This week, I started a new job with benefits; however, there is a 60-day waiting period before my new health insurance begins. My health insurance plan through my previous employer ended two weeks ago, and I did not opt for COBRA. Am I at risk for a tax penalty for being uninsured?
Under the Affordable Care Act, you are allowed one coverage gap for up to three consecutive months in a single year.1 Given the scenario you provided, it sounds as though you are within this time limit. However, if you have already been without insurance in 2014 or find yourself without it again in 2014, you may owe the tax penalty known as the shared responsibility payment for failing to meet the individual responsibility requirement.
Earlier this year, the Departments of Labor, Treasury, and Health and Human Services released a joint rule that limits employer waiting periods to 90 days, starting in 2015.2 This regulation is intended to keep job-based health insurance benefits compliant with the Affordable Care Act.
While your current situation may be within the law, you still do not have health insurance benefits that help protect your health and finances. If something happens in the next two months and you need to visit the emergency room or receive hospital care, you may have to pay for health care services out of pocket.
As a short-term solution, you might consider a temporary health insurance plan. Also known as short-term medical insurance, this type of health insurance coverage:
- Offers some short-term benefits for unexpected medical expenses related to inpatient and outpatient hospital care, outpatient emergency room visits, ambulatory services, and surgical services, among others.
- Lasts as few as 30 days—you select the policy length
- Is customizable in terms of deductible and coinsurance percentage
- Allows you to seek care from your preferred doctors and hospitals but offers access to discounted medical services through network providers
- Can be quickly purchased online—coverage begins as early as the next day
Temporary health insurance is not ACA-compliant, which means it does not include essential health benefits or free preventive services and will not help you avoid a tax penalty if you exceed the allowed gap. Unlike plans that qualify as minimum essential coverage, temporary plans can deny applicants coverage or charge more in premium based on health history. However, temporary health insurance plans can provide peace of mind and help alleviate financial strain should you require medical care before your employer-sponsored health insurance benefits take effect.
To learn more about temporary health insurance coverage, get a quick quote or apply, visit healthedeals.com or talk to a health insurance agent at 888-839-7679.
If you have concerns about health insurance and taxes, visit IRS.gov or consult your tax adviser.