You know that health insurance is vitally important and that the open enrollment period gives you just one chance to sign up for the year for major medical coverage. If you’re worried that you’re going to mess up and ruin your enrollment opportunity, you’re not alone. Fortunately, there are simple steps you can take to avoid the most common application mistakes. Take a breath, set aside some time and carefully consider your health insurance needs so you don’t rush the process. Proper planning will save you time and frustration (and maybe some money, too). Still worried about making some common application mistakes? Recognize what they are – and how to avoid them.
Health insurance companies used to be able to drop you for making small mistakes on your application, even if the errors were unintentional. The Affordable Care Act put a stop to that practice for major medical plans, but that doesn’t mean it’s okay to put any old information down on your application.
These days, intentional falsification of information is still grounds for termination. In other words, if you lie and the company finds out, you can lose your coverage. Even worse, your insurer can retroactively cancel your policy back to the date it began and can even demand repayment of anything that they’ve spent on your behalf.
How to Avoid This Mistake: Be honest. Fill out the application carefully and accurately. After completing it to the best of your ability, take time to review the details before submission. If you later realize that you made a mistake, go back and update your application.
Putting in the Wrong Income Info
For those applying for advance premium tax credits, you must enter financial information on your application. Although it may be difficult to estimate your income for the upcoming year, do your best to put in the right figure. There are good reasons for entering the right income info:
- If your estimate is too high, you’ll have to pay higher premiums each month, and you could miss out on cost sharing reductions. You’ll get back the unclaimed subsidy money with your end-of-the-year taxes, but you can’t reclaim the cost sharing benefits that you missed out on.
- On the other hand, if you underestimate your earnings, you could end up getting a subsidy that’s too high for your income level. At tax time, most people will be required to pay back part or all of the excess subsidies they received. Cost sharing reductions don’t have to be repaid, though.
How to Avoid This Mistake: Do your best to estimate next year’s income. Don’t forget to include all sources of household income, including the wages of other family members, alimony payments, Social Security payments and more. Reporting income can be tough for people with irregular incomes (like self-employed freelancers or commission-based salespeople). If your income changes significantly during the year, update your application accordingly. As long as you update your income, you shouldn’t have trouble at tax time.
Not Filing the Supporting Documents
To prevent fraud and to help you avoid costly mistakes, there’s an income verification process associated with applying for advance premium tax credits. If you apply online, the system will attempt to automatically compare your income to previous tax returns. If your reported income can’t be electronically verified, or it differs greatly from your income in years past, you may be required to provide documentation to back up your claims.
That’s not the only reason that you may have to supply documentation as part of the application process. You may need to show proof of your citizenship or immigration status. If you’re applying for a special enrollment period, you may have to show evidence that supports your request, like a birth or marriage certificate.
Requests for documentation are always accompanied by a deadline. It’s often 30 days, but it can vary depending on the reason behind the request. Failing to provide proof by the deadline could cost you the chance to get subsidies, or your coverage could be terminated.
How to Avoid This Mistake: Check to see which documents you need, and get copies of those ready to send in. You can upload your documents electronically or mail them in. The federal health insurance marketplace doesn’t accept faxes or emails. To avoid a last-minute scramble, send in your items well ahead of the deadline.
Failing to Pay the First Month’s Premium
To make your plan selection official, you have to pay your first month’s premium. Coverage won’t take effect until you do so. If you don’t make this payment, your coverage will never begin, and you could forfeit your opportunity to subscribe to a major medical plan this year.
Even if you apply for insurance through the health insurance marketplace, you must make your premium payment through your insurance company. You may be able to do this online, over the phone or by mail. Check your plan documents or the insurer’s website to make sure.
How to Avoid This Mistake: Be sure to submit your first payment by your policy’s effective date. Contact your health insurance company if you’re not sure how to send in the money.
Not Following Up with the Insurance Company
Once your application has been submitted, you should hear from the insurance company, likely in the form of an email and physical packet of information on your new health plan. If you applied through a marketplace – whether state, federal or private – your information should be sent from there to the insurer. Mistakes do happen, though, and you may not get the plan documents and other information you need to keep track of your coverage.
Be on the lookout for communications from the insurance company. The insurer might send you payment instructions, a welcome letter or your membership cards. If you don’t receive anything, it’s your responsibility to follow up.
How to Avoid This Mistake: If you don’t hear from the insurance company within a week of finalizing your application, reach out to the insurer directly. Call the customer service number or consult your confirmation email (or letter) to determine how to get the plan documents and other things you need.
Not Applying on Time
The law is clear about the enrollment period for major medical health insurance policies. You either sign up during open enrollment in the fall, or you don’t sign up at all. There are very few exceptions made for special enrollment periods throughout the year.
Don’t think that you’ll be fine as long as you’ve started the application process before the end of open enrollment. Your final selection must be made before December 15 (in most states), or you’ll be out of luck for next year.
How to Avoid This Mistake: Start your application process early in the open enrollment season if possible. This gives you plenty of time to compare different plans before making your choice. In most states, you have until December 15 to pick a plan for 2019. Use the next few weeks wisely to choose the coverage you want and need.