We are well into the tax season, and by now you should have already received your 1095 form from your insurance carrier. Be sure to provide this form to your accountant, as the information therein will provide proof of health care coverage in 2015 to avoid the health care penalty.
The penalty for tax year 2015 is 2% of your household’s annual taxable income, or $325 per adult and $162.50 per child to a maximum of $975.
The penalty will continue to increase over the next year. You may also fall under the category of people who are returning money to the government due to an underestimated income when claiming a subsidy for insurance. Enrollees who earned more than they expected in 2015 must now return a portion of their subsidies to Uncle Sam.
Regardless of whether you’re reaping the benefits or bearing the 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 works to your advantage; I can assist you in finding the best option in the areas where ACA presents one with challenges.
Since the start of the year, our clients have come to us with various questions that I have compiled into a valuable series of questions and answers on the subject of the health care reform act.
Why can’t I purchase a plan now?
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 had developed a health condition within that time period. 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.
As of January 2014, 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.
Who can 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 employee/employer who is part of a business is permitted to purchase health insurance anytime, as open enrollment applies only to the individual market.
Under ACA, the minimum size for a group is a minimum of 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.
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.
Additionally, even as an individual, you may fall under a list of qualifying events that render one eligible for purchasing a new plan mid-year.
Events include but are not limited to:
• Your existing coverage is no longer offered by your employer to all employees in a similar classification to 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.
For more information or for a free, no-obligation quote, please call (201) 817-1388 or email [email protected].
By Mark Herschlag
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.
