"Open enrollment periods for the health insurance marketplace under the Affordable Care Act are limited" says Mac Schneider, a retired certified public accountant from Albion, Michigan. "Avoiding tax penalties requires awareness of important dates that may vary year-to-year." As well as key dates, there are time cycles and coverage gap allowances important to health insurance coverage under provisions of health care reform.
Open enrollment for 2018
The Affordable Care Act (ACA) open enrollment period to sign up for coverage that starts on January 1, 2018 runs from November 1, 2018 through December 15, 2018. January 15, 2019 is the last day to sign up for coverage that begins February 1, 2019. If you don't enroll in a 2019 health insurance plan by January 31, 2019, you will not be able to enroll in a 2019 plan unless you qualify for a Special Enrollment Period.
Contributions to Flexible Spending Accounts
The ACA introduced an annual contribution cap limit of $2,500 for Flexible Spending Accounts (FSA). Contributing to an FSA through your employer's plan allows you to divert pre-tax income, resulting in lower taxable income for a tax year. Of course, you must use the money you withdraw from your FSA only for qualified health-related expenses to maintain its tax advantaged treatment.
Qualifying life events
You can bypass date requirements for health care reform open enrollment periods if you experience a life event leading to a change in health care coverage. These life events can include:
- Losing health care coverage, such as through a change of employment status
- Changes to your marital status
- The birth of a child
- If you’re covered under your parents' plan but reach your 26th birthday
Changes to income may alter your eligibility for health coverage subsidies for existing qualified coverage. New U.S. citizens are also eligible for enrollment at any time under qualifying life event provisions. You can apply for Medicaid or the Children's Health Insurance Program at any time through a year.
Open enrollment for future years
Future open enrollment periods are expected to continue to be late in fall to early winter. Penalties for remaining uninsured are either a flat fee per person in a household or a percentage of household earnings, whichever is highest. These penalties remain in affect through 2018 and will no longer be assessed beginning in 2019. The penalty rates increased each year until 2016, after which penalties have been indexed with inflation. If penalties are not paid with your tax return, they can be withheld from tax refunds in the current year or, if a taxpayer has a balance owing, from refunds in future years. Interest is charged on unpaid penalties, but unlike other tax amounts owing, the IRS can't impose liens or other criminal penalties for failure to pay these penalties.
Not sure if you are exempt from the tax penalty or from the requirement to purchase health insurance? See "Are You Exempt From Health Care Coverage?" to help determine whether you might be eligible to waive the tax penalty entirely and apply for a health care exemption.
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