Open enrollment can be nerve-racking, to say the least. You may want to throw your computer against the wall from all the questions on the Health Insurance Marketplace. All of that sweat and tears, just to see if you qualify for a tax credit to reduce your premiums. There is information you need first to help with the process. Without it, preparing could cost you time and thousands of dollars.
First off, what you had for coverage in the past, or how you think the coverage should be, is probably not the case. Why?
That is because the rules have changed. Period. You have to go into these plans with an open mind.
The new plans have to be a “Qualified Health Plan”, or QHP. They consist of 3 main things:
- Essential Health Benefits
- Meets the actuarial values set by the new law
- A Metallic Plan
In order to receive tax credit, you must first qualify. There is a list of things that are needed to help with the process.
- Last years tax return. Your income will be off of current year for the tax credit, but the last year’s tax return gives you a baseline. It also has information that the marketplace will ask for. It is a good reference.
- A snapshot of what you make in 30 days. If you were self-employed or work off commissions, you would use the income after your deductions (in most cases). If it cycles up and down, take the average, or speak to a CPA or other tax professional.
- Based on income, filing status and premiums, you may qualify for a tax credit. With some preliminary checking with a qualified insurance professional, you can save hours of time wasted to find out you do not qualify. Oh, and you would spare your computer.
The balance between coverage and cost has seemed to shift. Before healthcare reform was in full effect, you would save just enough money to pay for the difference in deductible when you chose a higher deductible. If something happened in the first 12-18 months, it would be a wash in savings. If nothing happened, you would be ahead of the game.
Today, its reverse.
Moving your budget aside for the moment, there is a financial incentive to go with a lower deductible plan. You don’t save as much as you would pre-health law. But not everyone can afford the lower deductibles.
Moving to the Bronze, or the HSA qualified plan you can still save money. Sure, it’s a higher deductible. If all you did were contribute the premium difference in an HSA account, you would have at least half of your deductible during the same 12-18 months. If you are a family of 4, for example, you can save enough for the individual deductible on the policy in 12 months, give or take. This does not include the tax savings you would receive for contributing to an HSA account.
There is one more thing to be better prepared. Everyone should review his or her life insurance policy. You are already going through a bunch of stuff for your insurance; you might as well take care of it. Otherwise you have to pull it all out again, and spend extra time on it. If you ever get time to go back to it.
Many do not have a life insurance policy in place. This is a good time to take care of it. Life insurance will not be any less expensive for you in the future. You will not see a ‘sale’ on life insurance. It will continue to go up as you age.
If you have a policy, it is a good time to review it. It has probably been years. Chances are it is not enough life insurance to cover income replacement, debts and basic necessities.
All of these things will help you prepare for open enrollment and beyond. Do your homework with a qualified professional. This will save you time and money.