Obamacare Sign-Up Deadline is Monday, March 31

NEW YORK (MainStreet) — Anyone who hasn't yet signed up for health insurance has only three days left to do so. Monday, March 31 is the open enrollment deadline for 2014 coverage. Starting April the exchanges will close to the general public, and only people with special circumstances will be able to apply for individual plans through the Affordable Care Act marketplaces such as healthcare.gov.

This deadline only applies to buying insurance through the ACA exchanges, so insurance companies will be free to sell plans directly to customers if they want to. It's uncertain how realistic that option will be, however, as the market for individual plans has largely migrated to the ACA exchanges. Americans who choose not to register before the deadline may not be able to get health insurance at all until next year.

March 31's deadline will also trigger the Affordable Care Act's mandate, so anyone who misses the deadline will be subject to penalties on next year's taxes. With all of this coming, here are a few details you might need to know.

Why is there a deadline in the first place?

The enrollment deadline is a necessary feature of the Affordable Care Act. One of the main goals of health care reform was to eliminate pre-existing conditions as a barrier to coverage. At the same time, though, private insurance as a concept only works if a company enrolls more healthy people than sick ones. Otherwise payments exceed premiums, the company bleeds money.

This is the much ballyhooed "death spiral."

If companies simply had to offer coverage at reasonable rates to everyone who walked through the door, as they now do, most of us would do the sensible thing: we would wait to buy insurance until en route to the hospital (typing with the hand that still moves). It would create a risk pool almost exclusively of the sick and injured.

The mandate addresses that problem. It makes sure the risk pool contains everybody, not just the ones who decided to test a do-it-yourself hang glider.

Monday's deadline exists, because requirements become meaningless without one. Give someone an assignment with no due date and he'll get around to it...eventually. So if the entire point of the mandate is to make sure healthy people get insurance, the law also has to make sure they get that insurance while they're still healthy. Otherwise rational, healthy consumers might get insurance in December, claim coverage in 2014 and pay for only one month's premiums.

And we would have the Blue Cross Herald.

Which people will this impact?

The deadline only matters if you don't already have insurance. Anyone already covered by a qualifying personal, group, government or employer policy can ignore it.

The insurance exchanges will remain open during the year for anyone who experiences what the law calls a "qualifying life event." This technical term refers to any major change in your life that also forces a change of insurance coverage, such as marriage, divorce, job loss, etc. Those users will be able to sign up for insurance through the marketplaces as normal.

The Center for Medicare & Medicaid Services (the CMS) will also recognize extreme cases, such as if a natural disaster kept you from enrolling before the deadline. Full guidance on extraordinary circumstances is available here.

What happens if you miss the deadline?

Contrary to some reporting, the Obama administration has not extended the enrollment deadline for 2014. It has created a special exception, however, seemingly in an effort to stay ahead of any last minute rushes and the technical issues which have notoriously plagued the federal site. Anyone who claims that that he tried to enroll by March 31 but couldn't will be allowed to complete registration through mid-April.

CMS refers to it as an exception for people who are "in line" when the deadline arrives, and it will work pretty much on the honor system. Users who register in April will have to attest that they tried to meet the deadline but couldn't. It will be an easy system to game (just lie), but, as an agency spokesperson noted, lying on your application is a federal crime.

Hopefully enough people will avoid insurance fraud to keep this from becoming a problem.

Anyone who misses the March 31 deadline to purchase coverage can continue to look for it through insurers. Companies will remain free to market directly to consumers as long as their plans comply with all of the regulations of the Affordable Care Act, including the rules about price controls and pre-existing conditions. This will be at the discretion of those individual companies, however, and given the very real risk of death spiral economics, pickings will likely be slim.

Missing this deadline also triggers the law's tax penalties. For 2014 anyone who chooses to remain uninsured after Monday will pay the greater of either $95 or 1% of his income. This will go up steadily over the next several years as the law continues phasing in.

There are several exceptions to this rule, which the CMS has listed in detail on its website. The three most common include:

  • Anyone who doesn't earn enough to file a tax return,
  • Anyone who is uninsured for less than three months of the year, and
  • Anyone for whom the cheapest available plan would be more than 8% of their income.

The ACA penalty also excludes anyone who falls into the "healthcare gap," people who would be included in the Medicaid expansion but live in states that chose not to take it.

This deadline only applies to coverage for 2014. Open enrollment for 2015 policies will last from November 15 through February 15, 2015.

--Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website www.wanderinglawyer.com.

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