How to navigate the individual open enrollment period of the ACA

Open enrollment for individual plans, under the Affordable Care Act (ACA) is here. Deductibles and out-of-pocket maximums will be resetting and rates will be changing — hopefully for the good.

“This is the time when people have a lot of decisions to make about their health care benefits for the 2016 calendar year,” says Craig Pritts, senior sales executive at JRG Advisors. “Decisions about the network, plan design and whether to use healthcare.gov are just some of the choices.”

Smart Business spoke with Pritts about what you need to know regarding the ACA’s individual open enrollment period.

When is open enrollment and why is so important?

Not making a decision by the deadline can be costly. The individual mandate requires most people to have insurance or pay a penalty. There are only a few exceptions.

The penalty for 2016 was increased to be the greater of 2.5 percent of yearly income, or $695 per adult person and $347.50 per child under 18 years old. The penalties are expected to increase in future years, based on cost of living adjustments.

This year the open enrollment period started on Nov. 1 and runs until Jan. 31, 2016. After Jan. 1, only people that qualify for a Special Enrollment Period will be allowed to enroll in an individual plan. This is true of plans direct with insurance companies and on the marketplace (healthcare.gov). Special enrollment may be due to involuntary loss of other coverage, marriage, divorce, birth, adoption, death, change of residence or released from incarceration (not escaped).

What’s the difference between the enrollment choices?

A person may enroll in an individual non-group health plan directly with an insurance company or with an insurance company through the marketplace. The biggest difference between the two can be the potential for a reduced premium and/or reduced out of pocket costs on the marketplace.

The Advanced Premium Tax Credit, also referred to as a subsidy, is a reduction in what a person pays monthly for their coverage. The subsidy is based on factors like household income and size and is determined by the marketplace.

Some people also qualify for a Cost Share Reduction, which lowers the out-of-pocket expenses on Silver Level Plans. There are three reductions available based on the household income. Those that qualify may see a plan that normally provides about 70 percent coverage increased to cover 73 percent, 87 percent or even 94 percent of the out-of-pocket costs. This means the deductible, copayments and coinsurance are lower as a result of the cost share reduction.

The subsidy and reductions are only available on the marketplace.

How does plan design play a part in this?

It is very important to be aware of plan design in the post ACA world. As insurance companies face more costs, they are finding ways to deliver plans at an affordable cost. One way the insurance companies are doing this is shifting more of the out-of-pocket costs to the members. A thorough review of the plan and the cost for the services will help you make a better decision.

This is true of the plan network as well. Insurance companies are offering plans with a smaller network or no out-of-network coverage as a way to control premiums. Tiered networks are also becoming more popular options. These have different costs when using providers in different networks. A person may have one deductible for a certain hospital and a different deductible for other hospitals. This allows an insurance company to offer a plan at a lower cost and have the member pay more if he or she uses a facility that charges the carrier more.

At the end of the day, everyone needs coverage and the process has become more difficult to navigate, so you should work with a broker. The plans and rates don’t change and a broker shouldn’t charge you for their help.

As an employer, if you don’t offer coverage, send your employees to someone you can trust to help them. If you do offer coverage, you should be helping your part-time and seasonal employees by referring them to a trusted advisor.

Insights Employee Benefits is brought to you by JRG Advisors