Individual Changes to Obamacare for 2016

It’s that time again; open enrollment for health insurance is upon us.  Since the advent of the Affordable Care Act, wrapping up the details of one’s individual health plan by year-end has been a top priority.  That’s because Obamacare created tax penalties for lack of insurance coverage.  That penalty was originally relatively small (the larger of $95 or 1% of income over $10,000, capped at $2,448, for individuals), but it has increased over time.  In 2015, the penalty jumped to the larger of $325 per person, or 2% of income, again with an overall cap. (Family penalties varied in both years).  In 2016, that tax is set to jump again (see below), and a host of other changes are present in the healthcare law.

If you are among the over 15 percent of Americans who purchase health insurance directly, instead of getting it through an employer, Medicare or Medicaid, here six big changes to Obamacare that you need to know now:

Open enrollment deadlines have changed.

This year, Open Enrollment for 2016 started 11/1/15 and ends on 1/31/16.  If you miss the Jan. 31st deadline, there won’t be any way to get insurance, or to change to a different plan, for the rest of 2016.  (There are a few exceptions to this rule: If you lose other coverage during the year, for example by losing a job, getting divorced, or moving to another state, you’re entitled to a Special Enrollment Period to get new coverage at any time.)  If you sign up or switch plans by 12/15/15, your new coverage will start 1/1/16. You must purchase or change plans within the annual Open Enrollment period.

This will be the last year open enrollment extends into January. Starting next year, open enrollment will be from 10/15 to 12/7, the same dates as Medicare open enrollment. Any coverage you elect during marketplace open enrollment then will start Jan. 1.

You must sign up if you don’t have health insurance from another source.

The cost of your plan will likely be higher.

Both private insurance and Obamacare premiums are set to spike to 2016 (link to prev. blog).  It’s a good idea to price out your options now, during Open Enrollment, which will show you whether your current plan is still the best value for you. This is especially true if you receive a tax credit to help with premiums. Because of the way the credit is calculated, it can potentially make the price swing even more severely in certain circumstances.

Penalties for not having health insurance have increased for 2016.

If you go without health insurance in 2016, the penalty is 2.5 percent of your income or $695 per adult (whichever is more) and the penalty for each child in the family without coverage will be up to $347.50. (In 2015, it was the greater of $325 or 2 percent of your income.)

If you owe a penalty, it will be taken from your tax refund. The government cannot garnish your wages or file liens on your property to collect an insurance penalty.

You must have the right coverage.

All health plans, no matter the level, must provide some coverage for at least 10 essential benefits. They are:

• Outpatient care (including chronic disease management)
• Emergency care
• Hospitalization
• Pregnancy and newborn care
• Mental health and substance abuse services
• Prescription drugs
• Rehabilitation services and devices
• Lab tests
• Preventive and wellness services
• Dental and vision care for children

You will still pay a penalty for being uninsured if you have coverage only for vision care or dental care, workers compensation, insurance that covers only a specific disease or condition (i.e. cancer insurance), or a plan that offers only discounts on medical services.

Hardships may exempt you.

You may not be required to buy health insurance during open enrollment if you qualify for a hardship exemption. You may be exempt if any of the following are true:

• You have been uninsured for less than three months of the year.
• You are the victim of domestic violence or have suffered from a natural or human-caused disaster such as a fire or flood that damaged your property substantially.
• A close family member recently died or you had unexpected expenses related to caring for an elderly, ill or disabled family member.
• You have been evicted from your home or suffered bankruptcy.
• You found you are ineligible for Medicaid because your state did not expand eligibility under Obamacare.
• You are not in the U.S. legally.
• You are incarcerated -- either detained or in jail.
• You are a member of a recognized religious sect that has religious objections to insurance.
• You live abroad for more than 330 days out of the year.

Financial help isn’t just for premiums.

Depending on your income and family size, you might qualify not only to receive a government subsidy for your insurance premium, but also for help with out-of-pocket costs like deductibles and copays. For instance, a two-person household can get a tax credit to offset part of the premium if their annual income is below $63,720. An income below $39,825 entitles them to buy special plans with reduced out-of-pocket costs. In most cases, the ACA uses the adjusted gross income line on your latest tax return, which could be considerably less than your total income. You can utilize a calculator on Healthare.gov to assess what types of subsidies and discounts you’re likely eligible to receive.