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Should You Keep Your Health Insurance Plan?

A possible reprieve from President Obama is no excuse not to shop around

President Obama announced Thursday that some people who previously lost their insurance plans will be able to keep their coverage for one more year. But should they?
Those who were satisfied with their coverage may find relief in knowing they can put off shopping for health insurance for another year. But because of the shortfalls of some of the plans that were initially going to be eliminated, many people may still be better off hitting the marketplace, health pros say.

Be Clear on What You're Buying

“The reason these plans are cheaper is usually because the benefits aren’t the same as you could get with a new plan,” says Carolyn McClanahan, a physician-turned-financial planner and founder of Life Planning Partners, a financial advisory practice in Jacksonville, Fla. “Make sure you understand the limitations of your coverage.”

(MORE: 6 Things Boomers Must Know About Obamacare)

Policies were cancelled because they didn’t meet the higher standards of the Affordable Care Act. Insurance carriers deciding to renew these plans for another year will need to point out any protections that the plans don’t include, the president said Thursday.

Shop Around for the Best Deal 

It’s those same shortfalls that consumers should examine when deciding if they will keep those plans or find new ones, insurance consultants say.

Some people who are relatively healthy may want to keep their current plans if they are cheaper than the plans on the new insurance exchanges. But others will find less expensive plans through the marketplace.

(MORE: How to Make an Insurance Exchange Work for You)

For instance, McClanahan says one married couple she advises recently found a plan on the exchanges that costs $220 a month and includes maternity benefits, down from the more than $300 they were paying monthly for their old plan, which didn’t cover maternity.

(MORE: Your Guide to Obamacare Options)

Public Exchanges Might Offer Better Choices 

Some of the plans that will get renewed don't cover prescription drugs or maternity care; others have lifetime or annual caps on coverage. For some consumers, the decision to keep or ditch their insurance plan will come down to their gender and medical condition, says Cheryl Fish-Parcham, deputy director of health policy for Families USA, a Washington, D.C.-based nonprofit consumer advocacy group. For instance, many plans were previously allowed to charge women higher premiums, meaning that some women may find more affordable plans on the public exchanges, she says.

The individual plans being renewed after the president's announcement may still refuse to cover conditions if they’re considered pre-existing, says Fish-Parcham. And people taking medications should double check that those prescriptions are covered by the plan they had or if they would be covered by another plan being considered from the exchanges, she says.

New Challenges with Latest Change
To be sure, it wasn’t clear fron the president's announcement how many insurance companies would even take the option of renewing these plans for another year. Health insurance companies expressed concerns that changing course after cancelation notices have been sent out could create new obstacles.

The health insurance trade group America’s Health Insurance Plans released a statement after the president’s announcement warning that changing the rules now could “destabilize the market and result in higher premiums for consumers.” And President Obama said that state insurance commissioners would get final say on what plans can be sold in their states.

Beyond Healthcare.gov 
At the very least, consumers thinking about keeping their old plans for another year should still take a look at their options, says Fish-Parcham. Despite some of the technical issues delaying applications on HealthCare.gov, consumers should still be able to use the site to compare insurance plans being sold in their area.

People who don’t expect to receive subsidies to lower premium costs can purchase plans directly through an insurance company or through an agent or broker. Those who want to receive a subsidy will have to apply through a state or federally run exchange.

The Department of Health and Human Services announced Wednesday that just over 106,000 people chose plans on the new exchanges during the first month of open enrollment, about 1.5 percent of people expected to sign up for insurance on the exchanges by the end of next year. 

Jonelle Marte covers the economy, jobs and other personal finance topics for MarketWatch.com and WSJ.com

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