All of the negatives surrounding the Affordable Care Act and the very premise of being legally required to purchase insurance whether you want to or not has millions of people wondering how they can opt out of enrolling in a health plan under the ACA (also referred to as Obamacare).
Well, we’ve done the research and I want to share several different ways that people are choosing to either opt out of enrolling in a plan entirely, or at least to delay it for as long as possible.
Options for Delaying Enrollment
Purchase a Policy Effective Before January 1
If you purchase a plan with a 2013 effective date, this effectively delays your enrollment into an Affordable Care Act plan until December of 2014. In this way, you will not be assessed the tax penalty for being uninsured, plus you have a year before being forced to enroll in a plan.
Because 2014 plans are much more expensive in most cases, choosing a 2013 plan may save you a lot of money over the next 12 months.
Renew Your Current Coverage
If you currently have insurance, you may have the option of renewing your policy to delay enrollment until your anniversary date. By renewing early, this resets your effective date to December, so that your existing coverage does not end until December 2014. This option varies by state, and by carrier.
During a recent press conference, President Obama announced a regulatory ruling allowing people whose policies had been cancelled to keep their plans for another year. This may be a good option for anyone who is allowed to do this.
However, this option will not be allowed in many states, and legal complications make it likely that most affected policyholders will not be able to take advantage of this option.
Once you have reached the anniversary date of your policy, you can still delay purchasing an ACA plan for an additional 60 days past the anniversary date (or 30 days if you are losing coverage under an employer-sponsored plan).
Keep Your Grandfathered Plan
If you are currently covered by a policy that was in place prior to March 23, 2010 (which is when the Affordable Care Act was signed into law), your policy is considered to be grandfathered. And, unless the policy has experienced significant changes in premiums charged or benefits provided, it will keep its grandfathered status.
With this type of policy, you can keep your current coverage for as long as it retains its grandfathered status. This will allow you to avoid having to enroll in an ACA plan and thus also avoid the premium increases so many Americans are seeing.
Options for Opting Out of the Affordable Care Act
Apply for an Exemption
There are certain circumstances where you can receive an exemption from the requirement to enroll in a health plan under the Affordable Care Act. Some of the exemptions available include (but are not limited to) the following:
• A religious objection—this applies to people who are part of a religious organization that objects to Medicare, insurance and Social Security. Currently, Mennonites and Amish are the only religions that are given this exemption.
• The cheapest plan available costs more than 8 percent of your annual income.
• You do not earn enough money to file taxes under current IRS regulations.
• You are incarcerated.
• You belong to a federally recognized American Indian tribe and as such are covered by a tribal health plan.
There may be other exemptions that apply to you, so be sure to speak with your insurance agent to discuss what options may be available to you.
Choose a Short-Term Plan
Short-term insurance policies are available for six- or 12-month terms. They are one of the few types of health insurance still available that does not have to be approved under the Affordable Care Act, and they are usually much less expensive.
Short-term plans provide excellent coverage for hospitalization and catastrophic events, but they do not cover preventive care or routine doctor visits. (In other words, they cover the things insurance is meant for.)
If you develop a serious illness while covered under a short-term plan, you will not be able to sign up for a new short-term plan when it expires. However, you will have a special enrollment period, in which you can apply for a guaranteed-issue permanent policy.
Get an Accident Plan
You can also purchase an accident policy, which will provide coverage if you are involved in a covered accident that requires hospitalization or extensive medical services. These types of plans are very inexpensive, and provide 100 percent coverage for any accident up to $10,000 after only a $100 deductible.
An accident plan is obviously not a substitute for full health insurance, but it’s a lot better than nothing, particularly for the young and healthy.
Choose Non-ACA-Compliant Insurance, or None at All
Although the Internal Revenue Service can assess a penalty against you for not having health insurance, they cannot arrest you or take your money out of your bank account to pay the bill. It is not a crime to go without insurance, so if you are completely against the Affordable Care Act, you do have the option to opt out entirely.
Going without insurance is risky, as you really cannot know ahead of time whether you will need medical services. You will not be able to enroll until the next open enrollment period if you opt out this year. But the good news is that even if you get ill, you will not be denied coverage if you wait until next year to enroll.
Before you make the decision to opt out of enrolling in an ACA plan, you need to weigh the financial repercussions that may result. Keep in mind that if you don’t pay the tax, interest will accrue; the IRS will not be allowed to place a levy or take any other aggressive collection actions, but they may take the owed amount out of any tax refund you have coming.
Talk to an Insurance Professional
I also want to remind you that you are not required to make a health insurance purchase on either the federal or state health exchanges. In fact, I do not believe that shopping on the exchanges is in anyone’s best interest.
If you have questions about your options for refusing to purchase a plan at all, your insurance agent or broker can help you make the decision that best fits your needs. Whether this means opting out of the ACA completely or simply delaying enrollment as long as possible, you should not take on the world of health insurance on your own.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.