Chapter 1: Insider’s Guide to Obamacare’s Open Enrollment

10 reasons why it’s time to enroll

Improved enrollment systems, protection against huge medical bills, steeper penalties, and seven other reasons you shouldn’t delay

  • By
  • healthinsurance.org contributor
  • August 20, 2016

The Insider's Guide to Obamacare's Open Enrollment 2016-2017 EditionIt’s been six years since the ACA was signed into law, and nearly three years since ACA-compliant health plans first became available for purchase. Yet there are still millions of Americans who are uninsured, or who still have coverage under a grandmothered or grandfathered health plan.

If you’re reading this, it’s possible that – for whatever reason – you still haven’t enrolled in a health plan that’s compliant with the requirements of the Affordable Care Act. Or maybe you’re enrolled, but you have friends or family members who are still “holding out” – and they need a little convincing.

If you’ve decided that you simply don’t need health insurance, you need to read this before you go any further.

But if you’ve waited to enroll in ACA-compliant coverage because you still have reservations about Obamacare, or you’re worried that you won’t be able to afford coverage – or some other reason – you really should wait no longer, and for a very long list of reasons.

Here are the most obvious reasons why you should enroll during the upcoming open enrollment period.

1. The exchanges are much improved

Although the first open enrollment that started in the fall of 2013 was fraught with glitches, things were dramatically better in virtually every state during the second open enrollment period, and the third open enrollment period was basically smooth sailing.

As of March 2016, more than 11 million people had effectuated coverage in private health plans through the exchanges (plus 400,000 people in Basic Health Programs in New York and Minnesota). If you’re still hesitant to enroll because of the snafus from the first open enrollment period, rest assured that those problems are long-since fixed.

2. You’ve only got 3 months to enroll

This year’s open enrollment period starts November 1, 2016 and wraps ups on January 31, 2017. The November-to-January format was used for 2016 enrollment, and will continue to be used for 2017 and 2018 enrollment. After that, the enrollment window will shrink to just half that time period, running from November 1 to December 15.

Open enrollment is the only opportunity you’ll have to enroll in individual coverage for 2017 – including outside the exchange in every state except Nevada – unless you have a qualifying event later in the year. If you need your coverage to be effective January 1, be aware that in all but three states you’ll need to enroll by December 15. (In Washington, Massachusetts, and Rhode Island, you can enroll as late as December 23 and have coverage effective January 1.)

3. On- or off-exchange … it’s your choice

In most parts of the country, you have the choice of selecting a health plan within your state’s exchange (where you may be eligible for subsidies based on income) or outside the exchange. Just remember that the November 1 to January 31 open enrollment window applies regardless of which option you choose.

The District of Columbia does not allow the sale of off-exchange plans, but in the rest of the states, the choice is yours (Vermont didn’t have off-exchange enrollment in 2014 or 2015, but they began allowing people to enroll directly throught the carriers in 2016). Keep in mind that premium subsidies and cost-sharing subsidies are only available if you shop in the exchange, so if you’re eligible for subsidies, don’t shop outside the exchange.

4. Discounted premiums

If you select a plan in the exchange and your household income doesn’t exceed 400 percent of poverty level ($97,200 for a family of four during the open enrollment period that begins November 1, 2016), the amount that you’ll pay for the benchmark Silver plan is capped as a percentage of your income.

Of people enrolled through HealthCare.gov for 2016, 85 percent qualified for subsidies to help cover the cost of their health insurance policies. And 78 percent of enrollees in state-run exchanges qualified for subsidies in 2016. By the end of March, 84.7 percent of all enrollees who had effectuated their coverage — nationwide — were receiving premium subsidies.

While average premiums are expected to increase again for 2017 – especially with the reinsurance and risk corridors programs terminating at the end of 2016 – subsidies will mitigate price hikes for most enrollees. But that comes with the caveat that it’s essential to shop around during open enrollment, as rate increases vary considerably from one plan to another.

If you shopped for individual health insurance prior to 2014 and found it to be too expensive, now’s your chance to look again. You may find that subsidies make it much less expensive than you’re expecting.

5. No worries about health history

Pre-existing conditions are no longer a barrier to enrollment. In the individual market, pre-existing conditions have historically resulted in declined applications, exclusion riders, or higher premiums. That is no longer the case, thanks to Obamacare.

6. It’s easier to compare plans

Most of the exchanges have numerous plans available, which is great for competition and consumer choice. But it can also be overwhelming and difficult to sort through the choices. To make the process easier, more decision support tools were rolled out for consumers during the 2016 open enrollment period, and CMS began requiring plan issuers to make their provider directories more user-friendly and up-to-date.

Some state-run exchanges have created comparison tools that help shoppers look beyond premiums to see how plans stack up in terms of total out-of-pocket costs.

In addition, HealthCare.gov is giving insurers the option of offering standardized plans beginning with the 2017 open enrollment period. Several state-run exchanges already offer standardized plans, and Covered California requires them in an effort to make it easier for consumers to compare apples to apples when selecting a health plan.

HealthCare.gov will also be using a Quality Rating System for QHPs in 2017, making it easier for consumers to see how health plans stack up against one another on a variety of quality rating metrics.

But the exchanges aren’t alone in improving their offerings. Many online health insurance quote providers now offer an impressive set of tools that go beyond premium comparison, serving up results that include personalized recommendations based on users’ anticipated medical needs. (Take a look at your plan options using this site’s free quote tool. )

7. Networks and formularies are more transparent

Provider networks and formularies (lists of covered prescription drugs) vary significantly from one carrier to another. But it is getting easier for consumers to compare the networks and formularies of the various plans they’re considering.

For people buying health plans in the 39 states that will be using HealthCare.gov during the 2017 open enrollment, the federal government implemented new transparency standards for network and formulary information in 2016. Many of the state-run exchanges already began addressing this issue in 2014 and 2015, and have continued to make progress.

CMS is working out the details of a network rating system for plans sold on HealthCare.gov, and it’s expected to be available in time for the 2017 open enrollment period.

Starting in September 2017, insurers will have to give insureds at least 30 days notice if their doctor is being dropped from the plan’s network. And when a provider’s contract is terminated without cause, insurers will have to allow people in active treatment for a life-threatening or acute condition, or in the second or third trimester of pregnancy, the option to continue to see the provider at in-network rates for up to 90 days.

8. Protection against huge medical bills

The maximum out-of-pocket exposure on ACA-compliant health plans in 2017 will be $7,150 for an individual, and $14,300 for a family (with an embedded individual out-of-pocket maximum for individual family members), as long as the treatment is received from doctors and hospitals that are in the health plan’s network. But that’s the upper limit. Health plans can – and generally do – have out-of-pocket limits that are lower than the maximum allowed by law.

If you’re uninsured, there’s no limit on the out-of-pocket costs you could face in the event of a serious illness or injury. If you’re insured on a pre-2014 grandmothered or grandfathered plan, your out-of-pocket limits might be higher than the limits on ACA-compliant plans in 2017, since there were no laws governing how high health plans’ out-of-pocket limits could be prior to 2014.

Switching to an ACA-compliant plan during open enrollment – either on or off-exchange – ensures that your out-of-pocket expenses for essential health benefits won’t exceed $7,150 for an individual or $13,400 for a family, and could be well under these amounts, depending on the plan.

In general, Bronze plans will have the highest out-of-pocket exposure, while Gold/Platinum plans will have the lowest. (Platinum plans aren’t available in all areas, as insurers have had very little demand for them.)

9. Steep penalties for being uninsured

The individual mandate penalty increased again – significantly – in 2016 for people who are uninsured and not exempt from the requirement to have health insurance. In 2016, the penalty is $695 per uninsured adult (half that amount for a child), up to $2,085 per household, OR 2.5 percent of household income above the tax-filing threshold, whichever is greater. For 2017 and beyond, the increase over the 2016 penalty will be based on inflation.

For people who were uninsured in 2014, the average penalty amounted to about $210 per tax-filer subject to the penalty. But it’s expected to be almost five times that much when the 2016 penalties are assessed during the tax filing season in early 2017.

For people who qualify for significant subsidies, the amount of the penalty could be a significant portion of the net cost of health insurance after the subsidies (and buying insurance is a much better use of your money than just giving it to the IRS and getting nothing in return). And for families who don’t qualify for subsidies, the percentage of income penalty can be as high as the average cost of a Bronze plan. In 2015, this was $207 per month for an individual, and $1,035 per month for a family of five or more. In 2016, it’s $223 per month for a single individual, and $1,115 per month for a family with five or more members.

The penalty section of our guide explains more about how the Obamacare penalty works, and how you can avoid it.

10. You’ll be part of the solution

The more Americans who enroll, the stronger the risk pool will be for everyone. This is especially true when healthy people enroll. Joining the health insurance pool now – while you’re healthy – helps to ensure that the pool will be strong and robust when you eventually need your coverage.

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