With mid-term elections now out of the way, consumers can begin turning their attention to two other important factors that roll around this time of year: the holiday season and Obamacare.
Sure, buying gifts for others (or ourselves) is a lot more fun than shopping for health insurance, but the time has come for all Americans to begin thinking about either signing up for health insurance, switching their existing plan, or reupping with their insurer for another year.
Of course, the Affordable Care Act (as it's officially known) of 2015 won't necessarily look anything like the Affordable Care Act that we knew in 2014. There are a number of changes going into effect this year which have the potential to affect you and possibly your investment portfolio. Let's have a look at five big changes for Obamacare in the upcoming enrollment period.
1. The open enrollment period is much shorter
Keep in mind that last year the open enrollment period lasted six months, and even that came with a little asterisk as consumers who were unable to complete their application by the closing date (March 31, 2014) were able to file supplemental paperwork and still be covered. This year consumers will have a mere three months (Nov. 15, 2014 through Feb. 15, 2015) to enroll – and half that time coincides with the busy holiday season. It essentially means consumers can't procrastinate like they did in 2014 when more than half of all enrollment came during the final month.
In addition, the exchanges and insurers should be better prepared to handle the influx of consumers. Last year no one really knew what to expect, and the IT architecture behind Healthcare.gov, the federally run health exchange, and a handful of other exchanges, simply proved inadequate. With Accenture (NYSE:ACN) taking the helm following CGI Group's (NYSE:GIB) mishandling of the exchange rollout, the expectation is things will run much smoother for the 36 states now part of the federal exchange, up from 34 last year.
2. The penalty for not having insurance is going up
Not surprisingly, the penalty for violating the actionable component of the Affordable Care Act, known as the individual mandate, is going up. The individual mandate says that each individual is to purchase health insurance or pay a penalty. This penalty in 2014 was the greater of $95 or 1% of their annual income. In 2015 this penalty is rising to the greater of $325 or 2% of an individuals' annual income.
The entire purpose of imposing a penalty is to encourage everyone to sign up for health insurance since having more people enrolled helps spread the cost of medical care across a larger percentage of the population and could keep medical cost inflation pretty low.
However, there are also ample ways for eligible consumers to skirt around this penalty. Those individuals who are low-income or would suffer an undue hardship from purchasing health insurance will be exempt, as will Americans that can claim a hardship exemption. Other exclusions are certain religious groups, Native Americans, and people currently incarcerated, for example.
3. Premium prices could see wild fluctuations
Telling you that your premium price is going to change in 2015 probably isn't some amazing revelation, but the scope of the change could be pretty dramatic.
Consider this: a number of national insurers, such as UnitedHealth Group (NYSE:UNH), are readying to enter a lot of new markets this year. After sitting on the sidelines throughout much of last year, UnitedHealth Group is moving into nearly half of all U.S. states after participating in just four in 2014. This increased competition could be the perfect scenario for premium prices to fall.
Also, with insurers like Molina Healthcare (NYSE:MOH) dipping their toes into the individual insurance market for the first time in 2014 there wasn't a lot of experience on its end with regard to pricing. Thus it and a lot of other first-time benefits providers may wind up readjusting rates in 2015 pretty substantially – some up; some down.
Competition is also going to be a big factor for each states' lowest-priced bronze plan. A Kaiser Family Foundation study of more than a dozen states showed that three-quarters would have a new "cheapest" bronze plan, which ultimately could mean a lot of policy-switching in the coming weeks.
4. The employer mandate will take effect for some businesses
After being delayed a year, businesses will also be required to comply with the actionable component of the law, known as the employer mandate, which requires them to offer affordable health plans to their full-time employees, and subsidize those plans if necessary, or face a $2,000-$3,000 penalty per employee.
How does the ACA define a full-time employee? It's anyone that works an average of 30 hours or more a week. According to the law as it stands now, businesses with 100 or more full-time employees need to provide health benefits to a minimum of 70% of their full-time employees in 2015 and 95% in 2016 or face those aforementioned hefty fines. Businesses with 50 to 99 employees will have until 2016 to become compliant under the ACA.
This is why some businesses, like Regal Entertainment Group (NYSE: RGC) which is the nation's largest operator of movie theaters, cut hours for all of its non-management personnel to part-time. Businesses aren't required by the ACA to supply health insurance options to employees below the 30-hour per week mark.
5. Your enrollment process may have changed
Finally, the way in which you enroll for health insurance may have changed, all depending on the state you live in.
Two new states (Oregon and Nevada) will now call Healthcare.gov home, rather than trying to repair their state-run health exchanges. In addition, some Americans may find the reenrollment process to be easy or overly complicated. Individuals in select states will be automatically reenrolled in their prior plan, while citizens in other states may need to head back to their online exchange to reenroll. The non-universal process could definitely create some anxiety and confusion.
Between expectations of 5 to 6 million new enrollees in 2015, as well as insurers needing to pull out the stops to retain existing members, it certainly projects to be an "interesting" enrollment period.