Thousands of North Carolina residents have been exempt from the Affordable Care Act and got to keep their old health insurance, paying significantly less for their coverage than those insured under the ACA.
But that’s about to come to an end for 50,000 customers of Blue Cross and Blue Shield of North Carolina. In 2018, they will have to switch to ACA plans, in some cases paying twice as much or more for health insurance.
“We know this will be tough news for our customers who love their grandfathered plans,” Blue Cross said in a post on the company’s blog this week. “Many customers transitioning off grandfathered plans will pay more for coverage in 2018. Many will pay quite a bit more.”
Most of these Blue Cross customers are blissfully unaware of the looming change. Blue Cross will notify these customers in September that their current policies will expire and they will have to switch. The affected customers are on so-called grandfathered plans, which were allowed to remain in effect, per President Obama’s promise, even though these plans do not comply with ACA requirements for health insurance and would not be legal to sell today.
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Customers on grandfathered plans always had the option to switch to ACA plans, but most didn’t because their older plans, some purchased years before the ACA went into effect, were cheaper. The Durham insurer said some customers who switch to the ACA will benefit from federal subsidies to offset increased insurance costs but not all.
These customers are going to find that health care has changed quite a bit since they bought their plans. There are now high deductibles, fewer choices for doctors and hospitals in their coverage plans. Some will have to drop doctors they’ve been seeing for years and find new providers.
Raleigh insurance agent Liz Gallops said six of her clients are still on grandfathered plans, and she plans to break the news to them.
“I am going to tell them first; I think they will take it better that way,” Gallops said by email. “It will be a big price shock to the client, which is why it is best if it comes from me.”
Blue Cross declined to give further details, but the blog said that, when comparing current-year premiums for grandfathered plans to premiums for an ACA plan next year, here’s how the winners and losers will shake out: Women over 50 and young men will generally pay more for ACA coverage, while older men and young women will pay less.
Gallops offered an example of a 48-year-old woman from Vance County to show that this customer will pay about three times as much for an ACA plan. This woman currently pays $213.17 a month and has a deductible of $2,700. Under an ACA plan this year, she’d pay $658.27 a month with a total out-of-pocket maximum cost of $6,550. So this customer’s maximum potential annual cost for the grandfathered plan is $5,258.04, compared to $14,449.24 for a comparable ACA plan, when monthly premiums and annual out-of-pocket costs are calculated.
Back in 2010, Blue Cross had 330,000 customers on these plans, but because they were closed off to new customers, the total dwindled every year, and those who remained grew older and sicker, becoming more expensive to insure. Still, Blue Cross did not raise rates on the grandfathered plans this year, while it raised ACA rates by 24.3 percent.
For 2018, Blue Cross is asking for a 14.1 percent rate increase on ACA plans. The company said in its blog it would have had to raise grandfathered plan rates significantly in 2018, but the amount is not known because the company never filed for a rate increase, knowing the plans were slated for elimination.
The grandfathered plans and ACA plans are sold to people who buy coverage directly from the insurer or through an insurance agent. Most people, however, get their coverage through their employers, who subsidize health insurance for their workers.
ACA plans cost more because they cap annual out-of-pocket costs, they have to accept everyone who signs up, and they require insurers to cover essential benefits – such as preventive and wellness services, and mental health care and substance abuse services – that were typically not included on pre-ACA plans unless a customer opted to pay extra for them. Customers could keep grandfathered plans as long as they purchased their coverage before the ACA became law in March 2010 and didn’t make any changes to their plans since the law was enacted. But the grandfathered exemption was temporary, and insurers have the discretion to eliminate this line of business.
“ACA plans offer built-in benefits – like maternity coverage – and cap out-of-pocket expenses for customers,” Blue Cross said. “This means that ACA plans provide more and better coverage than many pre-ACA plans, but that coverage comes at an increased cost.”