Lots of us call it Obamacare, but officially it’s the Affordable Care Act, or the ACA. The jury is still out as to whether this massive piece of legislation will live up to its title. One thing’s for sure – it’s completely changed the American health insurance marketplace in lots of ways. The fact that Americans can’t actually buy health coverage any time they want, like we could before the ACA is easily the biggest change as a result of this law.
Some people will qualify for Special Enrollment Periods (SEPs) when they have significant life-changing events, like moving or getting married. The rest of us can only start coverage, or change to different coverage, during the Open Enrollment Period, or OEP. It’s coming up really quickly, starting on the first of November and ending the thirty-first of January.
If you don’t have coverage, you need to look at your options and get an application in before December 15. You may already know that there’s penalty now (again, new with Obamacare) if you don’t have coverage, and it’s going up in 2016. If you keep going without coverage, when you pay your 2016 taxes you’ll owe a percentage of your total income (2.5%) or a flat amount for every adult ($695) and every child ($347.50) in your household. You’ll pay the amount that’s greater of those two.
Don’t cruise through OEP blissfully unaware if you do have health insurance. You may like the coverage you have, but we’re still recommending that all our clients to explore their options. Why? Here are several good reasons:
Subsidies change – If you receive subsidies from the government to help with the cost of your monthly insurance premiums, review last year’s tax returns to see if the amount might go up or down for 2016. How will you know? Your MAGI, or Modified Adjusted Gross Income, is the figure that determines whether you get a subsidy or not. It’s calculated by taking the Adjusted Gross Income, or AGI, from your return and adding back certain deductions.
Depending on your income last year, it’s possible that you can afford more coverage (if your subsidy is greater) or you might need to find another plan that’s not as expensive. One of the things our Personal Benefits Consultants (PBCs) are helping people with right now is calculating their subsidies, and figuring out what they can afford based on that.
Lots of plans are going to have higher premiums – insurance companies are notifying their insureds that their plans will increase in cost in 2016. And because you can’t change coverage whenever you want under Obamacare, you’ll have to pay that increased premium for all of 2016, until next year’s open enrollment.
Get a plan that includes an HSA (Health Savings Account) – Another of the key changes to health insurance under Obamacare is that plans are now required to cover certain things, such as many health screening tests and maternity care. This, in turn, has increased premiums, and in order to make plans more affordable, companies have raised deductibles. What if you needed surgery, like for a torn ACL, and you didn’t have the money on hand to pay your deductible?
This is one of the reasons that Health Savings Accounts (HSAs) are soaring in popularity. With the funds in an HSA, you can pay your deductible and other medically-related costs. And your contributions to your HSA aren’t taxed. Your money earns interest tax-free. When you pay for certain medical expenses with your HSA funds, you withdraw them from your account without penalties or taxes.
Add this to the fact that HSA funds grow every year and are yours to use as you like after retirement, and it’s a no-brainer that an HSA plan is a key part of your financial strategy.
Many plans will terminate this year – Your insurance carrier should have notified you if you fall into this category. If you do, obviously, you’ll need a new plan prior to 2016.
What about deadlines? The OEP does end January 31. However, you need submit your application before December 15. This is the only way to ensure that you’ll have coverage that’s effective on January 1. We want to help as many people as we can, but several PBCs (Personal Benefits Consultants) have full calendars already during all of November. Let’s set aside some time to get together, either via email or on the phone, to talk about your individual needs. We’re here to make the OEP stress-free for you, while getting you into a coverage solution that’s best for you and your family.