Obamacare FAQ: When Can You Buy or Switch Insurance?

(Getty Images)

(Getty Images)

Editor’s note: For people buying on the individual market who want health insurance starting Jan. 1, the deadline to sign up is Monday, Dec. 23. We are running one post a day with questions and answers on the Affordable Care Act and Covered California until that deadline. Readers can also consult KQED’s Obamacare Guide, written specifically for Californians.

By Emily BazarCHCF Center for Health Reporting

Q: Our 24-year-old daughter is employed full-time and her employer offers health insurance. Does she have to enroll in one of their plans or can she stay on ours until her 26th birthday?

A: Young adults and college students will have more insurance options in the new health care landscape than just about any other group, including both the Covered California marketplace and Medi-Cal, depending on their income.

Gwen from San Jose wants to know more about one option, a popular Obamacare provision that already allows parents to keep their young-adult children on their policies until their kids turn 26.

The good news, Gwen, is that your daughter can stay on your employer-sponsored plan until she’s 26, but … (And there is always a “but” … )

If your plan does not already offer coverage to children who work and have access to insurance through their jobs, she may have to wait until open enrollment for the 2014 plan year. Starting then, Obamacare will allow children up to age 26 to stay on their parents’ work-based plans even if they can buy insurance through their own employer.

Q: If my daughter can stay on our plan, is her 26th birthday a life event that will enable her to enroll in her work-based insurance so there is no gap in coverage, or will she have to wait until her employer’s next open enrollment?

A: The short answer here is “yes.”

Losing access to your health plan is what is known as a “qualifying event” in the insurance world, says San Luis Obispo insurance broker Dave Morgan. That means your daughter will be able to enroll in her employer’s coverage outside of the regular open-enrollment period as long as she does so within 30 days of being bounced off your plan, he says.

“The 30 days is key,” Morgan adds. “Otherwise it’s a long way till open enrollment.”

Other common qualifying events include losing your work-based insurance when you lose a job, marriage, divorce, and the birth or adoption of a child.

And depending on where you get your insurance, you may have more than 30 days. For instance, you’ll be eligible for a special enrollment period of 60 days after a qualifying event if you buy from the state’s health insurance marketplace, Covered California.

But pay close attention to open enrollment. For most people, that will be the only chance to buy or change your health insurance each year.

  • Covered California: The open-enrollment period for individual and family plans will last six months the first year, from Oct. 1 through March 31, 2014. In subsequent years, open enrollment will last from Oct. 15 through Dec. 7.

(Small businesses that buy plans for employee coverage on the exchange, on the other hand, are allowed to sign up for coverage year-round.)

  • The open market: If you buy individual or family plans outside of the exchange, a big change is coming. “Previously, people could sign up anytime,” says Fountain Valley health insurance agent Tom Freker.

Not under Obamacare. Beginning with plans that take effect next year, you must sign up during an open enrollment period that will take place at the same time as exchange open enrollment.

  • Work-based insurance: Open enrollment periods vary by company. Check with your boss.
  • Medi-Cal: If you are eligible for the state’s health insurance program for low-income residents, you can enroll at any time.

Q: You’ve said that starting in January, insurance companies can no longer deny coverage to people with pre-existing medical conditions. Does this mean that someone who is uninsured … can, after needing a hospital stay, apply for insurance and cannot be denied? If so, why would anyone pay for insurance until they need an expensive procedure?

A: While people with pre-existing medical conditions cannot be denied insurance, they must buy during the open enrollment period — again, that closes on Mar. 31, 2014.

As I described above, you won’t be able to sign up for individual or family health plans through Covered California or on the open market outside of open enrollment, unless you experience one of those legitimate change-of-life events.

Having a car accident or heart attack is not one of them.

“If someone gets sick or has an accident in the meantime, they’d have to pay their own way and/or get stuck with big bills,” explains Marian Mulkey, a health reform expert for the California HealthCare Foundation.

Insurance spreads the risk between the healthy and the not-as-healthy. If people could wait until they got sick to enroll in insurance, there would be far fewer healthy people in the insurance pool and insurance premiums would likely skyrocket.

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