I was asked yesterday why there was a specific end to enrollment in the Affordable Care Act. I guess I have been too involved with it to think that this was not well-known but then again…
The ACA has many concepts built into it to “make it work”. One of these is the specific enrollment period approach that works much the same way as signing up for Medicare (Parts A, B, C, and D). The fear among insurers is that people will wait until they get sick and then sign up for insurance. To avoid that situation, the Feds have established only certain periods that you are allowed to sign up. Presumably, you can still wait until you get sick but then you have to wait until the next enrollment period before you sign up for coverage and may lose your shirt before you can get the insurance. Young invincibles may still want to roll the dice but a single visit to an ER can easily leave someone in debt for years and being generally healthy doesn’t protect you from the driver running a red light.
There are other aspects of the ACA that “encourage” people to sign up. The penalty for not having insurance is one of them. A lot has been made of the $95 penalty for not having insurance. What has not gotten a lot of press is that the $95 is the minimum penalty. First of all, that is the penalty for just a single adult and not a family and even then it is for someone making less than $19,500 a year. If you make more than this, you pay a percentage of your income up to $11,000 for 2014 and then this increases in 2015. Throw in a single trip to the ER for you or your family and you are really in trouble.
Perhaps one caveat is that the IRS is not allowed to collect the money outside of deducting it from tax refund checks. This could raise some interesting questions in itself!
There are a number of other interesting ways that the ACA is adopting to “make it work” and to protect the insurance companies. I’ll cover some of these in later posts.