8 costly Obamacare mistakes to avoid
Ready to start shopping for health insurance in the new marketplaces created by the federal Affordable Care Act? If so, you should know about common pitfalls you might encounter while filling out your application.
Here are eight Obamacare shopping mistakes to avoid.
1. Ditching your health insurance too quickly.
Consumers who already have insurance should avoid hurrying to switch to a new plan, says Adam Lieberthal, owner of Lieberthal Insurance Services, an independent California agency. “The marketplaces have obviously had a very difficult rollout,” Lieberthal says, adding that he’s heard complaints from consumers who can’t log into Covered California, his state’s marketplace. So, if you’re already covered, he recommends waiting at least three months for the glitches to get fixed in the new system: “If you’ve got insurance, stick with it for now.”
2. Lying on your application.
For consumers who qualify, federal subsidies can really help lower the cost of premiums. But don’t lie, fudge or omit information on your application to try to get premium help, Lieberthal says, warning that you will get caught.
“You could lie on your application, but as soon as you hit the submit button, the system will automatically check with the IRS,” he says. “Don’t forget, this is private insurance but it’s a government-run program.” That means Uncle Sam has plenty of information, including your past tax returns, to verify your application.
3. Over/underestimating your income.
Income can change from year to year, especially for the self-employed, experts say. The federal government will use your income from the fiscal year ending in December 2012 to see if you qualify for a subsidy, Lieberthal says. However, if you get a tax credit paid in advance to lower your premiums, but your income goes up, you could get hit with an income tax surprise when you file your federal return. “If you get a subsidy and you shouldn’t have, you have to pay it back,” Lieberthal says.
Want to calculate your Obamacare subsidy? Use our Obamacare Subsidy Calculator to see what your subsidy would be.
But you can choose to take less in subsidies if you anticipate an income bump, and there are caps, determined by your income, on the amount you would need to pay back, according to Kaiser Health News.
4. Leaving out some sources of income on your application.
“Most people think of income and we think of our jobs,” says Christine Barber, senior policy analyst for the nonprofit Community Catalyst. But in addition to wages or salary and tips, your household income also includes:
- Unemployment compensation.
- Social Security disability payments.
- Retirement income.
- Investment income.
- Alimony for members of your household.
- Income from rental properties.
- Prizes or awards.
- Gambling winnings.
5. Not getting organized before you start shopping.
When you sit down to complete your online application, don’t forget to have all the necessary information at your fingertips. “It’s not like there are huge amounts of paperwork required, but you do need to have some information handy,” says Rachel DeGolia, executive director for the nonprofit advocacy group Universal Health Care Action Network. Here’s what you’ll need:
- Social Security Numbers (or document numbers for legal immigrants).
- Income information for everyone in your household. Pay stubs or last year’s W2s will work, DeGolia says.
- Policy numbers for existing health insurance plans for you and anyone else in your family who is signing up for coverage.
- A completed employer coverage tool form for every member of your household who is eligible for health insurance through an employer — even if they don’t have the coverage now. Most of the information on the form needs to be obtained from the employer, so plan ahead.
6. Not shopping around if you have expensive coverage through work.
If you have insurance through work but you’re not happy with the cost or coverage, it could be a mistake not to shop around, DeGolia says. If you have job-based coverage that’s very expensive, you might be able to get a subsidy in your state’s marketplace if your plan is considered “unaffordable” — that is, if it would cost more than 9.5 percent of your family income to cover just you. Even if that’s not the case, you might be able to get a subsidy anyway if your employer’s plan doesn’t meet “minimum value,” meaning it pays about 60 percent of total medical costs or above. To find out more, you can ask your boss to fill out the employer coverage tool work sheet. “You might get a better deal and better coverage shopping on the marketplace,” DeGolia says. You should always compare medical insurance plans to make sure your coverage and price are right for you.
7. Not looking at the provider network before buying a plan.
Don’t choose a plan without first checking out which doctors, hospitals and other providers are in-network for that plan, DeGolia says. One major error can trip up consumers, Barber says: “Maybe they’ve had BlueCross or Aetna before, so they assume a plan from that insurer will have the same network.” But that’s not always the case, she says, and networks vary by plan. “Always check before you enroll,” she says.
8. Trying to go it alone.
Don’t be afraid to seek help, Lieberthal says, noting that you can contact an independent agent or broker. Agents and brokers will be able to answer questions about benefits and deductibles and give you an idea of all your options — including plans that aren’t offered in the marketplaces. You can go into an agent or broker’s office or have them walk you through the shopping process on the phone, he says. HealthCare.gov also offers a tool to find local help. And DeGolia says many libraries and federally funded community health centers offer assistance.