This time of the year has for long been associated with tax season, but now it has become a hot season for healthcare too.
Tax filing can mean that it’s time to pay that feared penalty for lacking “minimum essential coverage” during at least some part of 2014, as prescribed by the Affordable Care Act (ACA). The penalty now stands at $95 per adult and $47.50 per child, or 1% of your total annual income – whichever is greater.
The penalty will increase significantly over the next two years.
Another aspect of ACA that’s keeping CPAs busy is the many frustrated clients who must send the IRS money in addition to their ordinary tax burden.
The credits that ACA enrollees received last year to subsidize their premiums for plans on the exchange marketplace were based on their estimated 2014 income. Enrollees who earned more last year than they expected must now return a portion of their subsidies to Uncle Sam. That never feels great.
Regardless of whether you’re reaping the benefits or seeing downsides of the health care act, it’s important that you are informed of the laws that it entails. That’s where my position as a professional insurance agent comes to your advantage in assisting you in finding the best option in the areas where ACA presents one with challenges.
Why can’t I purchase a plan now?
As you well know, ACA is an exceptionally complex law. We cannot discuss all of its aspects within the constraints of these pages. However, I would like to review some important points that people call our office about on a daily basis.
For starters, understanding the provision to coverage and pre-existing conditions is imperative. Previously, insurers were able to deny coverage to individuals who were at a lapse of coverage within a 12 month period and developed a health condition within that time frame. ACA removed that leverage from insurers, making it possible for people to obtain the health coverage they need regardless of their state of health.
However, insurers didn’t take this casually. Stratospheric premium increases would ensue if people could just remain uninsured – even with a penalty – or purchase a low level of coverage when they’re healthy, and just get onto a quality plan on demand if they get sick or injured. No one in their right mind would purchase quality coverage.
So, nowadays, insurers are only permitted to accept new enrollees during the “Open Enrollment” period, which runs between November 15th and February 15th of the year preceding coverage. During the other nine months – which we’re within now – insurers cannot accept new enrollees, regardless of one’s health condition.
It is important to note that open enrollment applies equally to the individual ACA exchange marketplace, as well as the private individual insurance market. In other words, you are unable to enroll in a plan or make changes to any plan during this period regardless of the price you are willing to pay, or the fact that you’re willing to forgo federal subsidies.
It is therefore advisable to obtain adequate coverage during the open enrollment period, so that you’re insured if need be when enrollment is closed. Fortunately, the subsidies that ACA offers to those earning below 400% of the poverty level make basic coverage a lot more affordable than before, especially for those towards the lower end of the income spectrum.
Is it possible to purchase a plan even during closed enrollment?
Don’t panic just yet! You may fall under a special category in which open enrollment is not relevant to you.
Here’s what you need to know:
An individual that is part of a group, as in a business, is permitted to purchase health insurance as open enrollment applies only to the individual market.
Under ACA, the minimum size for a group is two employees, although only one of them needs to actually enroll. (Two person groups can’t be comprised of husband and wife.)
If you own or work at a company that qualifies for group coverage, you can purchase coverage under the group plan at any time. However, this year-round enrollment only applies if the group as a whole is purchasing coverage anew. An individual cannot obtain his/her own new coverage after open enrollment even if part of a group.
In addition to having year-round enrollment, group coverage offers many other benefits when compared to the individual market. Coverage options tend to be more comprehensive and less pricy.
Group coverage gets even better when dealing with groups of 6-50, and even more competitive with 50+ employees. For instance, Cosmo Insurance Agency offers unique options for groups of 6-50 employees. They cost approximately 30% less than the going rate for that level of coverage. Some of these plans also refund a portion of the premiums that weren’t paid out on behalf of the enrollee during the year. Yes, that’s amazing!
Secondly, even as an individual you may fall under a list of qualifying events that render one eligible for purchasing a new plan.
Events include but are not limited to:
Your existing coverage is no longer offered by your employer to all employees in a similar classification as you
Your insurance is non-renewable since it is no longer offered by your carrier
Your Medicaid coverage was terminated
You lost your job or are no longer employed enough hours to receive employer benefits
Death of a fellow employee or policyholder
You moved from the region where your existing insurer offers coverage
Coverage for a new family member who was born
Marriage, legal separation or divorce
And more
In all of these situations, you have up to 60 days from the event to enroll in new coverage. Proper documentation to prove these special circumstances is required.
If you find yourself in a situation where you need to enroll in a new plan, it is crucial that you contact a competent agent who is familiar with the ins-and-outs of ACA and the insurance market. He or she can help you determine whether you qualify for special enrollment, and what documentation you need. They can help you determine your best option under any circumstance.
I look forward to answering any of your questions. As always!
Mark Herschlag is the founder and CEO of Cosmo Insurance Agency, which is based in Ocean County. Cosmo Insurance Agency offers personalized solutions for individuals and businesses looking to obtain health, life, dental, long term care or disability insurance. For more information or for a free, no-obligation quote, please call (201) 817-1388 or email [email protected].
By Mark Herschlag
