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New 2016 CMS Requirements For Qualifying Life Event In Order To Enroll In Obamacare After 1/31/2016 Deadline

Many consumers within the US may have missed the 2016 enrollment deadline for health insurance or Obamacare, which is the more commonly used term to describe “on-exchange” health plans. These are plans allow eligible individuals to receive subsidies to help pay for the cost of their required health insurance. Unless someone has what is called a “qualifying life event”, they might not have much of a choice when it comes to receive coverage. Short term health insurance is in fact an option that hundreds of thousands are currently enrolling in, however those plans are not compliant with the individual mandate, also know as the tax penalty. So while you still can get coverage to help you with any of your medical or health insurance needs, it will not prevent one from having to pay the tax penalty.

Many insurance carriers were finding that consumers were enrolling outside of the open enrollment window simply by taking advantage of the less than strict requirements to prove that one had a qualifying life event. Now it seems that CMS, the governing entity in charge of health insurance regulations, has heard loud and clear the complaints of health insurance carriers who are losing hundreds of millions of dollars annually on Obamacare plans. As such, CMS has just announced new eligibility requirements that the intent of which is to tighten up some of the loose regulations.

CMS Requirements for SEP, or Enrolling In A Health Insurance Plan Outside of Open Enrollment

Quick Summary of the New Requirements to Enroll in Health Insurance Outside of the Open Enrollment Period for 2016.

CMS wants to control the number of people who are enrolling in health insurance outside of the Open Enrollment Period when they should not be because they do not actually have a Qualified Life Event. The purpose of the new requirements is also to curb abuse and misuse of the SEP process.

If you experience one of the following Qualified Life Events outside of the Open Enrollment Period, you will have to provide documentation proof that the event occurred. CMS has also limited the scope of a couple of these life events, which will be explained when enrolling.

  • Loss of minimum essential coverage
    • New Limitation: does not apply to people who lost coverage due to nonpayment of premiums.
    • Documentation proof will be required
  • A permanent move
    • New Limitation: Does not apply to people who are moving to a new location for medical
    • Documentation proof will be required
  • Birth
    • Proof such as birth certification will be required
  • Adoption, placement for adoption, foster care, child support or some other court order
    • Proof such as court order will be required
  • Marriage
    • Proof such as marriage certificate will be required

CMS warned that if a consumer ignores its request to provide such documentation, coverage may be canceled and that person may be subject to the tax penalty for being uninsured.

CMS also stated that they will elicit the comment and feedback of carriers and consumer advocates to determine if their methods and instructions are effective and sufficient to control the number of people who are abusing the SEP system.

Details of the New CMS Requirements For Enrollment Outside Of Open Enrollment Period

The 2016 Open Enrollment Period closed out officially on January 31, 2016. CMS (The Center for Medicare & Medicaid Services), which manages the Federal Marketplace on Healthcare.gov and the overall process and implementation of the Affordable Care Act, along with HHS (Department of Health and Human Services), called this past season a huge success after 12.7 million people enrolled in coverage nationwide either through a state exchange or the Federal Marketplace or reenrolled in their 2015 plans.

Unlike previous years where CMS announced a broader and longer extension to the Open Enrollment Deadline to allow people in particular circumstances to enroll after the traditional deadline passed, this year was met with a short, limited and not widely broadcasted extension for people who who received subsidized health insurance in 2014 but did not file their federal income taxes on or before April 15, 2015 and were deemed unable to enroll in a health insurance plan during the 2016 Open Enrollment Period until they did file their 2014 federal taxes.

Another change with the 2016 season that differs from past seasons is that CMS is cracking down on the types of Qualifying Life Events (QLE) that can lead to a Special Enrollment Period (SEP). In previous years, people were able to enroll in health insurance or change their current plans outside of the Open Enrollment Period for reasons that loosely met the then established QLE’s. This meant that insurance carriers would have to cover new enrollees even when they did not budget for this business initially. Additionally, many of the people who were enrolling in plans during SEP were doing so because they needed medical coverage. This means that these new enrollees had more medical costs right away that carriers had to cover despite not receiving any premium payments from them during the prior months of that calendar year.

It’s no secret that insurance carriers wanted CMS to be stricter about the types of Qualifying Life Events that would result in an SEP. On February 24, 2016, CMS released a memo about the new Special Enrollment Period confirmation process that would be in effect from that day forward to combat the number of people who abused the SEP process by enrolling in health insurance outside of Open Enrollment when they did not qualify for a QLE.

During the spring and summertime, CMS will reach out to consumers who stated that they qualified for an SEP due to one of the following QLE events and require proof that the event actually happened. These QLEs are:

  • Loss of minimum essential coverage
  • A permanent move
  • Birth
  • Adoption, placement for adoption, foster care, child support or some other court order
  • Marriage

CMS reasoned in their memo that these QLEs were chosen because they represent 75% of the QLEs used by consumers in 2015 to enroll during the SEP.

The “permanent move” QLE is one of the QLEs that CMS limited this SEP season. CMS and insurance carriers found that in past years, people were claiming that they experienced a permanent move and enrolled outside of OEP even if they were only relocating for a shorter period (a few weeks or months) to a rehabilitation facility or some other temporary medical facility. Neither the insurance carrier or CMS intended for this type of move to qualify as a “permanent move” and prompted CMS to clarify the QLE. In the coming weeks, people who tried to enroll during SEP because they experienced a permanent move will see additional instruction that they should not choose this option if they are only moving for medical treatment or for vacation.

“Loss of minimum essential coverage” is another QLE that was clarified for this SEP season. If a person tries to click on this option when enrolling in a plan, they will be provided further instruction that this is not an option if they actually loss coverage due to non-payment of their premium.

If a consumer records that they qualify for a SEP due to one of these five events, they will be required to provide certain documentation such as a court order, a marriage certificate or birth certificate. If a consumer ignores the request to provide these documents, their insurance plan will be canceled and they may have to face the tax penalty for being uninsured.

Additionally, when they are enrolling for a plan during SEP, CMS will now require the consumer to confirm that:

  • they understand that they must provide truthful responses to the questions about their QLE; and
  • they may have to provide documents proving their QLE event; and
  • failure to provide those documents may result in loss of coverage.

Another point to take away from the CMS memo is that they are going to work with interested parties in the industry such as insurance carriers and consumer advocates to determine whether their efforts are not only effectively being communicated to consumers, but also whether it’s enough to meet the goals, which are again to stop any misuse of the SEP process. Depending on the feedback, CMS may find other ways to control the number of people who are wrongfully enrolling in a plan during SEP when they are not actually qualified.

While these restrictions might be viewed negatively by some individuals who may have missed the deadline, or whom did not intend to pay for health insurance coverage year round, tighter restrictions like these are quite necessary if health insurance carriers hope to be able to remain within the marketplace and continue to offer “Obamacare Plans” after 2016.

For more information on CMS announcement please see their official statement at the following link. Should you want to speak with a licensed health insurance professional to determine if you are eligible please use our toll free number listed within this website.

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