Health

FAQ: Health insurance open enrollment 3.0: What you need to know

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The opening bell for the Affordable Care Act's third open enrollment rings Sunday, marking the launch of  the three-month period during which consumers who buy private insurance will be allowed to purchase new coverage or  switch plans.

Only those who have experienced a qualified life event, such as marriage, divorce, job loss or the birth of a child, can buy health insurance outside of the open enrollment period, which runs from Nov. 1-Jan. 31, 2016.

To help you navigate the often complicated world of health insurance under the Affordable Care Act, we've compiled answers to some common questions.

1.  Who is affected by the Affordable Care Act's open enrollment period?
 Open enrollment under the federal health law applies to people who buy private health insurance for themselves or for their family. It does not apply to people with insurance provided by their work, or to those who are covered by Medicare or Medi-Cal.

2. Besides the Nov. 1-Jan. 31 window for open enrollment, any other important dates I should know?

Yes. If you want your new coverage to begin by Jan. 1st you must buy it by December 15th.

The way insurance works, coverage purchased during the first half of any month takes effect on the first day of the following month. So buy it by Dec. 15th, 2015 and your coverage starts on Jan. 1, 2016.  

But wait until the second half of the month, and coverage takes effect on the first day of the second month.  So buy it on Dec. 16th and you'll have to wait until Feb. 1 for your plan to take effect.

3. If I like my existing coverage, do I still need to shop around?  

The short answer: Absolutely.  Plans change.  Some change a lot, some only a little. Knowing which category yours falls into is essential to avoid ugly surprises - like services that may no longer be covered or a premium that's no longer affordable to you.  

You may have heard that California will see an average premium increase of only 4 percent among 2016 plans sold through Covered California, the state-run exchange. But remember, that's only an average.  Individual plan premiums can vary widely. 

For instance within the two insurance regions that cover Los Angeles County, the percentage change in premiums from this year to next ranges from a 13 percent drop in one Anthem plan to a 23 percent hike in one of Blue Shield's plans. 

In other words, it definitely pays to shop. 

4. If  I still want to keep my existing plan after shopping around, what do I need to do?  

You don't have to do anything. You’ll be automatically re-enrolled in your existing plan if you do nothing. But if you’re receiving the tax subsidy, or think you might qualify for it, make sure to go to Covered California’s website and enter your current income and family information. That's because any income changes are likely to affect the amount of subsidy you're eligible to receive.

If you claim too much in the way of subsidy assistance, you’ll have to to pay it back, which can prove to be an unpleasant and expensive surprise at tax time. On the other hand,  if you claim too little in the way of subsidies, you're potentially leaving some nice premium assistance on the table. 

5. What happens if I'm automatically re-enrolled in my 2015 plan but realize later I want to switch to a different one?
 
No worries, as long as you act during open enrollment. But remember, if you want that new plan to take effect by Jan. 1, you'll have to make the switch on or before Dec. 15. 

6. How do those subsidies work?
 They're a tax credit from the federal government that you can take in one of two ways. You can opt to receive them as an upfront offset to the cost of your monthly insurance premium.  Or you can take them at the end of the year.  That latter option can be a good choice for freelancers and other contract workers who have variable annual incomes.

If your income fluctuates, you might find it advantageous to wait until the end of the year to claim your subsidy to avoid owing money come tax time.

You can determine whether you qualify for a subsidy and for how much by logging into Covered California's website and entering a few pieces of information.
 
7.  Is it true that people getting subsidies have to file a tax return, even if they normally wouldn't have to?

Yes. The Affordable Care Act requires anyone who receives an insurance subsidy to file a tax return - regardless of income - to verify their continuing eligibility. And if you don’t file, you might find yourself re-enrolled in the same plan – but at full retail price. 
 
8. What is the 2016 penalty for not having health insurance?  

The penalty climbs in 2016 to either $695 per adult and $347.50 per child under 18 (up to a family maximum of $2,085) or 2.5 percent of your taxable yearly household income, whichever is greater. 
 
9. What happens if you are hit with that penalty, but don’t pay it?  

Well, you won’t be hauled off to jail. The IRS won’t impose any criminal penalties, liens or levies for failing to pay the penalty. Instead, it will deduct any amount you owe from future tax refunds.  
 
10.  Where can I get help shopping for a new plan?  

A licensed insurance broker is trained in deciphering complicated lingo and  how to navigate all the ins and outs. What's more,  he'll charge nothing for helping you, as he gets paid directly by the insurance companies. 

You also can shop on the Covered California website. But if you earn too much to qualify for subsidy assistance, there’s really no benefit to buying coverage through the state-run marketplace. All of the plans available there are also available outside the exchange, along with an assortment of other options offered by various insurance firms. 

And if you want to get some statewide ratings of the available health plans, check out the quality report cards; the complaint data reports and the primer on health insurance basics offered through California's Office of the Patient Advocate.