What are the consequences (beyond the obvious gambling that nothing’s going to happen) of dropping health insurance for Nov/Dec, with the plan to re-up for January? I’m about to turn 61, unable to get a full-time job that pays anywhere near what I need to get by, so struggling to make it as a freelancer. My health is okay. Husband is about to turn 53, but he’s got some problems – nothing life threatening, but semi-chronic. A major client of mine has dried up w/o warning; I’ve got a couple new ones in the pipeline, but won’t be generating actual income until January.
There are a lot of things to untangle. First, a scenario of significantly variable income is an excellent reason to buy insurance on Exchange. When times are good the advanced premium tax credit might be either very small or nil. However if there is an unexpected income drop, the advanved premium tax credit can be updated for the following month once the new income information is entered.
At the age of the couple, I would be terrified about running naked for two months but when there are no good options, bad options are the only ones to choose from. I am assuming they had coverage since January 1. That means they would have had ten months out of twelve with qualified coverage. The mandate penalty only kicks in if there is a gap of at least three months. The mandate will not apply in this scenario.
Now what are the options that are possible to provide at least the semblence of coverage?
First, I would check out Medicaid eligibility. I don’t think that will be a viable option but it is worth ten minutes.
Secondly, in the ACA, there is a three month grace period for non-payment of premiums after the first premium of the policy period is paid to effectuaatte the policy. It is effectively a floating one way option for people in this situation (it has some policy implications but we’ll ignore those today).
If they do not pay the November premium, the insurer is still on the hook for the first thirty days worth of charges. The insurer can go back for the unpaid premium debt and any cost sharing that would have been incurred from any services. Now let’s assume that the December premium is also not paid. At that point, the providers eat the cost. The insurer now holds two months of premiums and any potential cost sharing as a bad debt that it can collect on. once the insurer gets paid and the account is brought back to current, the providers will get paid. Due to the time of the year, the policy is then terminated on December 31, 2016 and a new policy is needed for January 1, 2017 but in other times of the year, this implicit option can go for three months instead of two months.
The problem then becomes January coverage as a new policy is needed and it does not go into effect until the first premium is paid. I don’t have a good hack or exploit for that. February coverage, given the details is simpler, a policy could be bought in early January and paid for in late January and things go back to the way they were.