Obamacare: What You Need to Know
If you don’t have health insurance, you’re not happy with your plan or you just want to look for a better deal, there’s good news: The open enrollment period begins soon for the 2016 coverage year.
Just like last year, consumers will have a period of three months in which to enroll or switch plans, but it’s best to shop in the early part of that time frame if you want your coverage to start as you’re ringing in the new year.
Open enrollment for 2016 coverage begins Nov. 1, 2015, and lasts through Jan. 31, 2016, according to HealthCare.gov. To get coverage that starts Jan. 1, you must enroll or change plans by Dec. 15, 2015. Otherwise, you must sign up by Jan. 15 to get coverage that starts on Feb. 1. And if you wait until the last half of January to buy a plan, your coverage won’t start until March 1.
You can buy health insurance on the marketplace in your state or directly through the health insurance company. Even if you have health insurance and you’re happy with your plan, you should still check out your options because plan prices and offerings change from year to year, says Sabrina Corlette, research professor and director at the Georgetown University Center on Health Insurance Reforms.
“Everyone would be smart to shop around,” Corlette says.
Going without insurance? Prepare to pay a big penalty
One of the biggest Obamacare changes is a sharp increase in the penalty for going without health insurance. The penalty was designed to start low and increase over three years.
If you’re still uninsured, don’t just calculate the cost of coverage versus the cost of the penalty, Corlette says. Think about the risk of getting sick or in an accident and how you’d pay for it, she says.
In 2014, the first year the penalty was in force, about 7.5 million Americans paid up for going without insurance, with an average penalty around $200, according to the IRS. That year, the penalty was the higher of either $95 per adult or 1 percent of yearly household income. And Americans uninsured in 2015 will pay whichever is greater, $325 per adult or 2 percent of household income.
But in 2016, the penalty skyrocketed to the maximum rate, after which it will be adjusted for inflation. Fail to buy coverage for the coming year, and you’ll owe whichever is higher: $695 per adult (or $347.50 for a child under 18) for a maximum of $2,085 per family, or 2.5 percent of your yearly household income.
“That is not a small amount,” Corlette says.
Shopping for Obamacare
The increase in penalty isn’t the only Obamacare change. Here are four things to know as you get ready to shop for health insurance for the coming year.
Prepare for a little sticker shock. Overall, health insurance premiums will go up in 2016, though it might not be a huge increase. In an analysis of 2016 silver plan prices in 11 major cities, the Kaiser Family Foundation, a nonprofit focused on health policy issues, found modest increases that average 4.4 percent, but were much higher in some areas. “Nationally, we’re not seeing huge swings in prices,” Corlette says. But that could vary by region or by individual plan, which is why it pays to shop around, she says.
You might have to switch plans to maximize your subsidy. If you get a subsidy, which is a tax credit that reduces the amount of your monthly premium, it’s especially important to shop during the upcoming open enrollment period. That’s because plan prices change each year, and the subsidy is pegged to the cost of the second-lowest-cost silver plan, Corlette says. If you chose that plan in 2015, but a different plan ends up as the second-lowest cost silver plan in 2016, you’d pay the difference, she says.
Low-income consumers may have more options. On top of premium subsidies, consumers who make 250 percent of the federal poverty level (FPL) or less have always had the ability to get “cost sharing subsidies” to cut their deductibles and copays. In 2016, the New York exchange is offering separate plans, known as The Essential Plan, says Susan Combs, CEO of Combs & Company, a New York insurance brokerage. For New Yorkers who earn between 138 percent and 150 percent of the FPL, the plan will have no monthly premium, and for those between 150 and 200 percent of FPL, it will cost $20 a month. “It’s a really nice plan,” Combs says.
Your employer might decide not to offer coverage. In 2016, employers with 50 to 99 full-time equivalent employees began having to offer coverage or pay a penalty. But Combs says she’s seeing some employers of that size choose to pay the penalty. In that case, employees will need to shop for their own individual coverage, she says. The upside: You might be able to get a subsidy, which would not have been available if your employer offered affordable coverage but you preferred to shop on your own, Combs says.
And, finally, consumers who were holding out on getting health insurance because they figured Obamacare would be repealed should go ahead and buy a plan, Combs says.
“It’s here to stay, so let’s move forward,” she says.