Obamacare: Does It Pay to Wait Until You Need It To Get Coverage?

Find out why it doesn't make sense to wait until you're sick to get health insurance.

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The tax penalty you’ll have to pay if you don’t obtain health insurance will likely be much smaller than the cost of obtaining coverage. So why not just go without coverage until you need it? After all, Obamacare prohibits insurers from denying coverage due to preexisting conditions. This means you can wait until you get sick to obtain coverage. Indeed, theoretically, you could wait to apply until you’re in an ambulance on the way to the hospital. Right?

Wrong! Ordinarily, you can apply for individual health coverage during annual open enrollment periods only. This is true whether you obtain coverage through your state health exchange or you bypass the exchange and purchase coverage directly from an insurer. There are exceptions for individuals with “qualifying events,” such as a change in family or dependency status or loss of other coverage. However, getting sick or injured is not a qualifying event.

Annual open enrollment periods vary. For the state exchanges, the open enrollment period to obtain coverage for 2014 is October 1, 2013 through March 31, 2014. If you are uninsured and you wait until March 31 (or anytime after March 15) to buy a plan, your coverage won’t start until May 1.

For later years, it will be the seven-week period from October 15 to December 7. Individual insurers have their own open enrollment periods for insurance not sold through the state exchanges.

This means that, unless you happen to get sick during an open enrollment period, you could have a hard time obtaining coverage as an individual at any other time of the year. Without health insurance, even a minor sickness or injury can cost you a fortune. A recent report by The New York Times found that it can cost more than $1,000 to have a cut finger fixed in a hospital emergency room.

The moral of the story is simple: Don’t wait to get covered. Do it during the open enrollment period.

Find out more about your rights under Obamacare (and how it affects your taxes) on our Medical Deductions page.

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