Health and Science

Obamacare's 95% solution: Auto-enrollment, with subsidies

People sit with an insurance agent as they purchase health insurance under the Affordable Care Act in Miami.
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The vast majority of people who enrolled in Obamacare on the federal health exchange will be both automatically re-enrolled in the health plans they selected in 2014 and automatically receive the subsidies to help pay for that insurance that they got this year, officials revealed Thursday.

A senior federal official told CNBC that an estimated 95 percent of HealthCare.gov enrollees—some 5.1 million people—will be signed up for the 2015 plan year and receive the same tax credits without having to do anything.

Granting not only automatic re-enrollment to those people but also their same tax credits to offset the costs of that insurance without making them go through the process again will give the federal exchange a massive head start on its goal of exceeding 2014 enrollment levels.

It could also alleviate the technological strain on the federal Obamacare exchange when open enrollment begins this fall.

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People who are automatically re-enrolled in their current HealthCare.gov plan can pick another plan during open enrollment, which begins Nov. 15 and runs through Feb. 15, 2015.

"Consumers in the federally-facilitated marketplace will receive notices from the marketplace informing them how to update their information to get a tailored and updated tax credit that keeps up with any income changes," the Health and Human Services Department said in a press release.

"Consumers will receive information from their health insurance company about the premium and the amount they are eligible to save on their monthly bill close to the beginning of the open-enrollment period, when they will be able to take action should they choose to do so."

The federal government in March 2012 had said that it would have automatic re-enrollment for people in HealthCare.gov-sold plans unless they opted out of that function.

On Thursday, officials for the first time revealed that a check of income-related records had showed that under a streamlined process outlined in a new rule the number of people eligible for both plan automatic renewal and subsidy renewal was 95 percent of federal exchange enrollees.

Nearly 90 percent of the 5.4 million people who bought health plans via HealthCare.gov qualified for such subsidies because their income fell between 100 percent and 400 percent of the federal poverty level.

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"As we plan for open enrollment in year two and continue to build a sustainable long-term system, we are committed to simplifying the experience for consumers by allowing auto-enrollment," said federal Health and Human Services Secretary Sylvia Mathews Burwell.

"We are working to streamline the process for consumers wishing to remain in their current plan."

Of the remaining 5 percent who will not be eligible for the double renewal, fewer than 100,000 people opted out of automatic plan renewal when they signed up for a health plan, and a certain number of subsidy recipients were found to have incomes that now exceed 500 percent of the federal poverty level, a senior HHS official said.

But even if someone is no longer eligible for a subsidy, they will still be re-enrolled in their same plan, unless they had opted out of that automatic process, the official said.

HealthCare.gov sells insurance plans to the residents of 36 states that opted not to build their own Obamacare exchanges.

The granting of automatic subsidies, along with automatic re-enrollment, only applies to HealthCare.gov enrollees, not to the 2.7 million people who enrolled on one of the 15 exchanges run by individual states and by the District of Columbia.

Those exchanges have the option of allowing either just automatic re-enrollment in health plans, in adding the streamlined automatic renewal of subsidies for those plans, or in designing a system of their own that is subject to approval by the federal Centers for Medicare and Medicaid Services, the senior official said.

Timothy Jost, a health law professor at Washington and Lee University School of Law, said that even with automatic renewal on HealthCare.gov, "I think there will be quite a bit of movement among plans" by current ernollees.

Jost noted that a number of plans that sign-up the largest number of Obamacare enrollees on the government exchanges have announced that they plan to increase their premium prices for 2015 plans, which could lead some of those enrollees to seek less-expensive options.

"Probably a lot of people will change plans," Jost said.


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—By CNBC's Dan Mangan

Correction: An earlier version of this story indicated that the federal government was announcing the automatic renewal of subsidies for eligible people in Obamacare plans. Such renewal was included in previously announced rules, but now will be more streamlined, according to federal officials.