MIAMI (AP) — 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.
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.
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.