The enrollment period for a 2017 Affordable Care Act, or ObamaCare, insurance plan is open through Jan. 1, 2017, and many must now decide if its beneficial for them to enroll. This comes on the heels of news that all but one insurance carrier per county has pulled plans eligible for a premium reduction from the exchange due to large financial losses.
Carriers offering plans on the marketplace cannot discriminate against an applicant based on health conditions, so one insurer will be absorbing all of the medical insurance risk in a county. The assumption of the extra risk has led to the filing of significant premium rate increases.
According to Arizona Department of Insurance Director Leslie Hess, “While many individuals who purchase their coverage on the exchange receive subsidies that will cover most or all of the premium increase, roughly a quarter of those enrolled in Marketplace plans are ineligible for subsidies, and will be faced with the difficult choice of paying a dramatically higher price or going without insurance and facing a stiff penalty from the federal government.”
As it stands, individuals who have not purchased insurance coverage for 2016 and do not qualify for an exemption will face a minimum penalty of $695 per adult and $347.50 per child on their 2016 income taxes. The penalty varies depending on filing status, number of dependents and income, but the maximum penalty any household or individual can be penalized is capped at $2,085.
Although the Affordable Care Act has expanded and increased coverage for those in need, this now puts taxpayers above 400 percent of the poverty level into the position formerly occupied by the lower income group.
For example, with $47,500 in annual income, a 40-year-old with no dependents can qualify for a reduction of $254 per month on his or her premium, making it $195 a month for the bronze level plan. At $48,000, the same individual now must pay the full premium price of $450 a month for the same plan with an estimated yearly cost of almost $3,000 more than when he or she earned just $500 less a year. At age 55, the monthly plan cost jumps to $785 and at 64, it is $1,055.
Short of forgoing any coverage at all, the only other option is to find a private plan through an insurance broker. Be aware though, many of these plans do not qualify for the penalty exemption, so any savings might be going to the IRS later on.
The law does allow a number of exemptions in requiring coverage, including cases when the Secretary of Health and Human Services is empowered to exempt others that she or he determines to “have suffered a hardship with respect to the capability to obtain coverage.” People who believe a rate increase will cause hardship can apply for a marketplace granted coverage exemption via the healthcare.gov site or by using IRS form 8965 prior to tax filing.
