Medicare is not the only show in town that has its annual enrollment period this time of the year. The Health Insurance Marketplace® (also known as the “Marketplace” or “exchange”) has its annual open enrollment period (for 2021 coverage) from November 1st through December 15th, 2020. Taking advantage of the open enrollment period allows both new and current participants to review their options to see which plan would be best for their specific situation, as well as understand their expected and potential costs for the year ahead. This will allow for budgeting accordingly and protection against ongoing and unexpected medical costs.
The Health Insurance Marketplace
The Marketplace should be the first stop for health insurance shopping if you are under age 65, are not covered by an employer plan and do not qualify for other government sponsored health insurance plans (e.g. Medicare, Medicaid and CHIP). This typically applies to the self-employed, individuals who have retired before age 65, and those who have a gap in health insurance coverage due to job loss or job transition.
If you fall into any of the categories above, it is critical that you use this opportunity to evaluate your options and make a decision in order to avoid any gaps in health insurance coverage. A gap in coverage could be very costly if you (or a family member) were to experience an unforeseen medical expense or have high ongoing medical costs. It is also the time to figure out (based on 2021 expected income), qualifications for subsidies to help cover either premiums costs and/or out-of-pocket medical costs.
The best place to start is to go to www.healthcare.gov and open an application.
Here, you will be able to preview the four (main) plan options (bronze, silver, gold and platinum). It is important to note that all four plans provide the same quality of care (e.g. they each cover the ten essential health benefits) and have the same annual maximum out-of-pocket for medical costs (including meeting your deductible). The difference is how much you pay per month in premiums versus how much you pay out-of-pocket when using the insurance. For example, the bronze plan will charge the lowest monthly premiums, but have the greatest out-of-pocket costs for medical care. While the platinum plan will charge the highest monthly premiums but have the lowest out-of-pocket costs for medical care. (There is a fifth plan type known as a catastrophic plan, but one must be under age 30 or be facing certain financial hardships in order to qualify).
Once You’ve Decided on the Medicare Plan
After you have decided on a plan, enter your expected income for 2021 to determine if you qualify for a premium tax credit (which can be paid in advance or when you file your 2021 taxes). To qualify for the tax credit, your income must be at or below 4x the federal poverty line. The lower your income, the higher the premium tax credit you will qualify for. For those whose expected income for 2021 is at or less than 2.5x the federal poverty line may even qualify for help with their out-of-pocket medical costs.
If your income is too high for the premium tax credit, you can still sign up for a plan on the public health marketplace. However, you will have to pay the full premium cost of the plan you choose.
Once you have entered all of your income information for 2021 and have filled out the full application, you can submit your application. Once enrolled your coverage will begin on January 1st, 2021 but will not be active until you have paid your first premium directly to the insurance carrier who will administer your health plan.
Do you not like the plan you have selected? Utilize next year’s open enrollment period to make changes and sign up for a plan that better fits you and your family’s needs.
Please don’t let this year’s open enrollment period go by without exploring your options on the Health Insurance Marketplace®. If you need help on where to get started or how to evaluate your specific situation, please reach out to your Wealth Advisor with the questions that you have.
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