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Automatic Renewal of Health Insurance: Pros and Cons

Posted: July 03, 2024

Health insurance is critical in ensuring that your medical bills are covered when you’re sick or injured. The application process for some health plans can be complex, so some people let their plans renew automatically at the end of the active period. The fundamental question is whether auto-renewal is good or bad for you. To answer this question, we will look at the pros and cons of automatic health insurance renewal.

Automatic Health Insurance Renewal

Do you have to renew your health insurance every year personally? The answer is no. You can let your health insurance plan automatically renew at the end of each period. However, as you’ll discover in the next sections, auto renewal will make you miss some benefits.

When does health insurance renew? State-run exchanges and HealthCare.gov process auto-renewals on or around December 16. The open enrollment period, which is the yearly period when individuals can enroll in a Marketplace health insurance plan, runs from November 1 to January 15 in most states. If you haven’t actively chosen your plan for the next year, your policy will be automatically renewed. You can actively choose a new health plan at any time during the open enrollment period.

If you don’t want your coverage to auto-renew, update your information by December 15 so your new plan starts January 1. If you don’t act by December 15, you will automatically reenroll for coverage starting January 1.

You should get two letters by November 1 — one from the Marketplace and one from your insurance company. These letters tell you:

  • Whether your current coverage is available for the coming year.
  • The plan – if any – you’re matched with and will be enrolled in if you don’t act by December 15.
  • Any changes in your health insurance plan and cost savings.
  • Whether the Marketplace needs documents to confirm the information on your application and how you can send the copies.

Why Renewals Are Done Every Year

Insurance plans typically last for a year, and then you must renew personally or let them renew automatically. Insurance companies must renew these policies yearly to ensure they’re up-to-date with rules and regulations. In addition, insurers adjust prices to account for industry inflation. Employers use the renewal period to tailor their employees’ benefits to the team’s needs. In addition, annual health plan renewals allow employees to add a dependent, switch plans or opt out of the plan.

Pros of Automatic Renewal

Before you choose between the two options, you need to understand what the advantages and disadvantages of automatic renewal are. Let’s start with the advantages.

1. Keeps You Covered

Automatic renewal means that you and the people under your coverage continue to enjoy insurance coverage automatically. You get the same benefits and coverage without having to make any updates. Automatic renewal is a good option if your finances and needs have not changed in the past year and the current plan works for you and your loved ones.

2. Saves Time

Renewing your health care insurance means you may need to make changes in your policies, which may take time. Although some of these changes may benefit policyholders, some people opt for automatic renewal to save time.

Cons of Automatic Renewal

There are several reasons why the automatic renewal route is not a good option.

Your Plan May Have Changed

Insurance companies frequently change health insurance policies. Things that can change include:

  • Deductibles
  • The premiums you pay
  • Cost-sharing amounts
  • The actual amount the insurer pays
  • The amount you should pay out of pocket before your insurance pays the rest of the bill

All these changes may translate to additional costs you’re unaware of if you renew automatically.

You Could Be Assigned a Different Health Plan

Your plan could also be terminated or removed from the Marketplace completely. You may be assigned to a different health insurance plan in such scenarios. This can be a big blow if your health needs have changed, yet the new plan does not cover them. The premium amounts you’re required to pay could also change.

You May Not Get the Right Premium Subsidy

You have to update your information if you don’t want the Marketplace to determine your premium subsidy for the next year. When you automatically renew your health insurance, the Marketplace uses the most recent income information it has for you. These projections by the Marketplace may be off if things have changed, such as loss of a job or change of jobs. You may have to pay more money than necessary each month if your policy renews automatically.

You may also lose your subsidy if you auto-renew your policy and do not authorize the Marketplace to access your tax returns.

Steps to Auto-Renew Health Insurance

You don’t have to do anything to renew your health plan automatically. HealthCare.gov will do it for you.

If you want to review your plan before it renews, you must do so on time to ensure your coverage continues uninterrupted. You can renew the plan online or manually. The online process is easy and quick. Follow these steps to renew your health insurance:

  • Step 1: Contact your insurance provider’s customer support team and request a health insurance renewal within the specified period. You should initiate this process before the policy expires.
  • Step 2: Provide all required details, including contact details and the policy number. If you’re adding a new family member under the same policy, provide their details.
  • Step 3: Make payment for the policy renewal.

The steps above may vary depending on your insurance company. If you buy your health insurance through Health for California, you can renew your policy through the company website.

As you renew your plan, looking at the numbers is important. You should also review common insurance terms like deductibles, out-of-pocket max, copays and coinsurance, monthly premiums, network, and preventive care coverage. Your renewals might also remind you about extra benefits beyond your drug, dental and medical coverage. Some benefits can help you achieve better health or save money. Examples of these bonuses include:

  • Discounts on contact lenses and eyeglasses
  • 100% coverage for yearly physical exams and other preventive care
  • Savings on weight loss programs
  • Gym discounts
  • Help when traveling outside your plan’s coverage area

Now that you know what auto-renewal means, its benefits and shortcomings, you can make an informed decision about your health insurance renewal. Remember that you must decide on your renewal before December 15 of each year.

Health for California Can Help You Choose a Health Insurance Plan

Your health insurance renewal is an opportunity to adjust your plan or switch to a plan that better suits your needs. If you’re uninsured or looking to switch plans, Health for California will make the process easy for you. Please contact us for help selecting a health insurance plan that meets your needs. We provide free services, and our website is the easiest platform to use when applying for health insurance in California.