Sticker shock often follows insurance cancellation

Dean and Mary Lou Griffin sit their home in Chadds Ford, Pa. on Friday, Nov. 1, 2013. '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 Dean, who is retired from running an information technology company. (AP Photo/Matt Rourke)

Dean and Mary Lou Griffin sit their home in Chadds Ford, Pa. on Friday, Nov. 1, 2013. "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 Dean, who is retired from running an information technology company. (AP Photo/Matt Rourke)

— 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."

____

Associated Press writers Christina A. Cassidy in Atlanta; Rachel La Corte in Olympia, Wash.; Marc Levy in Harrisburg, Pa.; Tom Murphy in Indianapolis; Juliet Williams in Sacramento, Calif.; and Kristen Wyatt in Denver contributed to this report.

© 2013 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Comments » 11

WMissow writes:

This is a traumatic experience for these people and the 10s of millions of others who being put into this untenable situation.

Thank you Mr. Flunky President Obama for making promises you knew nothing about or is this the icing on the cake of "I didn't knows" you have passed off to the American people, especially those who actually worked all of their lives for a decent retirement.

This is what we get when an election is controlled by a bunch dumber than dumb Americans.

panola60 writes:

The Obama administration has known for three years that when the employer mandate is enforced in 2015 up to 93 million Americans will be forced out of their employer-sponsored health insurance plans.

This means President Obama has not only been lying to Americans for at least three years, reassuring them that they would be able to keep their current healthcare plans, but that a massive chunk of the nation’s insured will be hurt by his signature healthcare reform that leftist Democrats unethically rammed through Congress in the dead of night.

Obamacare will hurt far more people than it will help

26yearsonmarco writes:

Lying to We the People of this Once Great Country is a far more impeachable crime than what Wee Willy Clinton did, and is what Tricky Dickey was impeached for, so Lets Demand it.

MIOCENE (Inactive) writes:

in response to WMissow:

This is a traumatic experience for these people and the 10s of millions of others who being put into this untenable situation.

Thank you Mr. Flunky President Obama for making promises you knew nothing about or is this the icing on the cake of "I didn't knows" you have passed off to the American people, especially those who actually worked all of their lives for a decent retirement.

This is what we get when an election is controlled by a bunch dumber than dumb Americans.

"This is what we get when an election is controlled by a bunch dumber than dumb Americans."

No, this is what you get when your party, the GOP, lost its traditional focus on fiscal and foreign policy issues; and traded it in for anti abortion, prayer, marriage amendments, personhood amendments, planting the 10 Commandments on public property, creationism, and rolling women's rights back to the 1950's.

In letting the Conservatives take over the once-moderate Republican Party; you alienated millions of women, minorities, Gay people and their families.

In doing so you allowed the "dumb" people to literally walk in and take over the government.

So one might say that Conservative stupidity led directly to Democratic stupidity.

Regardless; you got exactly what you deserved by allowing the Social Conservatives to turn the once-great Republican Party into a sword of Evangelism.

It was YOU who put Obama in office; including the more then 6 million nutty Evangelists who stayed home and didn't vote for Romney because Romney is a Mormon.

MIOCENE

MIOCENE (Inactive) writes:

in response to Hascle:

(This comment was removed by the site staff.)

I don't feel that these womanizing drunks ever read much of anything anyway.

Congressmen are probably presented with a brief synopsis or an outline; then vote based upon this, or according to party lines.

They wouldn't understand what the hell they were reading anyway. They are probably not supposed to.

That's why; no matter who is in Congress; things are always S.N.A.F.U.

ajm3s writes:

Here is an idea now coming out to fix Obamacare, from a Virginian Democratic idea. The bigger problems have not been fully exposed in Obamacare, but this is a hint that the government is concerned that providers will flee as well.

http://masonconservative.typepad.com/...

Regardless one's love or hate of a political party, Americans better wake up on both sides of the aisle, because the Affordable Care Act will have such an impact on our lives based on a single HHS bureaucracy with over a hundred agencies, crafted by a leader with a vision that healthcare should be affordable and provide for the uninsured....truly a noble case...but the taxes and fees scheduled to kick in per the ACA will impact your job and spending as well.

How is Obama doing on that basis? Today we are hearing about the fiasco. Individuals with existing individual health insurance clamoring and complaining of higher premiums and deductibles under Obamacare exchanges...and these are typically the healthy folks that assumed more risk.

But the uninsured young Americans are yet to sign on...and I suspect they will NOT. Just compare the cost of compliance vs non-compliance.

The next group impacted will be the elderly on Medicare but they will only see the effects when their doctors and providers start to opt out of the program as in Medicaid.

And on and on we go across all America, with ACA "standard" insurance some of us never asked for....but the government says our old policies were substandard and the government knows best and now offers more choices?

In many states, the choice of insurance companies offering Obamacare is limited to one company. I guess the other insurance carriers are taking a pass. So much for competitive choice amongst insurance providers.

I foresee development of an alternative insurance market that will take advantage of the poorly crafted Obamacare model. A competitive market driven model where the insurance companies will actually get to control the risk pool, by actively pursuing low risk groups...although the major hindrance to that model will be state regulation preventing insurance sold across state lines....and a federal government that will do its best to block and prevent any competition to Obamacare....

Just my thoughts! But if you are healthy, active, exercise regularly, and adhere to lifestyle choices that minimize poor health conditions, I can see an insurance market that may wish to offer a much lower premium with manageable out of pocket expenses for routine doctor visits at much lower costs. I can see insurance providers that manage healthcare through website portals to handle transactions and records.

I see a better place, I only wish I never woke up from this dream.

WMissow writes:

MIOCENE,

You must belong to the party of "I didn't eat the cookies, it must have been someone else"!

As AJM stated both parties are to blame as they are now, too far left and too far right, but as long as the gimmees vote the party line it is not going to make any difference and we are going to have the make the best we can out of a situation neither of us asked for or really want.

1Paradiselost writes:

"Under Health Care Act, Millions Eligible for Free Policies"

http://www.cnbc.com/id/101166468

August8 writes:

in response to MIOCENE:

I don't feel that these womanizing drunks ever read much of anything anyway.

Congressmen are probably presented with a brief synopsis or an outline; then vote based upon this, or according to party lines.

They wouldn't understand what the hell they were reading anyway. They are probably not supposed to.

That's why; no matter who is in Congress; things are always S.N.A.F.U.

Hey, what's wrong with womanizing anyway, I think judgeing by your posts that you are very jealous because no man ever would want to do that with you.

August8 writes:

in response to Hascle:

(This comment was removed by the site staff.)

They knew exactly what was in the law so do not buy that concept.The GOP fought the bill based on the contents?

August8 writes:

in response to Hascle:

(This comment was removed by the site staff.)

We the people are learning more each day,they new every step of the way to this mess.. Yes, repeal must be the answer now !!!

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