By Tom Murphy
Uninsured Americans face an important deadline at the end of this month, and many don’t realize it.
March 31 is the last day to sign up for health insurance coverage and avoid a penalty for failing to obtain insurance for 2014 under the federal health-care overhaul.
The Obama administration says about 4 million people have signed up so far through the overhaul’s insurance exchanges, which allow customers to buy coverage with help from income-based tax credits or subsidies. The percentage of those customers who were previously uninsured is unclear.
Only 24 percent of the uninsured polled last month by the Kaiser Family Foundation knew that March 31 is the deadline. Some 5 percent thought the deadline had already passed, and another 2 percent thought there was no deadline, according to the nonprofit foundation, which studies health-care issues.
Here are some questions and answers on the topic:
Q: Wasn’t there a December deadline to sign up?
A: Yes. If you wanted coverage that started Jan. 1. Insurance coverage generally starts the first day of the month, and insurers need a couple of weeks to process applications. If you sign up late in the month, your coverage probably won’t start until May.
Q: What happens if I miss the March 31 deadline?
A: There are a couple ways you could be hurt financially.
The most obvious is by paying a tax penalty based on the size of your annual household income. That can amount to a penalty of either $95 per adult and $47.50 per child under 18, which tops out at $285 per family, or a penalty totaling 1 percent of taxable annual income, whichever is greater.
That 1 percent could translate into a penalty totaling several hundred dollars depending on how much you make above the minimum gross income level required for filing a tax return. For instance, an individual who earns $50,000 could face a $400 penalty based on the 2013 minimum gross income level of $10,000 for an individual.
There are several exceptions to this coverage requirement and the fine that comes with it, noted Jennifer Tolbert, a health-care overhaul expert with Kaiser. One of the biggest is for people who can’t find coverage that costs less than 8 percent of their taxable annual income.
The mandate to obtain health insurance also provides a three-month grace period, so anyone uninsured for less than three months in 2014 won’t have to make this payment. Those who are uninsured for part of the year pay a penalty based on how many months they are uninsured.
The other financial risk comes from incurring a big medical expense without coverage. A doctor’s visit can cost more than $100, and the price for a major surgery, such as joint replacement, can stretch into six figures.
Q: When will I have another chance to sign up?
A: You may have to wait until next fall to sign up for coverage that starts in 2015. That’s unless you have a major change in your insurance needs triggered by events such as a move to another state, marriage, divorce, the birth of a child or the loss of a job.
The next open enrollment period is scheduled Nov. 15, 2014, to Jan. 15, 2015.
Q: What are the typical options I might have for coverage?
A: Individual insurance plans are sold based on four coverage levels — bronze, silver, gold and platinum — that correspond to the extent of the insurance provided. Basically, bronze-level plans will come with a lower up-front cost or premium, but the patient will have to pay more out of pocket before the coverage starts.
Income-based tax credits are available to help cover the premium for individuals or families making up to four times the federal poverty level. That equates to an income of $95,400 for a family of four in all states except Alaska and Hawaii.
Shoppers can use those when buying coverage through government-run health insurance marketplaces set up for the overhaul.
A word of caution about these subsidies: They are based on the applicant’s estimate of his or her modified, adjusted gross income. Those who estimate too low, and wind up with a bigger subsidy than they deserve, may have to pay some of it back.
Q: How can I sign up?
A: The federal government’s website, HeathCare.gov, provides links to apply for coverage. It also offers tips and information about coverage options.
That website endured a rocky debut last fall, when frequent crashes and other technical problems left many customers frustrated. But government officials say those problems have been largely cleaned up.
Applicants who make too much to qualify for significant subsidy help should look beyond these government-run exchanges for more options. An insurer may sell gold- or silver-level plans on a state’s exchange and then offer a platinum-level plan off the exchange.
Independent insurance brokers can help sort out these choices.