10 things your health insurance won’t tell you

1. We have no idea what to charge you for coverage

The Affordable Care Act overhauled the country’s health insurance system, and insurers are still grappling with the changes. When President Obama’s signature law took full effect on Jan. 1, insurers on the individual market could no longer charge sick people more than healthy people or decline to cover them. Insurers were also limited in the amount they could charge older consumers over younger ones.

Discrimination based on age and health status was common before, and the worst of it was reserved for the roughly 11 million people who bought plans on the individual market because they didn’t have work or government-based coverage. Denying coverage to certain consumers—or charging them more than healthy ones—helped insurers predict and control their costs. They now face more uncertainty about how to price their product.

As the industry gears up for the start of the second Obamacare open enrollment period on Nov. 15, “there is definitely still some guesswork” when it comes to setting premium prices for 2015, says Caroline Pearson, vice president for Avalere Health, a Washington, D.C.-based health care consultancy.

Lots of sick consumers would push up premiums for all, but insurers are still getting a handle on the needs of their new customers. Insurers must pay patient claims and still turn a profit—after all, many of the major carriers are publicly traded companies that answer to shareholders. In 2012, consumer spending on private insurance premiums accounted for $917 billion of the $2.8 trillion spent on health care in the U.S., according to the Centers for Medicare and Medicaid Services.

Carriers’ analysis will clarify somewhat for 2016, as they will have had a full year’s worth of claims data to analyze. Yet the demographics of the insured population will continue to change as new people enroll and others drop their coverage, keeping insurers on their toes, Pearson says.

During this “time of transition,” insurers remain focused on ensuring the affordability, stability and accessibility of their plans, said Clare Krusing, a spokeswoman for America’s Health Insurance Plans (AHIP), the trade association representing the insurance industry.

2. You might get a tax break (but good luck doing the math)

During open enrollment for 2014, more than 5.4 million people selected insurance through a marketplace run by the federal government, and of them, 87% chose a plan supported by tax credits. To qualify, their income had to be equal to or lower than 400% of the 2014 federal poverty level, or $95,400 for a family of four, $62,920 for a family of two, and $46,680 for a single person.

While the subsidy is technically a tax credit, it can take the form of an immediate discount applied to the premiums consumers pay, rather than in a break they receive when they file their taxes.

Here’s the problem: Subsidy amounts were based on estimated income for 2014. People who earned more or less than expected—which won’t be uncommon on the individual market given its large numbers of self-employed consumers—will have to report the difference when they pay their taxes for that year. Those who received too much in subsidies will have to pay back the difference.

The process begins anew this open enrollment, with individuals and families estimating their 2015 income. But that process is likely to be laden with new problems. Insurance carriers will notify consumers of how much they can save on their monthly premiums next year with their current tax credit. However, this could be misleading, as a consumer’s individual tax credit could change for 2015.

What’s more, the subsidy calculation is based in part on the cost of the second-least expensive silver plan in the person’s area. But the insurance company’s notification of 2015 premiums will not reflect potential changes to that plan, according to a spokesman for the Centers for Medicare and Medicaid Services, which runs the federally facilitated exchanges. It will also not reflect any changes that the consumer wants to make to his 2015 income estimates. “That’s going to be confusing,” says Carrie McLean, director of customer care for eHealth Inc. EHTH, -0.62% parent company of brokerage eHealthInsurance.com.

Bottom line: To get the most accurate picture of their actual costs for 2015, consumers must update their personal information on their state insurance exchange. If they don’t do this and allow themselves to be automatically re-enrolled, their actual premium cost may turn out higher or lower than they expected.

3. On the individual market? Shop around

In most cases, if current Obamacare consumers do nothing, they will automatically be re-enrolled in their existing coverage for 2015. This mirrors the way it works for those with employer-based coverage, which generally carries over from one year to the next.

Inertia is a powerful force, especially when it comes to something as complex as choosing a health plan. And consumers who encountered technical difficulties enrolling on the exchanges during the last open-enrollment period might not want to tempt fate and try it again.

But shoppers should at least visit their state exchange to check out their options for next year. Some new carriers will be entering the market: One notable example is UnitedHealthcare UNH, +3.27% which took a cautious approach during the first season and plans to expand its presence on the state marketplaces for 2015.

What’s more, subsidy-eligible consumers won’t have the most accurate sense of their actual premium cost unless they update their personal information on the marketplace.

“Treat it like year one,” says Jonathan Gruber, a professor of economics at MIT who worked as a consultant for the White House during the drafting of the Affordable Care Act. “It won’t be harder than last year, but it won’t be much easier.”

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