If You're Shopping For Health Insurance, Make Sure You're Paid Up On Old Plan

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The 2018 annual open-enrollment period for coverage on the health insurance marketplaces starts Wednesday. But if you don't take care of lingering issues from your past coverage, they may come back to haunt you.

Unpaid premiums

A new rule will allow some insurers to require you to pay any back premiums you owe for the 12 months prior to the effective date of your new coverage.

The rule, which became effective in June, generally applies only if you try to enroll in a plan with the same insurer, not if you choose coverage from another company. It's up to insurers to decide whether to come after you for the money.

But in many parts of the country, there may be only one insurer offering coverage. In those cases, if you've fallen behind on payments, "you really won't be able to escape this policy," said Tara Straw, a senior health policy analyst at the Center on Budget and Policy Priorities.

Before invoking the rule, insurers have to notify you that they plan to hold you accountable in the future for missed payments.

The Affordable Care Act offers some protection for people who fall behind on their payments. Under the law, you have a 90-day grace period in which to catch up on unpaid premiums. Once that grace period ends, your coverage would be canceled retroactive to the end of the first month of delinquency and you'd be responsible only for your portion of the first month's unpaid premium. (You wouldn't be responsible for premium tax credits paid on your behalf to the insurer.)

But if you stop paying your premiums during the last three months of this year, you could get hit with a bill for a full three months of premiums if you re-enroll for 2018 coverage. This is because your 90-day grace period hasn't ended.

"Effectively your coverage has never terminated, and therefore you owe for the full period," said Timothy Jost, professor emeritus of law at Washington and Lee University in Virginia.

If you want to drop a marketplace plan, it's not enough to just stop paying premiums.

"Make sure you go to the marketplace and terminate your plan," said Straw. "Otherwise you could be on the hook for these payments during open enrollment or during a special enrollment period if you try to sign up again."

Unfiled tax documents

Most people who get marketplace coverage qualify for tax credits that provide money to help them pay their premiums. The assistance is available to consumers whose income is less than 400 percent of the federal poverty level (about $48,000 for one person). If you had a marketplace plan in 2016, you were supposed to include a special document — IRS Form 8962 — when you filed your 2016 federal income taxes this year. This document reconciled how much you received in advance premium tax credits against how much you should have received based on your actual income for the year.

If you didn't file the form with your taxes, you can still sign up for insurance coverage but you wouldn't qualify for subsidies.

To fix that problem, you'll generally have to file the Form 8962, along with the second page of your income tax Form 1040 and the 1095-A form you received from the marketplace showing your 2016 enrollment details, said Straw. If you want to receive premium tax credits starting in January, you'll need to get that done before the open-enrollment period ends Dec. 15.

This issue will primarily affect people who are automatically re-enrolled in a plan for the following year, as were 31 percent of marketplace customers last year (see Table 2 on Page 6.)

If you sign into your marketplace account to update your income and other personal information — as everyone should — you'll be asked whether you've filed and reconciled your taxes. That is a signal the issue needs to be addressed.

Some policy analysts are concerned that this filing requirement will be particularly challenging for people whose annual income is below the usual threshold required to file an income tax return (about $10,000 for one person or $20,000 for a married couple) but who must do so now because they receive premium tax credits paid in advance.

"It's confusing enough, and many people don't remember that they now have to file an income tax form," said Mara Youdelman, managing attorney at the National Health Law Program, which has been working to ensure people receive proper notification that their benefit may be at risk if they don't comply with filing requirements.

Kaiser Health News is an editorially independent news service that is part of the nonpartisan Henry J. Kaiser Family Foundation. Follow Michelle Andrews on Twitter: @mandrews110.