"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.
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Open enrollment for 2014
The first open enrollment period for ACA signup opened October 1, 2013 and ran through March 31, 2014. While the enrollment period was slow getting off the ground, with technical and procedural issues plaguing the federal marketplace website, a surge in last-minute enrollment brought signups over the 7 million mark, projected by the Congressional Budget Office prior to October 2013. Though the March date represented a hard deadline, new extension guidelines were forthcoming for people who encountered technical problems with the federal healthcare marketplace system. Similarly, state-run marketplaces have increased flexibility, such as Nevada, which announced a 60-day extension to the open enrollment period. The penalty period for eligible taxpayers who remain uninsured began March 31, 2014, unless the taxpayer qualified for an extension.
Other important dates
At any time, health care reform insurance coverage purchased before the 15th of the month will take effect on the first day of the following month. Coverage purchased on the 16th or later will not begin until the first day of the second month following enrollment. January 1, 2013 was another significant health care reform date, seeing the introduction of an annual contribution cap limit of $2,500. Contributing to a Flexible Spending Account (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
With the health care marketplace infrastructure in place, the open enrollment period for health insurance coverage starting in 2015 is reduced from six months to three months. The open enrollment period for 2015 starts November 15, 2014 and ends February 15, 2015. Future open enrollment periods are expected 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 rates increase each year until 2016, after which penalties are indexed with inflation. Penalties are 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.
Not sure if you are exempt from the tax penalty or from the requirement to purchase health insurance? The TurboTax Exemption Check, is a free, online tool to help determine whether you might be eligible to waive the tax penalty entirely and apply for a health care exemption.