Why Not Wait Until I'm Sick to Buy Health Insurance?

Waiting until you're sick might be more expensive

Couple looking at health plans
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Health insurance is expensive, so why not just wait and buy health insurance when you need it? Why pay months of premiums when you might not need to use it?

Since Affordable Care Act rules require health insurers to cover pre-existing conditions, it may seem cheaper and safe to delay buying coverage until you need it. But, there are compelling reasons not to wait.

Open Enrollment Isn't Open-Ended

You can only buy health insurance in the individual market (which includes through the health insurance exchanges as well as outside the exchanges) during open enrollment, a period of time when everybody can buy health insurance.

If you don’t buy your health insurance during open enrollment, you’ll have to wait until the next open enrollment for another opportunity. If you get sick in the meanwhile, you’ll probably be out of luck.

The period of open enrollment has become shorter. Initially, it was six months, and then three months long. But open enrollment in most states is now only about six weeks long, running from November 1 to December 15 each year, with coverage effective January 1 of the coming year (state-run health insurance exchanges can have longer enrollment periods; most of them have thus-far opted to extend open enrollment by at least a week or two, and two states—California and Colorado—have permanently extended open enrollment).

If you work for an employer that offers health insurance, you're also limited to signing up during open enrollment. And open enrollment for employer-sponsored plans is generally shorter than the window that applies in the individual market. Employers can set their own open enrollment windows (there's no set schedule the way there is for the individual market). They usually occur in the fall, for coverage starting January 1, but employer-sponsored plans can have plan years that differ from the calendar year, so you may find that your employer conducts open enrollment at a different time of the year. But one way or the other, your opportunity to sign up for the coverage your employer offers is going to be limited to a short window each year. You're not going to be able to wait until you need care to sign up for health insurance.

Exceptions to Open Enrollment

Situational changes in your life (but not changes in your health status) will create a special enrollment period during which you can buy health insurance or change your health plan. Special enrollment periods apply to employer-sponsored coverage as well as coverage that you buy on your own.

Qualifying events for individual market coverage include:

  • Losing access to your existing health insurance plan for reasons other than non-payment of premium or fraud (for example, leaving your job and losing access to your employer-sponsored insurance, or getting divorced and losing access to health insurance that you had via your ex's plan). 
  • Gaining a dependent or becoming a dependent. Getting married, having a baby, or adopting a child are examples.
  • Permanently relocating can create a special enrollment period. but since mid-2016, this has only applied if you were already insured in your previous location—you'll have an opportunity to change insurance if you move, but not to obtain coverage for the first time.

For employer-sponsored plans, qualifying events are similar, but there are some that differ (here's the Code of Federal Regulations that governs special enrollment periods for employer-sponsored coverage).

Special enrollment periods are time-limited. For employer-sponsored plans, you've generally only got 30 days from the qualifying event to enroll. In the individual market, you'll have 60 days. But if you don't sign up during the applicable window, you'll have to wait for the next open enrollment period.

Health Insurance Waiting Periods

Health insurance coverage doesn’t take effect the day you buy it. Whether you're insured through work or through a company you found on the health exchange, there is usually a waiting period before your coverage kicks in. For example:

  • If you enroll during your employer's open enrollment period, your coverage will take effect on the first day of the upcoming plan year. In most cases, this is January 1, although your employer's plan year might not follow the calendar year.
  • If you enroll in your employer's plan due to a qualifying event, your coverage will start the first day of the following month [see 29 CFR 2590.701-6 (4)].
  • If you sign up during autumn open enrollment for individual market plans, your coverage will start on January 1st (note that if a state-run health insurance exchange extends open enrollment into the new year, people who apply later in the enrollment window might not have coverage effective until February or March).
  • If you're buying your own coverage outside of open enrollment (using a special enrollment period) and you enroll before the 15th of the month, your coverage will start at the beginning of the next month
  • If you're buying your own coverage and you enroll after the 15th of the month, your coverage won't start until the beginning of the second following month. For example, if you experience a qualifying event and sign up on March 25, 2019, your coverage won't take effect until May 1, 2019 (unless your qualifying event is loss of other coverage or marriage, in which case special rules apply to the effective date, and your coverage could be effective April 1, 2018; note that in all cases, you can get coverage effective for a new baby or adopted child retroactive to the date of birth or adoption as long as you enroll before the special enrollment period ends).

    Health Insurance for Unforeseen Circumstances

    It's a bad plan to wait to buy health insurance until you need to use it. Even if you’re young and healthy, bad things can still happen.

    What if you sliced your hand when a wine glass broke as you were washing it? Stitches in an emergency room can be very expensive. What if you tripped over the cat while walking down stairs? A broken ankle can’t wait for treatment and might even require surgery.

    Even if something like this happens when you're able to enroll in coverage right away (during open enrollment or during a special enrollment period), your coverage wouldn't take effect right away. It's doubtful that you'd want to wait around for weeks to go to the emergency room. You'd have to wait months just to enroll.

    The Expense of Health Insurance

    The most common reason people give for not having health insurance is that it's too expensive. But the ACA has helped to make coverage much more affordable for people with low and mid-range incomes.

    If your income is less than about $17,236 in 2019 (for a single individual), you may qualify for Medicaid. It depends on whether your state has expanded Medicaid, but 33 states and DC have thus-far opted to expand Medicaid under the ACA. In states that have expanded Medicaid, you're eligible if your income doesn't exceed 138 percent of the poverty level (here are 2019 poverty level numbers; just multiply by 1.38 to see if your income would make you eligible for Medicaid).

    If your income is too high for Medicaid but up to four times the prior year's poverty level, you may be eligible for subsidies to cover a portion of your premium in the exchange. The upper-income limit for subsidies for 2019 coverage for a single individual is $48,560—certainly well into the middle class for a single person (for a family of four, the income limit extends all the way to $100,400).

    To qualify for subsidies, you must buy your health insurance through the exchange. You can either take the subsidies up-front, paid directly to your insurance carrier throughout the year, or you can pay full price for your coverage and then claim your subsidy on your tax return.

    Catastrophic Plans

    If you're younger than 30 years old, or if you have a financial hardship, you may be eligible for a catastrophic health plan. Although these plans have the highest deductibles and out-of-pocket costs allowed under the ACA, their premiums are lower than the other available options, and at least you’ll have some coverage.

    Catastrophic plans cannot be purchased by people over 30 unless they have a hardship exemption. And it's also important to note that subsidies cannot be used to help pay for catastrophic plans, so they're generally not a good choice for anyone who qualifies for subsidies based on income.

    And just like any other major medical health plan, catastrophic plans can only be purchased during open enrollment or a special enrollment period.

    What About Short-Term Health Insurance?

    Short-term health insurance is available for initial terms of up to a year in quite a few states, and since it's not regulated by the ACA, it's available for purchase year-round. Short-term health insurance can also be purchased with an effective date as soon as the day after you apply. But nearly all short-term health plans have blanket exclusions on pre-existing conditions.

    The insurer can reject your application altogether based on your medical history, but even if they accept you, the plan is going to include fine print noting that they're not going to cover any medical issues that you were experiencing before your plan took effect. So a short-term plan is not going to be a solution if you're hoping to wait until you need medical care and then purchase coverage at that point.

    A Word from Verywell

    Like any insurance product, health insurance only works when enough claim-free or low-claim individuals are in the pool to balance out the cost of the high-claim individuals. This is why it's so important to maintain health insurance even when you're perfectly healthy. It's not just yourself you're protecting, it's the whole pool. And you never know when you might need the pool to be there for you—the healthiest among us can become a high-claim individual in the blink of an eye.

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