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Navigating Open Enrollment Outside of an Employer

In my last blog, I provided five tips for handling open enrollment for employees. But according to the Tax Foundation, more than 23 million people in the U.S. are sole proprietors, and many more are single-member LLCs. Those who can’t, or don’t want to rely on an employed spouse with benefits need to navigate open enrollment in a different way – through individual health insurance or Affordable Care Act (ACA) exchanges.  

If you think it’s tough figuring out benefits through an employer, try figuring it out on your own! In this blog, I’ll point out a few things that self-employed individuals should know going into open-enrollment season, which starts Nov. 1 and runs through Dec. 15.

You can purchase a healthcare policy in several ways. Michigan has a state-federal partnership exchange, which means that the state oversees management of the plan, but uses Healthcare.gov (the federal government website) for enrollment. The Michigan Department of Insurance and Financial Services offers a consumer assistance program on its website for people interested in purchasing health insurance. If you prefer, you can also purchase insurance directly from a health-insurance company directly or through an agent, or by shopping for coverage online.

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However, having healthcare is no longer required. Under the Obama administration, the Affordable Care Act required nearly all Americans to have health insurance. But last year, Congress chose to eliminate the individual mandate penalty, while leaving the mandate itself intact. While this seems confusing, know that you won’t have to pay a penalty at tax time if you choose not to purchase insurance, although that’s not something I would recommend!

While the level of coverage may vary, all plans must cover 10 essential benefits. Those benefits include:

  • Emergency care
  • Hospitalization
  • Prescription drugs
  • Lab tests
  • Outpatient care, including management of chronic diseases
  • Pregnancy and newborn care
  • Mental health and substance abuse services
  • Rehabilitation services and devices
  • Dental and vision for children
  • Preventive and wellness services

The best way to compare plans and benefits is to examine the Summary of Benefits and Coverage (SBC) for each plan you’re considering. These SBCs are designed to provide you with a brief, understandable overview of what’s covered.

You will need to estimate your household’s adjusted gross income (AGI) in your application. Luckily, you can find a tutorial on the Healthcare.gov website if you are unsure how to go about it. You will also need this information to learn whether you can qualify for a tax credit. If you qualify, you can apply the credits to your premiums. Your family income needs to be between 100 and 400 percent of the federal policy level to receive a tax credit.

You could opt for a short-term plan to save money. If you can’t afford regular coverage, and you are in good health, you may be able to take advantage of a short-term health insurance plan for 2019. The Trump administration added this option as a less-expensive alternative to regular health plans under the ACA. However, along with lower premiums comes reduced coverage. These plans are not required to offer the “10 essential health benefits” listed above, so you’ll need to really study what your plan does cover. With reduced coverage, you could be on the hook for some expensive medical bills if you get sick.  

If you work with a financial adviser, you may be able to consult with him or her on the options that are best for you and your family. At AMDG Financial, we work with a number of entrepreneurs and small-business owners to consider health care as a part of a holistic plan for their financial well-being. We’d be pleased to help you and your business succeed, too.

 

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