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Good Reasons to Switch to a New Obamacare Health Policy

If you’re a good candidate to switch policies, you'll have to act fast. You have until January 31 to make changes—even if you have already signed up for and started using a new policy.

I bought a health insurance plan on the exchange for 2016 and have already started to use it, but I'd like to find a plan with better prescription-drug coverage. Since open enrollment for Obamacare health insurance policies lasts until January 31, can I switch to a different policy? If so, when would the new plan start?

You have until January 31 to buy individual health insurance coverage, whether through the Obamacare exchanges or through an agent or insurer. You can also switch to a different policy by that deadline, even if you've already started to use the other coverage in 2016. If you sign up for a policy before the end of January, your new coverage will take effect on March 1.

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But if you don't sign up by January 31, you'll need to wait until the next open-enrollment period in the fall to choose new coverage that will start on January 1, 2017—unless you qualify for a special enrollment period. (You qualify if, for example, you move or get married. See Don't Miss the Deadlines to Sign Up for Health Insurance for details.)

Think carefully before you switch to a different policy, especially if you've already spent money toward the deductible this year. "You would not be able to carry your deductible over from your prior policy and would have to start over again with your new plan, beginning March 1," says Alex Tolbert, of Bernard Health, which provides consumers with health insurance advice.

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Still, switching plans can be worthwhile in some situations. For example, it may make sense if you haven't incurred many out-of-pocket costs yet and you'd like to see a doctor who isn't covered under your current plan, or if your doctor prescribed new medications that have high co-payments or aren't covered in your plan's formulary, or if your health has changed since you selected the policy.

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Switching to a plan with a lower deductible is worth considering "if you bought a plan a month ago with a high deductible because you didn't expect to incur much in medical costs but have since been told that, for example, you need to have surgery on a knee or that your chest pains are something more serious than heartburn," says Jeff Smedsrud, CEO of Healthcare.com, which offers tools to help choose a health plan.

It's also worthwhile to check out your options if you became pregnant after you selected your policy. Maternity expenses are covered as "essential benefits" under all individual policies but can have very different levels of deductibles and co-pays, says Smedsrud.

Also consider a new policy if your income is below 250% of the federal poverty level ($29,425 if single or $60,625 for a family of four) and you didn’t buy a silver-level policy. At this income level, you qualify not only for a subsidy to help with premiums but also a cost-sharing subsidy that reduces your deductibles, coinsurance and co-payments when you receive care. But you can get this extra break only if you buy a silver-level policy. A study by Avalere Health found that in 2015, more than 2 million people who bought coverage on the exchanges and were eligible for this cost-sharing subsidy weren’t receiving that extra benefit because they didn’t sign up for a silver policy. A bronze policy may have lower premiums, but your overall expenses may be lower with the silver policy and the extra subsidy. See Save on Obamacare With This Overlooked Cost-Sharing Subsidy.

Go to HealthCare.gov for links to your state’s health insurance exchange, where you can compare premiums and out-of-pocket costs for the plans in your area. See 7 Steps to Choose the Best Obamacare Health Insurance Plan for 2016 for more information about choosing a plan.

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