What Consumers Need to Know About Obamacare Open Enrollment

Source: Department of Health and Human Services

The second open enrollment period for the Affordable Care Act private insurance marketplace begins on Nov. 15, and millions of additional Americans might sign up for insurance coverage offered by insurers including UnitedHealth Group (UNH -1.98%) and WellPoint (ELV 0.15%)

If you're among the 7 million who signed up for coverage during the first enrollment period, which lasted from October 2013 through March of this year, or are one of the many people considering signing up for health care coverage in 2015, here are some key considerations to keep in mind.

Dawdlers beware
The second enrollment period on the health care insurance exchanges will be six weeks shorter than the first enrollment term. Consumers interested in insurance will need to select their plans by Feb. 15 and those looking to have their insurance kick in on Jan. 1 must select their plan by Dec. 15. 

Procrastinators could also end up paying more for insurance in 2015 than they did this year. That's because the federal exchange and some individual state exchanges will reenroll people in their current plan, at their current subsidy levels, for 2015 if no other plan is selected by Dec. 15. 

That may mean higher premium payments because subsidy amounts are based on the second lowest cost silver plan available in each area and many areas have new lower-price options available for 2015. If the price for the second lowest silver plan in your area drops, so will your subsidy payment and that could mean that your share of your monthly payment will climb. In order to avoid such a premium surprise, consumers should review the plans being offered in their area for 2015 and confirm that their 2014 plan is the one that makes the most sense. If you miss the Dec. 15 deadline for reenrollments, don't worry. You still have until Feb. 15 to opt out of that plan and pick another one.

Qualifying for help
Many middle-class families can qualify for federal subsidies to reduce the monthly premium cost of their insurance plan. For example, a family of three could receive at least some help with the monthly premium payment if they earn less than $79,000 next year.

In addition to lower premiums, some will also qualify for help with their out-of-pocket medical costs. In 2015, a family of three earning less than $49,475 would qualify for that assistance.

Source: Healthcare.gov

If the expected income for a family of three is below $19,790, then insurance coverage might be available through Medicaid, particularly in states that have adopted Medicaid expansion under ACA. If that's the case, you can fill out an application on health care.gov and the exchange will connect you with the individual state Medicaid program.

Colors galore
The federal and state exchanges offer plans across four "metal" tiers: bronze, silver, gold, and platinum. Typically, monthly premium payments are lowest for bronze plans and highest for platinum plans. Unsurprisingly, bronze plans cover fewer health care costs than platinum plans, so before choosing a plan consumers might benefit from considering how often they visit doctors, the prescription medicines they take, and what their expected utilization of care might be next year.

Scrutinize provider lists
Exchanges in many states will offer more insurance plans in this enrollment period than in its predecessor, and that could mean lower monthly payments. However, consumers might not want to select their plan solely on price. Although it will take longer to figure out whether your doctors are included in each of the plans you're considering, it could be worthwhile to know that you won't have to switch healthcare providers.

Paying the piper
In most cases, consumers who didn't have healthcare insurance through their employer, the exchanges, or other sources this year will pay a penalty when they file their tax returns next April.

That penalty will total the higher of either $95 per person ($47.50 per child under age 18) or 1% of any income earned above $10,000. Consumers who do not obtain insurance coverage for 2015 will pay a higher penalty of $325 per person ($162.50 per child under 18) or 2% of income earned above $10,000 when they file their tax returns in 2016.

Weigh the risk
Major insurers are banking on healthy individuals and families signing up for insurance plans to offset the cost of caring for the sick.

This past year, many consumers opted out of paying for insurance because the penalty might have been smaller than the premium payment. Those people, however, should consider that penalties will increase significantly this year and that the cost of treating even the simplest of conditions can equal multiple months of premium payments. For instance, the bills tied to caring for my son's broken finger this past summer totaled nearly $2,000.

It might be tempting to assume that your good health will continue, but it's important to consider that the healthcare costs for opting out of insurance coverage could be much higher than expected.

And another thing
Health insurers can't set premium payments based on pre-existing conditions, so people who are sick can still get insurance coverage. In fact, insurers can only use five specific criteria to set their prices: a person's age, where they live, whether they use tobacco, whether it's an individual or family plan, and the plan level (i.e., bronze, silver, etc.).

Making a good decision means doing some preparation, and that preparation could have a major impact on your financial situation. Healthcare expenses remain a major cause of personal bankruptcy, so consumers could be well served by spending a little extra time considering their options before making a decision.