WASHINGTON — If you have health insurance on your job, you probably don't give much thought to each year's renewal. But make the same assumption in one of the new health law plans, and it could lead to costly surprises.
Insurance exchange customers who opt for convenience by automatically renewing their coverage for 2015 are likely to receive dated and inaccurate financial aid amounts from the government, say industry officials, advocates and other experts.
If those amounts are too low, consumers could get sticker shock over their new premiums. Too high, and they'll owe the tax man later.
Automatic renewal was supposed to make the next open-enrollment under President Barack Obama's health care overhaul smooth for consumers.
But unless the administration changes its 2015 approach, "they're setting people up for large and avoidable premium increases," said researcher Caroline Pearson, who follows the health law for the market analysis firm Avalere Health.
It could be a new twist on an old public relations headache for the White House: You keep the health plan you like but get billed way more.
"It was our preference for (the administration) to have the capacity to update people's subsidy information, but they haven't been able to get that built," said Brendan Buck, a spokesman for the industry trade group America's Health Insurance Plans.
Here's the issue, in a nutshell:
To streamline next year's open enrollment season, the Health and Human Services Department recently proposed offering automatic renewal to 8 million consumers who are already signed up.
But the fine print of the HHS announcement said consumers who auto enroll will get the "the exact dollar amount" of financial aid they are receiving this year.
That's likely to be a problem for a couple of reasons, not to mention inflation.
First, financial aid is partly based on premiums for a current benchmark plan in the community where the consumer lives. Because more plans are joining the market and insurers are submitting entirely new bids for 2015, the benchmark in many communities will be different.
Second, financial aid is also based on household income. If your income goes down, you are entitled to a bigger health insurance tax credit. If it goes up, you get less. The 2014 amounts could well be out of date and incorrect for many people. Financial assistance is also affected by age, family size and where people live.
And that doesn't get into another motivation for consumers to shop around: Premiums and choices for 2015 are changing, so your current plan may no longer be a good deal.
"Just continuing in the same plan with the same credit is not going to be the optimal outcome for most people," said Judy Solomon of the Center on Budget and Policy Priorities, which advocates for low-income people. "Your 2014 credit is going to be lower in most cases, and in some cases it could be too high."
About 8 in 10 of those who signed up for private coverage under the health care law are getting financial aid. In the 36 states served by the federal insurance exchange, the tax credits average $264 a month, reducing the average monthly premium of $346 to just $82.
Even with such generous subsidies, about 4 in 10 who bought a health law plan say they have trouble paying their premiums, according to a poll by the nonpartisan Kaiser Family Foundation.
Open enrollment starts Nov. 15, and consumers who already have a policy will have just about a month to renew or make changes to avoid a break in coverage Jan. 1. Millions of new customers are also expected to try to sign up for the first time.
New Health and Human Services Secretary Sylvia Mathews Burwell is hoping that auto renewal will simplify things, a welcome change from this year's website problems.
But the subsidy scheme created by Congress to keep premiums affordable has so many moving parts that it's turning out to be difficult for the government to administer.
Administration spokesman Aaron Albright says all consumers are encouraged to contact their health insurance exchange to update any changes in personal and financial details. You can do that at any time, before the open-enrollment crunch.
However, you will have to wait until the fall to change to a new plan for next year.
Even if the financial aid amounts are off the mark, some advocates say auto renewal is still a safeguard to keep some people from falling through the cracks.
"It is not a perfect solution, but I'm not sure that there is a better solution in terms of protecting people so they don't lose health coverage," said Ron Pollack, executive director of Families USA, an advocacy group supporting the overhaul.