One final push for 2013 effectives

There’s nothing like waiting ’til the last minute…

But this is America, that’s what we do – right? There are long lines at the post office on April 15th, and now, with the new, more expensive ACA-compliant plans taking over for 1/1 effective dates and beyond, a lot of people are scrambling to purchase coverage that starts before the first of the year so they can lock in a lower rate.

In the individual market, non-grandfathered plans must come into compliance by their renewal date in 2014. This timeframe could be extended in states that agree with President Obama’s “fix” to let carriers renew these existing plans in 2014, but not every state is moving forward with the President’s plan – in fact, California decided yesterday not to delay the transition to the new policies that have all the bells and whistles. And not every state or every insurance company is allowing consumers to wait until their 2014 renewal date to get compliant – many consumers are having their policies cancelled December 31st of this year.

But in other states – ones that are allowing for the transition time or at least allowing individuals to wait until their renewal date to switch to an upgraded plan, there may be an opportunity for consumers who hurry to get health insurance now – in 2013 – and postpone the impact of the ACA for them and their families just a little longer. In fact, many people who already had individual health insurance coverage have been renewing early – on December 1st – to buy themselves a little more time. We’ve seen a similar trend in the small group market in a number of states.

There are a lot of arguments to be made for the changes that are happening. Health insurance in the individual market will be guaranteed issue starting in 2014. People can’t be charged more for pre-existing conditions. The plans will cover more benefits, including maternity. The out-of-pocket limit will be capped. Copayments will now count toward the OOP max. And this list goes on. But still, one has to wonder how much demand there really is for all of these new benefits if millions of Americans are trying to find a way around it.

In a free market, consumers decide what they want to buy, and companies offer products and services to meet this consumer demand. But when the government gets involved, products are designed “to code” whether people want the new features or not, and normally they don’t. At a time when the number one reason Americans don’t have health insurance is because of cost, the government decided to solve the problem by making plans more expensive.

So, predictably, here’s what’s either happening now or will be happening soon:

  • Lots of people are doing whatever they can to keep their current coverage.
  • Other people are trying to buy less-comprehensive plans while they still can.
  • Despite the higher prices, millions of people will purchase qualified individual plans for 2014 because the government’s paying part of the bill.
  • Those who don’t qualify for a subsidy may be priced out of the market, so instead of buying compliant plans that will help them avoid a penalty, they’ll either go uninsured or will search for other options like short-term medical plans.

Everyone’s situation is different, so brokers need to be able to offer a lot of solutions. And the door is closing on some of those solutions, but if you know some clients who will qualify and they live in a state that will allow it, there might be a few more days to sell them a plan now that actually fits into their budget.

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