Off-Season enrollees may be screwed on deductibles...but don't blame Obamacare

Thanks to Jed Graham for bringing up an interesting point about the 2015 renewal-vs-new-enrollee issue earlier today.

His original point was that it's likely going to cause no end of headaches (especially to me) to try and keep track of the enrollment figures since there's going to be around 7.5 million existing enrollees to contend with (most of whom, I would hope, will renew their policies) plus the newly-added enrollees whose policies start in January or later.

However, it occurred to me to check something out and sure enough, over at HC.gov you'll find this notice:

Any 2014 plan you enroll in with a Special Enrollment Period ends December 31, 2014. This is true no matter what month in 2014 your coverage starts.

OK, so anyone whose policy started after May 1st (ie, those who enrolled after April 15th) will have to renew their policy no later than December 15th in order to keep it running. The policy doesn't run for a full year in those cases. For the most part, that's not an issue; if they want to keep the same policy they'll just renew between 11/15 - 12/15 and be all set.

However, this also suggests that the deductibles for those policies could be a bad deal for off-season enrollees, since deductibles are based on a full year, not by month. If you enroll, say, today, your policy won't start until November 1st and ends on December 31st, which means that you'll only have 2 months to "max out" your deductible before most of your coverage actually kicks in.

If your deductible is only a few hundred dollars this isn't that big of a deal, but if it's a thousand bucks or more, the "balance" on your deductible could easily be reset back to the full amount on January 1st before you've had a "chance" to hit the 2014 limit.

As for those who enrolled during the open enrollment period but after last December (ie, people whose policies started in January - May), I'm not sure what the rule is. Do those policies also renew on 1/1/15, or do they run for the full year (through 1/31/15, 2/31/15, 3/31/15 or 4/30/15)?

Strike That: It appears that all exchange policies (and presumably off-exchange policies as well) will have to be renewed (between 11/15/14 - 12/15/14) regardless of whether they were originally enrolled in during open enrollment or not. In some cases this will be done automatically (which I've strongly argued against, but few seem to be listening to me). In others it will be done manually. In other cases, of course, people will be switching from one policy to another. The point is that everyone who is currently enrolled should make sure that they either renew or switch policies by December 15th to avoid a coverage gap.

I discussed this with my wife (who actually knows a lot more about private insurance policies than I do) and learned that resetting deductibles at the start of a new calendar year is actually pretty standard practice. We've actually been with BCBSM for years before the exchanges launched, and our own deductible was indeed reset every January 1st even though we originally switched over to them sometime in the middle of the year. If we had a $1,000/year deductible, but hadn't started our policy until, say December 1st, we would still be liable for the first $1K before our coverage kicked in even though we only had 1 month to use it up.

This may differ in other states or with other companies, but the more I think about it the more sense it makes from an actuary POV.

Of course, ACA critics will likely blast this as somehow being the "Obamacare's fault" anyway.