What’s Open Enrollment? And why do we have it?
Open Enrollment is the annual period when you can evaluate your health insurance options and change your plan accordingly. The most important thing to understand about Open Enrollment is the time frame for applying for health insurance, which is November 1 to December 15 for a January 1 effective date.
The Affordable Care Act (ACA) includes specific application periods to reduce the chance that people would wait until they needed healthcare before getting insurance. In the insurance industry this is known as “adverse selection” – where the insurance buyer has information about their health that the insurance company does not have or cannot use to make an approval decision. If the buyer is allowed to purchase coverage only when they need benefits, there aren’t any healthy clients whose premiums would offset the expenses generated by the people who waited.
How it works. During Open Enrollment, you can submit an application to health insurance carriers to change deductibles, add or drop benefits, take advantage of improved network participation, and update subsidy applications for Healthcare.gov. After approval, your coverage is not subject to any waiting periods for pre-existing conditions.
Open Enrollment deadlines are critical. Apply early! The 15th day of each month during Open Enrollment is when lines are drawn regarding when your coverage kicks in. So if you submit your application between November 1, 2020 and December 15, 2020, your coverage will take effect on January 1, 2021. If you apply between December 16, 2020 and January 15, 2020, your coverage will take effect on February 1, 2021. All applications submitted on or after January 16, 2021 will be automatically assigned a March 1, 2021 effective date.
The other important aspect of these deadlines is how application volume affects enrollment. Historically, application volume spikes dramatically around December 10 and January 15 – the last days to qualify for a first of the following month effective date. As in the past, heavy volume dates always translate into system issues with the Health Insurance Marketplace and insurance carrier online applications. At Stateside, we always encourage our clients to submit their applications at least three days ahead of any key deadline to avoid potential enrollment issues which could result coverage delays.
What if you do not apply during Open Enrollment? If you apply for health insurance outside of the Open Enrollment period you can only make a plan change if you qualify under a specific set of circumstances:
- Loss of Essential Health Coverage: Includes loss of employer coverage or loss of Medicaid or CHIP as a result of a reported change in household income or other circumstances.
- Change in Family Size: Marriage, divorce, death of a family member, birth, or adoption.
- Change in Citizenship: Gaining status as a citizen or lawfully present in the United States.
- Enrollment Error: Experienced an error in your original enrollment.
- Violation of Plan Benefits: An enrollment in a qualified health plan and a demonstration that the plan substantially violated a material provision of the plan.
- Change in Premium Subsidy Eligibility: Becoming newly eligible or newly ineligible for the premium subsidy or cost-sharing reductions.
- Relocation: New plans become available based on moving to a new area.
- Native American Indian: An individual is an Indian, as defined by the Indian Health Care Improvement Act.
- Exceptional Circumstances: A qualified enrollee is subject to other exceptional circumstances as determined by the Exchange.
What about subsidies? And who is eligible? To make health insurance more affordable a key components of the ACA provide premium subsidies and financial assistance for out-of-pocket expenses to individuals and families who meet defined income requirements. The goal: to help people who cannot access affordable coverage from employers or the private insurance marketplace.
Open Enrollment is when you may evaluate your subsidy eligibility and submit an application to the Health Insurance Marketplace to determine if you’re eligible for a subsidy.
According to ACA rules, subsidies will be available to individuals and families with incomes ranging from 100% to 400% of the federal poverty level (FPL). To be eligible for the subsidies and assistance with out-of-pocket expenses, an individual or family’s modified adjusted gross income will be compared to the FPL. The level of assistance will be determined by the percentage of annual adjusted gross income to the FPL as determined by number of family members. For example, the FPL for 2021 is $12,760 adjusted gross income for a one-person household, and increases by $4,460 for each additional family member. So the FPL for a four-person family is $26,200. The FPL benchmark is adjusted for inflation each year.
How are subsidy amounts determined? Three health insurance plans are offered through the exchange: Gold, Silver and Bronze. Each plan has a different percentage of costs it will cover, known as the actuarial value. For example, Gold plans will cover 80% of healthcare costs, with the remaining 20% the policyholder’s responsibility. The remaining Silver plans will pay 70% and Bronze plans 60%.
The Silver plan premium will establish how income levels will be accessed. Since healthcare costs vary from state to state, Silver premiums will also vary depending on the state. The percentage of premium policyholders pay will be tied directly to the modified adjusted annual income as a percentage of the federal poverty level. For example, individuals and families with incomes at 150% of the FPL will be required to pay no more than 4.7% of their income toward their health insurance premium.
Here is a list of FPL percentages and the percentage of income policyholders must pay in health insurance premium:
|Income Level||Annual Premium Not to Exceed % of Income|
|100% to 150% Federal Poverty Level||2.1% to 4.7% of Modified Adjusted Gross|
|150% to 200% Federal Poverty Level||4.5& to 6.5% of Modified Adjusted Gross|
|200% to 250% Federal Poverty Level||6.5% to 8.4% of Modified Adjusted Gross|
|250% to 400% of Federal Poverty Level||8.4% to 10.2% of Modified Adjusted Gross|
Let us say a family of three had an income of $40,180. The FPL for this family would be $21,720 so their income places them at 200% of the FPL. So the amount the family would be expected to pay for health insurance wouldn’t exceed 6.5% of their modified adjusted gross income or $2,611 toward the premium cost of their plan. Using their city’s Silver plan annual premium of $5,000 as the benchmark, the family would be eligible for a $2,389 subsidy and would pay the remaining $2,611. Also, the family is not limited to purchasing a Silver plan. They can purchase any plan available from the exchange and use their $2,389 subsidy to reduce their annual premium.
In addition to assistance with premiums, financial support for out-of-pocket expenses such as deductibles and out-of-pocket maximums is available to individuals and families whose incomes don’t exceed 250% of the FPL. To qualify for this financial support the individual or family will be required to purchase at least a Silver plan within the exchange.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.