Marketplace Open Enrollment is Here: Six Things to Know
November 17, 2022
In this blog, we’re going to break down six critical points to know about the Marketplace that will optimize your clients’ healthcare coverage and costs, make it easy for you to guide them through the process, and protect your clients from unnecessary spending and risk.
Bonus content: Show your clients you’re well-versed in Open Enrollment by watching our free webinar, approved for one CE credit by the CFP Board, on November 22, 2022, at 12 pm EST. Register here.
The timeline for Open Enrollment is a critical window of opportunity.
For 2023 health insurance coverage, people can enroll in a Marketplace plan (also known as Obamacare, which offers a place to shop for ACA-compliant health plans) between November 1st, 2022 and January 15th, 2023. However, it’s important to note that some states have their own Marketplace with varying Open Enrollment timelines. The window for enrollment is critical to keep in mind, especially if a Marketplace plan is your client’s only option for health insurance. If they miss this window, they’ll need to wait until the next Open Enrollment Period unless they’re eligible for a Special Enrollment Period. This is applicable if they lose coverage through a qualifying life event or special circumstance such as retirement, address change, or aging off of a policy (i.e. turning 26). Typically, someone has 60 days after the event to enroll in a new plan. If your client knows when they’ll lose coverage, they may also have 60 days before the event to get prepared and enroll in that new plan. For a full list of circumstances that can trigger a Special Enrollment Period, check here.
If your client misses the Open Enrollment window and doesn’t qualify for a Special Enrollment Period, they risk being uninsured for the year, which can lead to thousands in out-of-pocket healthcare costs. But, all hope isn’t lost. There are other options for health insurance, such as short-term health plans and healthcare sharing ministries. These plans are better than nothing, but they’re not great.
Short-term plans are not ACA-compliant, meaning they are not required to cover the ACA’s essential health benefits which include maternity care, preventative care, or prescription drugs. This also means they are allowed to deny coverage based on pre-existing conditions or those who have high health risks. The network coverage varies depending on the plan: some plans will let you see any doctor or go to any hospital whereas other plans have restricted networks where you pay less when you see a provider in their network.
Healthcare sharing ministries (HSMs) may seem attractive since monthly membership fees tend to be lower than full-price health insurance premiums, however, HSMs are not considered healthcare insurance, so members are not protected by insurance laws and regulations in most states. The plans, while mimicking health insurance policies, are not ACA-compliant. There is no guarantee that your clients’ healthcare costs will be covered. They may also need to prove that they’re in good health to qualify for the plan.
Although these options are technically better than nothing, they’re not the ideal choice since they put your clients at risk of still paying thousands in out-of-pocket costs for healthcare.
Take our advice, and make sure your clients who need Marketplace coverage enroll in time. Also, if you have clients currently enrolled in a short-term health plan or a healthcare sharing ministry, now would be the time to switch to the Marketplace.
Anyone can enroll, but there are some clients that benefit more than others from Marketplace plans.
The only requirements for eligibility are that enrollees must live in the United States, be a U.S. citizen or national (or be lawfully present), and not be incarcerated. But just because most people can enroll in a Marketplace plan doesn’t mean everyone should. There are many factors to consider when determining if a Marketplace plan is the optimal health plan choice for yourself or your client. Similarly, if you’re a financial advisor, don’t assume that your clients won’t benefit from a Marketplace plan. The prime example of financial advisor clients who benefit from Marketplace plans is pre-65 retirees. They aren’t eligible for Medicare yet and depending on how early they retire they may be years away from eligibility. They need affordable, comprehensive health insurance coverage in the interim between leaving their job and turning 65, and the Marketplace is the perfect solution.
Other clients who would benefit from enrolling in a Marketplace health insurance plan would be anyone who isn’t able to get health insurance through an employer. For example, freelance workers, small business owners, and contract workers would all benefit.
Marketplace plans offer ample coverage.
If clients have never been enrolled in a Marketplace plan before, one worry they might have is about the quality of coverage. Rest assured, if the health plan is on the Marketplace, that means it’s met the ACA’s requirements to have ten essential health benefits, covers pre-existing conditions, and covers preventive services. And those are just the minimum requirements. Many Marketplace plans have additional covered services. So, whether a client has just a few basic healthcare needs or several complex needs, there’s likely a Marketplace plan that offers the coverage they need. With the question of, “Are Marketplace plans comprehensive enough?” out of the way, now we can get into more specifics about these plans.
Income plays a big role in the Marketplace.
It doesn’t affect eligibility, but it does impact costs and tax credits. Which, of course, is a huge factor when deciding whether to get a Marketplace or not (assuming there’s a choice.) Premium Tax Credits (PTCs) are a type of sliding-scale subsidy that reduces the premium amount for individual or family health plans purchased through the Marketplace. For your clients to be eligible, they must have an annual household income between 100% and 400% below the Federal Poverty Level (FPL), be enrolled through a Marketplace plan, have U.S. citizenship or legal residency, file federal income tax returns, and must not qualify for other programs such as Medicaid and Medicare. Additionally, your client can not be eligible for an employee plan that offers minimum essential coverage.
Even if your client doesn’t meet the requirements to receive a Premium Tax Credit, there are other ways to reduce their overall, annual healthcare costs. How? Tax deductions. If your clients itemize on their tax return, the IRS allows a medical tax deduction for qualified medical expenses when they exceed 7.5% of adjusted gross income (AGI), which is income minus any adjustments. The 7.5% threshold has varied over the years but was made permanent by the Consolidated Appropriations Act. Although taking this deduction requires tracking and itemizing allowable medical expenses, it may provide enough tax savings to do so. In 2021 alone, we found clients an average of $13,495.09 in tax savings through HealthPlanning Analyses.
Not all Marketplace plans are created equally.
Much like employer-sponsored health plans have different coverage and cost options, so does the Marketplace. Even within the same state some plans’ costs and services can vary quite a bit even though they’re all required to meet the same basic requirements set by the ACA. This is because of extra services covered, contracts, drug formularies, and other factors that impact how health plans set their costs. It’s also important to note that the same types of plans aren’t available in every state. For 2023 coverage, the following states do not offer PPO Plans:
States without PPO Plans:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- South Carolina
- West Virginia
Marketplace plans can be good health insurance options for those who need temporary coverage.
Because Marketplace plans can sometimes be expensive, your clients might not want to choose them as a permanent health insurance option. The good news is that Marketplace plans are great options for those who just need temporary coverage. For example, let’s say your client is retiring before 65 (before Medicare eligibility) and they plan to use COBRA for the first 18 months after they leave their job, but then they still have one year between the end of COBRA and the beginning of their Medicare eligibility. Enter: the Marketplace.
Although these six key pieces of information will make it a lot easier to shop for and enroll in a Marketplace plan, there are additional factors to consider that will make the Open Enrollment process even smoother. We suggest using the preferences and questions in this blog as a way for you and your clients to quickly and easily identify which Marketplace plans will work best for them. And if you really want to make healthcare planning a seamless experience for your clients, schedule a call with us to learn how our healthcare planning software supports their financial goals and makes you the ultimate comprehensive financial planner.