Obamacare Q&A: Deadlines, tax credits and coverage gaps

In this installment of our Obamacare Q&A series, we’ll tackle questions about tax credits for buying insurance, deadlines for getting covered through the exchange, what happens if you need coverage after the open enrollment period ends, and what happens if you’re uninsured for part of the year.

If you have a question about the health law you’d like addressed, email Mirror Health Reporter Arielle Levin Becker at alevinbecker@cmirror.org.

I found out that I qualify for a tax credit to buy insurance through the exchange, but I didn’t meet the Dec. 23 deadline for enrolling. I’m planning to buy a private plan sold outside the exchange. If I do that, will I be able to get the same tax credit for my insurance costs when I file my 2014 tax return?

No, you can’t get the tax credit for a plan sold outside the exchange. But it’s not too late to buy a plan through the exchange that would qualify you for the tax credit.

Under the federal health law, people whose income falls below a certain level (400 percent of the poverty level) are eligible for federal financial assistance to buy insurance. That comes in the form of a tax credit. You can choose to get it in a lump sum when you file your taxes, or you can have the federal government pay some or all of the tax credit to your insurance company each month, reducing the amount you have to pay in premiums.

Those tax credits are available only to people who buy insurance through state-based exchanges (Connecticut’s is called Access Health CT).

As for the deadline issue, Dec. 23 was the deadline for signing up to get coverage that began Jan. 1. But you can still sign up for insurance through the exchange; it just won’t take effect until Feb. 1 at the earliest. If you want to buy a plan with federal financial assistance in 2014, you have until March 31 to sign up for one through the exchange.

What are the deadlines for buying insurance through the exchange?

People who want to buy insurance through Access Health have until March 31 to do so. But the date the coverage takes effect will vary.

The basic rule is this: To get coverage by the first of a month between now and April, you must have enrolled by the 15th of the previous month and paid your premium by the end of the prior month. If you sign up from March 16 through March 31 — the final date for open enrollment — your coverage will take effect May 1.

Here are the dates to know:

These deadlines apply to private insurance purchased through the individual exchange. People who qualify for Medicaid can sign up at any time in the year.

What happens if I lose my insurance in 2014 after the open enrollment period is over?

There are some circumstances, known as “qualifying life events,” that allow you to sign up for health insurance even if it’s not an open enrollment period. Those include getting married, having or adopting a child, or moving to a new area that offers different health plans. Other “qualifying” events include losing access to your previous health coverage because of a divorce, job loss or because you’re no longer eligible for Medicaid. (Things that don’t count: Losing your coverage because you chose to give it up or because you didn’t pay your premium.)

I have not had insurance for several months. I have not signed up for Obamacare. I am now within 5 months of being eligible for Medicare. If I simply wait until that time and sign up for Medicare, will I be penalized for the months I am uninsured?

Yes, you’ll most likely face a penalty if you’re uninsured for five months. But you could avoid the penalty if you are uninsured for a shorter period of time. Here’s why:

Starting Jan. 1, nearly all legal U.S. residents are required to have health insurance or pay a penalty.

But there are some exceptions, including for people who have a “short coverage gap” — that is, people who are uninsured for less than three consecutive months. If you don’t have insurance now but get it by the end of March (and keep it for the rest of the year), you won’t face a penalty.

Something to note about coverage gaps: If you have insurance for even one day in a given calendar month, the federal government will consider you to have coverage for the whole month, according to the IRS. So if you go without insurance from, say, Jan. 15 to April 15, you’ll be considered to have been insured for the months of January and April, and uninsured in February and March.

Also, for this year only, people who sign up for coverage through the exchange by March 31 won’t face a penalty, even if they end up being without coverage for the first three or four months of the year.

There are other reasons why you might be considered exempt from the penalty, even if you don’t get insurance at all in 2014. For example, if your income is too low for you to be required to file a tax return, or if the lowest-priced coverage available would cost more than 8 percent of your household income, you would not have to pay a penalty for being uninsured. For the full list of exemptions, click here.

Previous Q&As:

End-of-year coverage deadlines

How should I cancel an old policy?

What happens if you don’t have coverage Jan. 1?

What happens once you enroll through Access Health CT?

Are there new options under Obamacare for getting family coverage if my employer-sponsored plan is too expensive?

Will my kids lose HUSKY coverage if I buy discounted insurance through the exchange?

If I don’t get insurance, how will they come after me?

Are the deductibles on a family plan for each person or for everyone?

Is dental coverage included in exchange plans?

Should I consider the exchange if I’m on Medicare?

What should I do when applying for coverage if my income is erratic?

Can a small employer buy coverage for workers through the individual market?

What if I’ve been denied coverage in the past?

Do I need to buy additional coverage if I already have a plan?

What if I lose my job?

I qualify for free insurance through the exchange. Is it worth it?

Exchange insurance prices, explained

Which doctors are covered by exchange plans?

Can people still contribute to health savings accounts?

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