Remember the “old days”, when you could buy health insurance anytime you wanted to? Did you ever wonder why you can now only buy during an Open Enrollment period?* The turning point was when Obamacare went into effect, otherwise known as The Affordable Care Act.. Before Obamacare, you could buy anytime. After Obamacare, you can only buy during Open Enrollment. So why the change?
If you think about it, Obamacare changed a lot of things regarding Health Insurance (understatement). But the change that applies here is that, with the advent of Obamacare, there is no longer any underwriting. In other words, there are no medical questions – anybody can get insured regardless of their medical history.
So if you could get insured regardless of your medical history, why would you buy insurance if you weren’t sick? You might as well save your money and not buy health insurance until you get sick. What the heck, they’re not going to ask you any medical questions.
That’s why there is Open Enrollment… to prevent that situation.
Imagine if you didn’t have to buy auto insurance until you got into a wreck. Or if you didn’t have to buy homeowners insurance until your house burnt down. It wouldn’t really be insurance, would it? And the insurance companies would go out of business in about 5 minutes.
So if health insurance is going to be offered on a “guaranteed” basis, then there has to be a stipulation that you buy during a specific time period – Open Enrollment. And if you don’t buy during Open Enrollment, you can’t buy again until the next Open Enrollment, whether you get sick in the interim or not.
*There are certain times, called Special Enrollment Periods, in which you can buy outside of Open Enrollment. More on that in another blog post.
Neil Steinman is the principal of Orange County Health & Life Insurance in Orange County, CA – and has been serving the needs of California residents for nearly 20 years.