is very generous with his own money (and not the money of others) enough to compensate you for any/all loss you may incur in your life.

The Big Dog's back

sappy (h z), am I talking to much above your comprehension?

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