New York (MainStreet) -- Open enrollment for 2015 Obamacare officially begins on Saturday.
Like jury duty and taxes, health insurance has become an area where the government demands our attention. Unfortunately, and also much like taxes, this remains an incredibly complicated law. So for everyone already looking at November 15 as the spiritual successor to April 15, here’s what you need to know about ACA enrollment this weekend.
There are four big deadlines to know for this year’s open enrollment period:
- November 15 –Open enrollment begins.
- February 15 – Open enrollment ends.
- January 1 – The earliest date coverage can begin for people who enroll.
- April 15 – Date by which everyone has to indicate 2014 coverage or pay a tax penalty.
It’s particularly important to pay attention to these dates because they’ve changed since last year. During the law’s rollout, the Obama administration stretched enrollment from October to April so people could adjust to the new health care system. That was a one time event, however. From now on, everyone will have November 15 through February 15.
Don’t miss this window. As Kaiser Foundation State Health Policy Director Jennifer Tolbert said during a press conference, “[o]pen enrollment is the only time during the year where people can sign up for non-group coverage. Outside of the open enrollment period you must have a qualifying event to enroll in or change health plans, and this is true both inside and outside of the marketplaces.”
Do You Need to Act?
Everyone is required to have health insurance these days. Unless you get it from another source (employer, spouse, government, parents for those under 26) it’s your responsibility to purchase a plan, and the open enrollment period is the time to do it. What some people may not realize, however, is that they should check for coverage even if they bought health insurance mid-year.
The good news is that for all states, except Oregon and Massachusetts, renewal happens automatically. Anyone with coverage who hasn’t selected a new plan by December 15 will be re-enrolled in their existing plan, although a person can still change that plan by February 15.
According to Karen Politz, a senior fellow at the Kaiser Family Foundation, it’s still “a good idea for consumers to check in, see what’s being offered, what it costs and make an active decision whether to keep their current plan or change it.”
Plans and participating insurers change from year to year, and a better option may have opened up. It’s also worth knowing if your current plan is being canceled. As long as the same insurance company stays on the exchange they’ll automatically enroll you in a similar plan, but “similar” doesn’t mean “the same” and could still lead to rate hikes in the new year.
Finally, you may need to act because of something called “benchmark silver plans.”
The ACA uses the second cheapest silver plan on the marketplace as its benchmark, and insurance subsidies are calculated based on both individual income and the benchmark plan price. If the price of the benchmark plan drops, or a less expensive plan becomes the benchmark, then subsidies will change too. As a result, someone who sticks with their existing plan can end up paying more whether his premiums go up or not.
Here’s an example:
A 40-year-old man out in Denver makes $30,000 per year. In 2014 the second cheapest plan cost him $250 per month, making it the “benchmark." He got $41 per month in subsidies and spent $209 per month on insurance.
This year a new plan has entered the Colorado marketplace. It costs just $211, making it the benchmark and reducing this man’s subsidies to $3 per month. Therefore, if he does nothing and stays on his original, $250 per month plan, his out of pocket costs will jump to $247.
Anyone receiving subsidies should take the time necessary to check that his effective rates won’t go up from not taking action.
What About the Premiums?
As far as insurance premiums go the news is generally good. Nationwide rates haven’t gone up for 2015. In fact they’ve dipped by a very slight 0.2%.
The problem is this word “nationwide,” because on a state by state basis, the data is all over the place. A few states will see little or no meaningful change in their insurance premiums, but 13 of the markets surveyed by Kaiser can expect fluctuations of at least 3% or more. In Mississippi, for example, prices might fall by as much as 25%, while Alaska is staring down the barrel of a near 30% rate hike.
A few different factors explain these fluctuations. Insurance companies entering or leaving a state’s market can impact prices, generally by driving them down through increased competition. Where states see a large jump it’s generally because they already have abnormally cheap insurance and the market is catching up. States like Minnesota, Tennessee and Oregon have rates well below the cap that the ACA puts on benchmark silver plan premiums ($209 after subsidies), leading to large local growth as companies begin to edge closer toward that cap.
Another small piece of good news about insurance premiums is that tax subsidies will go up in 2015. They’re calculated based on an individual’s income relative to the federal poverty line which is being increased for inflation next year. That will have the effect of pushing everyone whose income stays the same closer to the poverty line, and thereby increasing income.
So, overall most people will pay about the same or slightly less for their insurance in 2015. Given America’s 50 state insurance marketplace, it all depends on where you live.
While premiums go down next year, the individual mandate penalty will go way up.
As a reminder, in 2014 the penalty for not having health insurance was $95 or 1% of applicable income, whichever is larger. Next year that more than doubles. Anyone who skips out on insurance for 2015 is liable for the greater of a $325 fine or 2% of applicable income. These penalties are applied at 1/12 of the total penalty for each month you spent without either coverage or a qualifying exemptions.
Since the IRS is involved, of course the rules get more complicated; however, those are the basic numbers you need to know.
Where to Shop
We’ve previously covered which states host their own health insurance exchanges vs. which ones use healthcare.gov, and anyone looking for where to shop can check it out here. Only four states have made any changes:
- Nevada, New Mexico and Oregon will now use healthcare.gov.
- Idaho will now host its own exchange, Your Health Idaho.
Everyone else can go back to the same market he used in 2014.
-- Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website www.wanderinglawyer.com.