The New Year has officially arrived, and so has ObamaCare. The Affordable Care Act’s individual mandate kicked in on Jan. 1 that requires Americans to have coverage by the end of open enrollment period on April 1, but the maze the sweeping law has wound throughout the health insurance industry continues to grow more complicated.
The White House announced more than two million people signed up for coverage before ringing in the new year, but that doesn’t mean all of those new enrollees have paid their premium.
The Obama Administration extended the coverage deadline to Dec. 31 to register for coverage on Healthcare.gov to start the new year with coverage, and many insurers have extended the premium payment deadline till Jan. 10.
Those who enrolled by Dec. 31 and make that first month’s payment by Jan. 10 will have coverage, says Yevgeniy Feyman, Manhattan Institute scholar. But, if they fail to make their payments in the months after that, insurers can kick them off their policies.
“Insurers can kick you off if you fail to pay for three months in a row,” Feyman says. “If people fail to pay, HHS may have to revise down their latest enrollment numbers.”
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And those who made their payments, but have not seen the payment processed yet may run into issues when they try to use their coverage, he warns. Some insurers may not back-date coverage while others may be more lenient. The government is also still working to create a back-end mechanism to pay insurers for subsidies and cost-sharing plans. As of right now, insurance companies have to estimate their costs and bill the government.
“If you can prove to the government and insurer that you sent your payment in on time…the government may push insurers to provide you coverage if you made a good faith effort to pay,” Feyman says. “But if you decide not to pay and do not qualify for a ‘life event’ to enroll after open enrollment period, you will have to wait until the next open enrollment period begins in November 2014.”
Those who fail to obtain coverage will face a fee of $95 or 1% of their annual income for not complying with the law if they do not have coverage by the end of open enrollment period.
Scott Richards, a local insurance broker who sells Priority Health in Gobles, Mich., says the lack of clarity on who has coverage is the law’s biggest struggle out of the gate in 2014.
“A lot of people don’t have I.D. cards, they don’t have prescription cards yet,” he says. “It’s hard to know whether or not they have coverage.”
Priority will likely not be processing payments for those who registered until early February, Richards says, but the company is much smaller than a large insurer like Aetna (NYSE: AET) or Blue Cross Blue Shield, so it plans on back-dating coverage.
“If people go to the doctor and don’t have coverage yet, we probably won’t process their claim until they have paid, but we will back date to Jan. 1,” he says.
Richards says his brokerage has contracts with 400 individuals in the state, and while Priority Health has more than 20,000, and that the vast majority of the people he has signed up for care over the past few months are older and sick. The law’s second- biggest obstacle for him will be signing up younger and healthier people to balance out the insurance pool.
“So many people got cancelled from their prior coverage, and they are moving into new coverage with rates two-to-three times higher than they were in the past,” Richards says. “Most of them are subsidy eligible, I’d say about 80% of them are.”