The Skinny on Special Enrollment: 4 Times You Can Revisit Your Health Benefits

The Skinny on Special Enrollment: 4 Times You Can Revisit Your Health Benefits

As benefits open enrollment season came to an end in February, nearly 11.7 million people signed up for their 2015 health care coverage—a 46% increase over 2014.

The last day to pick a health insurance plan through an employer or the government exchanges was February 15—but did you know that there's a special enrollment period offered year-round?

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That's right—if you undergo a qualifying major life change, such as having a baby or landing that dream job, you can change your coverage elections during a special enrollment period that runs 60 days from when the event occurs.

Of course, this means weighing—all over again!—your overall health care strategy. Will you need to increase your coverage, thanks to an expanding family? Or is cost—and a lower premium—now top of mind?

It's a lot to consider. So to help you navigate the benefits terrain, we’re taking a deep-dive look at four events that could warrant a shift in your health insurance needs—and what to keep in mind if you're taking advantage of the special enrollment period.

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Eligible Life Event #1: Turning 26

If you were born in 1989, it’s time to get out from under Mom and Dad's health plan: According to the Affordable Care Act, you can no longer be covered by your parents' policy once your 26th birthday rolls around.

How to Prepare for Special Enrollment: The overarching advice? Start looking for a new plan well in advance of the big 2-6. Otherwise, you may miss the 60-day window to get new coverage.

“We call [this demographic] ‘The Young Invincibles,’ ” says Don Valdez, a health care navigator at Pima Community Access Program, a Tucson, Ariz.–based nonprofit that helps connect local uninsured consumers with affordable health care providers. "They think they’re not going to get hurt, but go out mountain biking and break something, and you'll be glad you’ve got coverage.”

To prep for special enrollment, have a copy of your federal tax return so you can estimate your 2015 household income on your application—and keep your W-2s handy in case you’re asked to verify your income, says Zachary Baron, a senior policy analyst at Enroll America, a Washington, D.C.–based nonprofit focused on health care outreach.

If you’re young and healthy, don’t take a lot of prescriptions, and don’t foresee many doctor’s visits, opting for higher out-of-pocket costs for lower monthly premiums may make sense.

What to Consider When Choosing a New Plan: Individuals coming off their parents' insurance should have few problems finding affordable options, since premiums tend to be lower for younger people.

Plus, “New insurers have come to the marketplace, there’s lots of competition, and in some cases, premiums are going down,” Baron says.

If you’re young and healthy, don’t take a lot of prescriptions, and don’t foresee many doctor’s visits, opting for higher out-of-pocket costs for lower monthly premiums may make sense for you, Valdez says.

But you may still want to compare deductibles, co-pays, coverage for in- or out-of-network providers, and any coverage options available for specific health conditions.

And if you’re still on a “starter” salary, check if you qualify for lower premiums and out-of-pocket costs, or tax credits, based on your income and household size.

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Eligible Life Event #2: Change in Marital Status

Recently married, divorced, legally separated, or widowed? If you fit into any of these buckets, then you qualify for the special enrollment period.

But if you're a newlywed, you may require the most prep, since you’ll have to navigate a new maze of insurance decisions as a pair.

How to Prepare for Special Enrollment: Step one is to nail down your joint income so you can hash out a new budget, determine what type of monthly premium you can afford, and see which cost savings you may still be eligible for.

You may have qualified for marketplace tax credits as individuals, but your combined income may push you above the threshold—an adjusted gross income of about $63,000 in most states for a household of two, says Baron. And if either of you has access to an employer-based plan and file taxes jointly, you won’t qualify for the tax credits at all.

Of course, another big to-do is to sit down and assess your medical histories together.

Have you mostly just needed checkups and preventive care, which could mean you’d prefer a lower premium/higher deductible plan? Or does one of you have a chronic condition, which could translate into a higher premium/lower deductible plan?

What to Consider When Choosing a New Plan: As a new couple, you’re probably still trying to find the balance between your cost and coverage needs.

If cost ends up being your primary concern as a couple, then you may want to consider an HMO, which tends to have a cheaper price tag—as long as you stay within the provider network.

But if one of you has a condition that may require seeing out-of-network providers, then a PPO, which has fewer restrictions on choosing doctors and specialists, could be worth the higher premium you’d pay over an HMO.

If you end up qualifying for tax credits through the marketplace, Valdez also suggests keeping track of your joint income throughout the year, because you’ll need to update that information in your account as soon as possible. If you no longer qualify for a credit, you may have to pay back the full amount for every month you were covered by it, he explains.

RELATED: Checklist: I Want to Do My Financial Planning for Getting Married

Eligible Life Event #3: Welcoming a Baby

If the stork paid a visit this year, it’s likely that you’ll have to change or increase your coverage—especially if your new addition was a surprise.

How to Prepare for Special Enrollment: Probably the most important piece of paperwork to have on hand is your baby’s birth certificate, because you may be asked to upload or mail it in for verification when applying for a new policy.

If you’re going through the marketplace, it may also be a good time to research whether you qualify for tax credits or other cost savings, because the income limits expand based on how much your household has grown.

For example, a household of three qualifies for financial assistance if you make up to $79,160 in 2015, versus $62,920 for a household of two.

What to Consider When Choosing a New Plan: Since maternity and newborn care are part of the essential health benefits that must be covered by insurance, the larger cost factor for parents is usually whether a child has ongoing health issues.

This may be one of the reasons why parents would opt for a family plan with higher premiums but lower out-of-pocket costs, says Valdez. These plans may offer better coverage if your child has to see specialists who aren’t all in the same network.

If your child is healthy, however, parents can expect fairly ongoing and consistent coverage under most plans, he adds.

The one advantage your child has when it comes to health care? Providers must guarantee pediatric dental coverage for children.

Regular checkups—including immunization vaccinations and other types of preventive care—through age 18 should be covered without requiring a co-pay or other forms of cost sharing.

And the one advantage your child has when it comes to health care? Providers must guarantee pediatric dental coverage for children—adults, by comparison, have to buy that coverage separately.

RELATED: 4 Milestones That Can Have a Big Impact on Your Health Care Game Plan

Eligible Life Event #4: Change in Employment

If you got a new gig this year—congratulations! You’ve got a lot to think about, not least of which is deciding what type of health insurance you’re going to get.

How to Prepare for Special Enrollment: Deciding between employer-based coverage and a marketplace plan will depend on whether you think your new employer's options are more affordable than what you can buy on your own.

Since companies typically cover part or all of your premium, employer-based coverage often makes the most sense, says Baron.

But it's still worth estimating how much of your paycheck would go toward your health insurance—this will not only help you budget for your health care costs, it will also help you determine whether you're eligible for price breaks or tax credits should you decide to buy through an exchange.

If your company offers insurance that's considered affordable, you won't qualify for tax breaks or costs savings—and the government's definition of "affordable" is if your costs for self-only coverage fall below 9.56% of your income.

But if you have to enroll in a marketplace plan because you're losing coverage, start shopping before the last day at your old job so you have a new plan in place as soon as possible after you leave.

What to Consider When Choosing a New Plan: One of the biggest factors impacting your new coverage will be whether you need to relocate for your new job.

Plans you buy through the marketplace vary in price from state to state and even county to county, says Valdez, so doing price comparisons will be important in determining the impact on your budget.

It’s also important to revisit your health care plan going into the 2016 enrollment period, because you will be automatically re-enrolled. This could pose a potential issue if you’d like to enroll in an employer-provided plan, or if you’re dealing with salary changes resulting from your new job.

“We tell people to make sure to report life changes, like a job change that results in your income going up or down, as soon as possible," Baron says. "This will minimize any potential for surprises during tax filing, such as owing money for any financial assistance you’ve received via the marketplace.”

RELATED: Beyond Your Paycheck: 5 Things to Negotiate at Work

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

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