Round 4: Signing up for Obamacare

Round 4: Signing up for Obamacare
Eileen St. Pierre, The Everyday Financial Planner

health-care-reform-pictureIt’s that time of year again. Open enrollment for those individuals and families wanting to purchase health insurance in the Marketplace started on November 1. I had to wait about 15 minutes to enter the enrollment site, but had no problems signing up this year. You need to sign up for a plan by December 15 if you want coverage to start on January 1, 2017.

I braced myself for sticker shock when I started previewing plans in late October. There were two reasons why our insurance was going to be more expensive in 2017:

First, we made more money in 2015 than in 2014.

In computing the amount of the advanced premium tax credit, the Marketplace uses the last filed tax return to verify income. So when considering our 2017 insurance application, they will use information from our 2015 tax return. As I mentioned in last year’s column, 2014 was the first full year of self-employment income for us so we got a good size tax credit plus very low cost sharing in 2016.

The big difference this year was not the amount of the tax credit – it actually increased. It was that we now have to pay much higher deductibles and have larger out-of-pocket maximums. This is what a lot of people don’t realize with Obamacare.

  • If your income is below a certain threshold, you have very low deductibles and out-of-pocket expenses in addition to the tax credit.
  • Cross that income threshold, and that extra help disappears.

We got real spoiled in 2016. Like many consumers, we’ve tried to fit in as many doctor visits and prescription refills as we can before the end of this year. In a way, it helped to compensate us for starting our own business. That’s how I like to look at it.

Second, health insurance costs have really skyrocketed.

We kept hearing that our home state of Oklahoma was going to experience really high premium increases. Indeed, if we were to keep the same policy we had in 2016, our monthly premiums would have gone up by almost $900. To make things worse, our individual in-network deductible and out-of-pocket maximum went up by $3,250 and $5,750, respectively. Ouch!

We decided to go with a cheaper Bronze plan.

We’ve had a Silver plan since the Marketplace began. But it made sense to switch after considering how we expect to use our insurance next year. By going with the Bronze plan, our monthly premium costs will only go up about $40 a month over last year. Even though our in-network deductible and out-of-pocket maximum will be higher, we’ll save about $5,000 a year by switching plans. We expect our extra out-of-pocket expenses to be less than that.

The bottom line is that I am grateful for this insurance. I will be having surgery over the next few months to correct a pre-existing condition. Without the passage of the Affordable Care Act, I would be uninsured for this condition – or I would have had to stay at a job that did not make me happy just to be covered under an employer plan.

Visit my Health Care Reform page for more information.