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How to Escape "Job Lock"

Obamacare has accomplished many things, but one of its premier accomplishments has been to help many people escape "job lock" -- being trapped in a job because you're afraid of losing health insurance. Indeed, a 2008 Harvard Business School study found that around 11 million people suffered from job lock. And during Obamacare's first two years, self-employment increased by nearly 3.5% as former employees could now safely bail out of their employer-sponsored health insurance. But with an ACA repeal on the horizon, will job lock return with a vengeance?

Before Obamacare

Before the Affordable Care Act took effect in 2013, finding affordable private health insurance was a challenge even for the young and healthy. And if you could afford private health insurance, the threat of rescission hung over your head like a Sword of Damocles. Rescission meant that health insurance providers had the right to retroactively cancel your insurance coverage if you made a mistake on your initial application or concealed something from them at the time you applied.

In principle, rescission makes sense; in practice, health insurance providers would wait until someone ran into a serious health problem, and then go over the person's application with a fine-toothed comb until they found something they could use as an excuse for canceling that now-expensive enrollee's insurance policy. Obamacare made rescission illegal unless the health insurance company could prove fraud or deliberate misrepresentation.

Image source: Getty images.

What is the Marketplace?

Until Obamacare is actually repealed, the state Marketplaces (also called exchanges) will continue to operate. Your state's Marketplace allows you to buy health insurance coverage that's eligible for federal subsidies and tax credits. Normally, open enrollment periods for a given year are limited to November 1 through December 15 of the previous year; however, if you have special circumstances, you can apply for Marketplace insurance at other times of the year. Special circumstances include losing your employer-provided health insurance, getting married, or having a baby. If you're a US citizen or national, live in the USA, aren't in jail, and aren't covered by Medicare, you're eligible to use the Marketplace.

How to get subsidized health insurance

You can get private health insurance in a lot of different places, including directly from the health insurance provider, but if you want to qualify for federal subsidies you have to buy a policy on your state's Marketplace. Healthcare.gov has a page that walks you through the various options for applying for Marketplace plans.

Whichever application method you choose, you'll be asked about your household size and income. These questions determine whether or not you're eligible to get an immediate financial subsidy for your health insurance premiums.

If you don't elect to get the subsidy at the time you apply for an insurance policy, you can get it retroactively instead when you file your federal taxes for the year (in that form, it's called the premium tax credit). On the other hand, if you claim the subsidy and then it turns out that you made more money than you expected for the year, you may have to repay some or all of that subsidy in the form of extra taxes on your federal tax return. In either case, you fill out Form 8962 and turn it in with the rest of your return.

Once you've secured your alternate health insurance, you're free to start job hunting at last.

Trumpcare

It seems clear at this point that Obamacare will be repealed, and something will be put in its place -- but the exact nature of the replacement program is still up in the air. However, both versions of the healthcare reform bill now being debated in Congress phase out Obamacare over a two or three year period, so enrollees will have a chance to see what other options are out there before their coverage runs out.

The House version of the healthcare reform bill leaves many important factors up to the state's discretion, so if that version of the bill passes, you may need to move to a different state to ensure that you'll have access to affordable health insurance. Fortunately, none of the healthcare reform proposals have proposed repealing the ban on rescission, so at least that's one threat we won't have hanging over our heads. And with a repeal of the employer mandate likely, being an employee might not protect your health insurance, either.

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