No, you can’t just wait until you get sick to sign up

A persistent but dangerous myth about Obamacare is that because insurers can no longer turn people down due to pre-existing conditions, that healthy people can just save their money and wait until they actually get sick or injured to sign up.  But it just doesn’t work that way.

You can’t just sign up for insurance any time — you need to do it during an open enrollment period.  This year, there is an extended period, from October 1, 2013, to March 31, 2014.  But in future years, the period will be only about 6 weeks from late October through early December.  There are some circumstances that will enable a person to sign up outside of the open enrollment period, such as change in marital status, loss of employment, or a new child in the family due to birth or adoption. But getting sick or injured is not the type of event that will allow someone to sign up outside the public open enrollment periods.

Also, insurance coverage does not start on the day you sign up. Generally, if you sign up within the first 15 days of a month, your coverage will begin on the first day of the next month. If you sign up on day 16 or later, the coverage will begin on the first day of the next succeeding month. So the people who sign up by December 15 of this year will have coverage on January 1.  A person who signs up on December 20 will have to wait until February 1 for coverage to begin.

Finally, insurance coverage is not retroactive.  If you fall off your bike and get rushed to the emergency room, and hospitalized for several days while they patch you up, an insurance policy that goes into effect a month or two down the line is not going to pay bills for any services that were incurred before the effective date of coverage.  Most serious and sudden illnesses or injuries require immediate, and often very expensive, treatment.  Sure, if you still need physical therapy two months down the line, you can get insurance to start picking up that cost — but it isn’t going to pay the thousands you racked up during your hospital stay.

The good news is that no one will be blacklisted for life. If your newly diagnosed illness requires years of specialized medications and treatment, if your injury  is so severe that it requires multiple surgeries spaced weeks or months apart — then at least some of your expenses will be covered.  But you may have to wait for months for the coverage to kick in.

In the meantime you’ve racked up expenses that will can exceed the amount of insurance premiums that you would pay for years to come.  A complex fracture requiring surgery? That could easily cost $30,000. 

Young people are not immune from serious illness or injury.  They are at lower risk than older people, but their lower risk is built into the calculation of their premiums — a 25 year old will also pay a lot less per month for a premium than a 45 year old purchasing the same policy.

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