If your senses are getting numbed by Obamacare’s endless deadline drumbeat, let us direct your attention to arguably the most important date of all: March 31, 2014.
March 31 is important not only because it’s the deadline for getting coverage in order to avoid penalties for being uninsured. It’s also the end of this round of open enrollment, meaning it’s your last chance this year for getting insurance coverage as an individual (though of course there are exceptions that will allow you to get individual coverage later in the year, exceptions such as getting a divorce or losing a job that had benefits).
But just as you don’t have to wait for April 15 to file your income taxes, you likewise don’t have to delay signing up health insurance until March 31. Anytime between now and then you can enroll through the state insurance exchange, Washington Healthplanfinder, where you might qualify for subsidized coverage, or you can buy insurance outside of the exchange through brokers or directly from insurance companies.
If you sign up through Healthplanfinder before the end of March, here’s when your coverage will start (deadlines can vary for plans bought outside of the exchange — check with your insurance company):
- Enroll and pay by Jan. 23, your coverage starts Feb. 1
- Enroll and pay by Feb. 23, your coverage starts March 1
- Enroll and pay by March 23, your coverage starts April 1
- Enroll and pay by March 31, your coverage starts May 1
With all of the emphasis on the exchanges, don’t get confused by the fact that individual insurance isn’t the only game in town. You don’t have to buy insurance through the exchange to avoid a penalty — you just need to be insured.
If you get a job that includes insurance benefits, they’ll kick in shortly after you’re employed and you’re covered. If your annual income dips below $15,856 you can enroll in Medicaid (known locally as Apple Health) throughout the year. Again, to be clear, Medicaid enrollment never closes, you can sign up whenever you are eligible for it (Healthplanfinder, the place you sign up for subsidized insurance, is also the entry point for Medicaid). And for seniors and those who qualify, Medicare has its own special rules about when you can enroll.
But if you don’t get insurance through work or from a federal program, individual insurance bought inside or outside of the exchange is your answer if you want coverage.
Given that the government would like to see everyone with insurance coverage, why are there windows of open and closed enrollment? Why not let people sign up whenever they’d like to?
First, deadlines are good motivators. If you could sign up whenever, some people would just keep putting it off and a major goal of the Affordable Care Act is that most Americans have health insurance.
Second, and more importantly, insurance companies can no longer deny coverage to people who are sick. If enrollment was available year round, someone could go without insurance until they got injured in a car crash, for example, or were diagnosed with a costly disease and then sign up.
Uninsured pay a price
The truth is, some folks won’t get insurance. Some will decide that it’s too expensive or not worth the cost and opt to take the gamble that they’ll stay healthy or be able to pay for their health care on their own. Others are so incensed by the government telling them they must get health insurance that they’ll defy the mandate on principal.
With a few exceptions, folks who don’t sign up face potentially significant penalties, technically called the “individual shared responsibility payment.” The penalty is calculated by the number of people in your household, or as a fraction of your income — whichever is larger. And it goes up each year. Here’s how it works:
- 2014: $95 per adult, $47.50 per child, up to $285 per family OR 1 percent of the household income (so $600 for a family earning $60,000)
- 2015: $325 per adult, $162.50 per child, up to $975 per family OR 2 percent of the household income
- 2016: $695 per adult, $347.50 per child, up to $2,085 per family OR 2.5 percent of the household income
- 2017: Adjusted for inflation
The 2014 penalties will be due when people pay their taxes to the Internal Revenue Service on April 15, 2015. But because of how the fee will be collected, not everyone will actually pay it. According to HealthCare.gov, the federal insurance exchange site:
“The IRS will hold back the amount of the fee from any future tax refunds. There are no liens, levies, or criminal penalties for failing to pay the fee.”
But it turns out that a lot of people get refunds, and pretty big ones. The IRS reports that approximately 75 percent of taxpayers get a refund and in 2012 the average refund was about $2,700.
However, if you owe the IRS at the end of the year, you could duck the penalty.
Timothy Jost, a professor at the Washington and Lee University School of Law and coauthor of the casebook “Health Law,” had this take on the IRS’s ability to extract the fee, as quoted in a recent article from Yahoo Finance:
“If you don’t pay it, all they can do is wait until they owe you some money and take that. Or probably just send you a letter every now and then reminding you that you owe money to the IRS.”
For folks who opt out of coverage this year, there’s always 2015. The next enrollment window is proposed to run from Nov. 15, 2014 to Jan. 15, 2015.