A Primer On Trumpcare’s Upcoming Open-Enrollment Period
If you are new to the health insurance landscape and need to purchase coverage, you should understand how open enrollment periods work and why they exist in the first place. Most health insurance companies have some form of open enrollment period, with notable exceptions for government programs like Medicaid and CHIP. Here’s a closer look at how open enrollment works and why there’s a limit on when you can apply for coverage.
What is “Open” Enrollment?
Open enrollment is a set amount of time when you can sign up for or make changes to your health insurance plan. Unless you experience a qualifying life event – such as the birth of a baby or a change in jobs – you cannot enroll in a health insurance plan or change your current medical insurance outside this period. There are two main categories of health insurance:
- Group coverage: This is health insurance that you get from your job, the premiums of which your employer pays a portion (usually a substantial portion). If you receive your coverage through a group health insurance plan at work, open enrollment could happen at any point in the year, but standard practice is to set the signup period during late fall so that people can make changes before a new year starts.
- Individual coverage: If you don’t get coverage through work, then you can buy a plan on an Obamacare on-exchange plan marketplace, through an insurer directly, or by contacting an independent broker. For nongroup coverage, also referred to as individual insurance, the enrollment period is currently set by the federal government as part of the Affordable Care Act. This year, the 2018 enrollment period is much shorter than it was for the last four years. You’ll only have 45 days to sign up for health insurance for next year if you need nongroup coverage. The 2018 open enrollment period runs from November 1 to December 15.
If you’re eligible for Medicare, open enrollment starts on October 15 and ends on December 7. During this period, you can change your current coverage by enrolling in a Medicare Advantage plan, choosing Part D coverage or making other adjustments.
Medicaid, the program for low-income people under certain categories, has no open enrollment period, nor does the Children’s Health Insurance Program (CHIP). If you or your children qualify for these programs, then you can sign up at any time throughout the year.
Why Open Enrollment Exists
If you don’t know why open enrollment periods exist, you’re not alone. Many people don’t understand open enrollment and why they cannot enroll in a health insurance plan whenever they want. Healthcare is confusing, but open enrollment actually serves a purpose.
Without open enrollment periods, many people would forgo the cost of monthly health insurance premiums and only buy healthcare coverage when they’re sick. If people only bought coverage when they needed it, medical costs would explode and it could lead insurance companies into financial ruin.
Consider it this way: If you bought insurance only when you got sick, then you would only pay a few months of premiums while the insurance company paid for expensive medical services. Once you received all the medical services you needed, you could drop the coverage and enroll in a cheaper plan or opt out of health insurance entirely. With monthly deadlines in place where you must enroll or miss out, scenarios such as these don’t occur. Just as with auto or home insurance, the purpose of these products is to make sure that you have coverage – and pay premiums for it – well before you need to file a claim. It stabilizes the insurance market.
Affordable Care Act Open Enrollment
From 2013 to last year, people had about three months to sign up for individual coverage. The Centers for Medicare and Medicaid Services, which oversees Obamacare, finalized a shorter signup period in April. For 2018, the enrollment period runs from November 1 through December 15 for private, nongroup coverage. During this time, you can shop for coverage offered by private insurance companies on or off the marketplace. If you need insurance and don’t enroll, you may need to wait a year and pay the fine, or you can try to qualify for the special enrollment period.
A special enrollment period allows you to enroll in a plan outside of the open enrollment period if you’ve experienced a qualifying life event. A qualifying life event includes losing your job, moving, getting married, having a child or losing your health insurance, among other things. Under Obamacare, you have 60 days after the qualifying event to enroll in a plan. If you have employer-based coverage, the special enrollment period is 30 days from the qualifying event.
The Future of Open Enrollment Under Trumpcare
It is no secret that President Donald Trump and Congressional Republicans want to repeal and replace the ACA. Earlier in the year, the Trump administration issued a proposed rule that shortens the open enrollment period. The goal of the rule was to stabilize the insurance marketplace created by the ACA. Had the CMS not issued the rule, the enrollment period would have run from Nov. 1 to Jan. 31.
On April 13, 2107, the Centers for Medicare and Medicaid finalized the rule and shortened the open enrollment period to 45 days instead of three months. Several healthcare organizations and experts opposed the rule, stating it would cause a rise in premiums and reduce plan sales while increasing out-of-pocket expenses. The rule also made it difficult to qualify for a special enrollment period. According to a Reuter’s article in April, insurers welcomed the shortened open enrollment period but claimed it wasn’t not enough to stop them from losing millions of dollars in the ACA’s health insurance marketplace.
Health Insurance Is Still Required by Law Under the Affordable Care Act
If you don’t have a qualifying health insurance policy, the federal government will fine you for not obtaining coverage. Known as the individual mandate, this provision under the Affordable Care Act requires every American to enroll in a qualifying health insurance plan. If you fail to acquire coverage, the penalty is 2.5 percent of your taxable income for the 2016 tax year, or $695 per adult and $395 per child under the age of 18 in your household, whichever is greater.
So, the question is, “What constitutes qualifying coverage?” Here’s a look at qualifying coverage, also known as minimum essential coverage. Keep in mind that plans offering limited benefits do not qualify. Examples of minimum essential coverage include:
- Employer-sponsored health insurance
- Any plan sold on an Obamacare insurance exchange
- Any major medical policy sold after March 23, 2010 on the private market
- Medicare Part A
- Medicare Advantage plans
- Medicaid or the Children’s Health Insurance Program (CHIP)
- Certain plans offered to veterans, such as TRICARE
Since the Affordable Care Act requires you to enroll in qualifying health insurance, you must know when the enrollment periods start and end. You should understand special enrollment periods and how to qualify for an extension. It’s also critical to know which plans qualify under the ACA if you want to buy a policy that isn’t offered on an Obamacare exchange. Because the enrollment period has been cut in half, knowing how to navigate the insurance market before November will help you pick a plan that works for you, your family and your budget.