If you’ve gotten cozy with the health insurance plan you purchased through healthcare.gov for 2014 and have no desire to shop around, you might be in for a rude awakening. That’s because the complicated way subsidies are decided means the federal tax credits that help you afford coverage could change next year, even if your plan doesn’t.
In other words, even if your premium doesn’t jump substantially, you could be on the hook for a much higher monthly health care bill if your subsidy drops without your knowledge. Sound complicated? The new health care law comes with plenty of hoops to jump through for those who want affordable coverage, and part of your responsibility includes shopping for a new plan and reapplying for subsidies during each year’s open enrollment period.
With Obamacare, Plenty of Reasons to Shop Around
There are several reasons it might pay to shop around this year, even if you’ve been happy with your coverage, says Carrie McLean, a consumer health insurance expert at eHealthInsurance.com. According to McLean, new and possibly better plans are coming onto the market for 2015, which means you might find a better bargain if you take time to look.
And if you expect your income to change next year, you may find a better deal with a new plan. As McLean points out, subsidies are doled out to those who earn up to 400 percent of the federal poverty level. However, the federal poverty level can change one year to the next, and with it, the subsidy cutoff.
For example, the “subsidy cliff,” as it’s commonly called, hit consumers at 400 percent of the FPL, or $94,200 for a family of four, for 2013 to 2014. However, for 2014 to 2015, 400 percent of the FPL is $94,500.
So if you plan to earn more or less next year than you did this year, it could pay to shop around. You may find that your subsidy went up or down due to the way subsidies are calculated or, based on your income, you could find you no longer qualify for a subsidy.
And if you end up earning more than you planned, McLean warns you may need to pay back all or some of the subsidies you’ve received.
Open Enrollment Is Here Today, Gone Tomorrow
Another reason to shop around during open enrollment? Under Obamacare, consumers cannot buy health insurance outside of open enrollment unless they experience a qualifying life event such as getting married, having a baby or losing other coverage. And since open enrollment is from Nov. 15 to Feb. 15 of next year, shoppers have only a limited amount of time to explore their options.
“Consumers can think about the Affordable Care Act’s open enrollment period in the same way many people think about their employer’s open enrollment period when they’re asked to choose employer-sponsored benefits for the next year,” McLean says. “Open enrollment is the one time of year that you need to reconsider your coverage options because it may be your only chance to make a change. And if you don’t look into your options during open enrollment, you could lose money.”
How to Choose the Right Plan
Since everyone has different needs when it comes to health care, there is no one-size-fits-all insurance plan that will please everyone. That’s why it’s important to weigh the pros and cons of any plan you’re considering, and take the time to understand what is included and what isn’t. In other words, choose a plan to suit your specific needs.
McLean advises figuring out what you typically spend on health care in a year and choosing a lower or higher deductible based on your projected spending. For example, if you see a doctor often or take prescription drugs, you might be better off choosing a plan with a higher monthly premium and lower out-of-pocket costs. On the other hand, if you don’t plan on seeking much health care, you might benefit from a plan with a lower monthly premium with higher out-of-pocket costs.
No matter what you do, don’t forget you only have a limited time to shop around. Because, like it or not, health care in this country has changed, and the window of time when you can shop around won’t be open forever.
“You’ve got nothing to lose by looking at your coverage options for 2015, and in fact, you could save yourself some money by reshopping,” McLean says. “The truth is that this may be your only chance to get coverage for yourself or your family before 2016.”
Let the frenzy begin.
Holly Johnson is the founder of personal finance website, Club Thrifty, which provides tips for frugal living, budgeting, and more. Holly also writes about frugality and travel at Get Rich Slowly, Frugal Travel Guy, and her other website, Travel Blue Book.
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