How to save on health insurance: marketplace open enrollment
Part three of a three-part series on saving money and maximizing benefits during open enrollment
The federal health care exchange and many state exchanges will begin open enrollment November 1. Marketplace open enrollment gives taxpayers the opportunity to enroll in new coverage, change health insurance plans and apply for premium tax credits to get the right health benefits and most accurate savings for 2016.
Marketplace open enrollment provides choices
Anyone can choose from different health insurance plans on the federal or state exchange. Marketplace plans offer levels of coverage varying from “bronze” to “platinum.” Bronze plans have the lowest premiums but higher out-of-pocket costs, while platinum plans have higher premiums and lower out-of-pocket costs. Those who qualify for a cost-sharing reduction (CSR) will want to consider a silver plan in order to get help with out-of-pocket costs like deductibles and copays. Those under age 30 can also enroll in catastrophic plans, which generally have the smallest premiums but provide the least benefit.
It is important for taxpayers to find the right level of coverage for their situation. They can compare plans on www.healthcare.gov or their state marketplace site. Taxpayers can also get free assistance from a Licensed Health Care Advisor at 1-800-HRBLOCK or go online to find plans and enroll.
Marketplace open enrollment prevents penalties
In 2016, penalties for being without insurance will increase for the second year in a row. Taxpayers will have to pay a penalty of $695 per uncovered adult and $347 per uncovered child or 2.5 percent of their household income, whichever is greater. That means a family of four earning $60,000 would pay a penalty of more than $2,000. For 2014, their penalty would have been around $400.
To avoid a penalty, taxpayers may enroll in a marketplace plan. Some taxpayers may be eligible for an exemption from the penalty and can determine whether they may qualify by using the ACA tax calculator.
Marketplace open enrollment offers premium tax credit
Some taxpayers will qualify for a tax credit to lower the monthly cost of health insurance. Depending on their situation, taxpayers could qualify for an advance premium tax credit (APTC) to reduce their premium costs. To qualify, taxpayers must meet income and other eligibility requirements, including:
- being enrolled in coverage through the marketplace,
- having income between 100 percent and 400 percent of the federal poverty line,
- not having access to affordable coverage through an employer plan that meets minimum standards,
- being ineligible for coverage through Medicare, TRICARE or other government programs,
- not using the married filing separately status and
- not being a dependent.
Marketplace premium tax credit requires tax compliance
Taxpayers can lose their eligibility for the APTC if they have not filed the necessary tax forms. Anyone who received the APTC in 2014 needed to file form 8962 with their return to ensure they received the proper amount of APTC in 2014. The marketplace will use that information to determine whether a taxpayer qualifies to continue receiving the APTC for the 2016 plan year.
Those who received APTC in 2014 and either did not file a 2014 return or who did not include the required form will not be able to get the APTC for 2016. To regain eligibility and continue receiving the assistance they relied on in the past, taxpayers can file a 2014 return or amend a 2014 return to include form 8962 as soon as possible.
Marketplace open enrollment starts November 1 and lasts until the end of January 2016. Those who do not enroll during open enrollment will not be able to enroll in coverage unless they qualify for a special enrollment period due to a life changing event, such as marriage, birth or moving to a new coverage area. Taxpayers should take this chance to consider their coverage options, prevent any penalties and claim any tax credits they’re eligible for. They can learn more at ACA Tax Impact or by talking to a trusted tax professional.