Article last updated on November 2017
The Affordable Care Act (ACA) was established to provide Americans with access to high-quality health insurance. Since the ACA became law in 2010, millions of people have gained access to health care coverage. This has dropped the nation’s uninsured rate to 12.3 percent among adults aged 18 or older, enabling beneficiaries to visit their choice of healthcare providers and facilities.
Plan enrollment must occur during the open enrollment period (OEP), which will run from November 1, 2017 through December 15, 2017 for the 2018 enrollment season. This applies to both existing and new policyholders. During this window, you can review and select a variety of plans. But once the open enrollment deadline passes, those left uninsured may face the individual shared responsibility payment, which requires those without minimum essential coverage to pay tax penalties.
What happens if you miss the open enrollment deadline this year? The only option for enrollment after the OEP has ended is being granted a special enrollment period (SEP). An individual SEP allows people to change plans, enroll in new coverage and apply for subsidies if you meet the income requirements. To qualify, you must experience a specific set of circumstances, known as a qualifying life event (QLE). These events enable you to purchase coverage at any time of the year within certain parameters.
Understanding the SEP Process
While the SEP enrollment window generally begins 60 days after your specific qualifying life event occurs, the government does allow enrollment up to 60 days before the event happens as well so that there’s no lapse in coverage. An SEP’s length and description may vary depending on the specific QLE. This will be discussed in detail in the following section. During previous signup periods, the government has held official SEPs due to problems affecting sign-ups, such as technical issues or consumer difficulties.
For 2018 open enrollment, a special enrollment period exists for people who were affected by the series of hurricanes that struck the U.S. in early fall. If you live in one of the hurricane-impacted areas, then you have until December 31 to sign up for coverage. You will need to call the marketplace directly to request this SEP.
Qualifying Life Events – A Closer Look
Now, let’s focus on all of the possible qualifying life events that are allowed by the government. Certain events allow a person to enroll up until 60 days after the event occurs, but some have other deadlines. The most common QLEs include:
Gaining or losing a dependent: This includes birth, adoption, or putting a child up for adoption or foster care. Generally, a 60-day extension period is provided, with the SEP beginning on the day of the event. The start date is backdated to the actual event, but parents can select a later effective date. During this SEP, applications are accepted for the entire family (including siblings), meaning that even if there is only one new addition to the family who needs insurance, the entire family can change the plan or enroll in health insurance for the first time that year.
Turning 26 years old: Under the ACA, young adults up to age 26 can stay on their parents’ health plans. However, you don’t have to get a new health plan if you turn 26 before the end of a calendar year. You can wait until the plan’s coverage ends on December 31. Open enrollment for 2018 starts on November 1, which is when you’ll need to start enrolling in a health plan of your own.
Pregnancy: While the ACA does not have a pregnancy QLE, if you are going to lose your Medicaid coverage because you are pregnant, you can enroll in a regular health insurance plan during the special enrollment period, which lasts until the 60th day after you are dropped from Medicaid.
Marriage: If you get married, there’s a 60-day special enrollment period beginning on the date of your wedding. This SEP applies to both you and your spouse even if one or both of you are already insured.
Divorce: Like marriage, divorce-based SEPs can be triggered for lost coverage, and the same time frame applies (60 days after the date of the divorce). Parents could be ordered by the court to obtain health insurance in a custody agreement. If so, they can apply for coverage starting on date of the court order.
Death: If you experience a death in the family, the entire immediate family will be eligible for a special enrollment period to get new coverage. You can also check for eligibility for subsidies during this SEP. This period will last for 60 days following the passing of the family member.
Loss of coverage: Under the ACA, you can qualify for an SEP if you lose coverage that counts as minimum essential coverage (also known as an ACA-compliant plan). This also applies if the policy becomes unaffordable, meaning that a marketplace plan costs more than 8.16 percent of your income. If you get your coverage through work and the portion that you pay costs more than 9.69 percent of your income, then this SEP also applies. However, an SEP won’t be issued for those voluntarily leaving their jobs or being terminated for not paying premiums. This QLE applies to:
- Plans purchased from the federal marketplace or a state exchange
- Plans purchased from a carrier or through an agent, broker or independent health insurance marketplace
- Losing your job-based health insurance plans
- Losing your COBRA benefits
- Losing your Medicaid, CHIP or TRICARE (health insurance for active-duty and retired uniformed services members and their families) health insurance plan
This Qualified Life Event generally does not apply to a short-term health insurance plan. If you lost your health insurance from your job, you only have a 30-day special enrollment period to get a new health insurance plan with or without subsidies. All of the other circumstances that resulted in a loss of health insurance coverage covered under this section have a 60-day SEP. The new plan’s start date may depend on when you enroll:
- If completed before coverage is lost, it takes effect on the first of the month following the loss of coverage, regardless of the enrollment date. For example, if a plan ends March 31, you can select new coverage February or March, with the new plan starting on April 1.
- If completed after coverage is lost, the new plan may begin on the first day of the following month, regardless of the enrollment date. Alternately, it may begin on the normal date, which is typically the 15th of the month, with the new coverage taking effective the first day of the following month.
Grandfathered plans: Grandfathered plans are private or job-based health insurance plans that existed on or before March 23, 2010 (the date that the ACA was signed into law). These plans don’t include many of the protections that ACA-compliant plans have. You can’t buy a grandfathered plan anymore, but if you had one before the new law took effect, then you can keep it for as long as your insurer (or job) allows you to enroll. If your plan gets cancelled, updated or changed in a way that financially impacts you, then you have a special enrollment period during which you can sign up for a new plan on or off the marketplace.
Income changes: Consumers experiencing a change in income may qualify for an SEP. It applies whether they become eligible or ineligible for any premium tax credits or subsidies provided during a previous OEP. Previously, this SEP only applied to those already enrolled. But the Department of Health and Human Services (HHS) issued an SEP targeted at people in states not expanding Medicaid as well. Generally, this qualifying life event applies to those with changes to their income that caused an increase or decrease of at least 100 percent of the Federal Poverty Level (FPL).
Even if you don’t want to change your coverage, it’s important to report the change in income and adjust the subsidy amount received, especially if you are now eligible for a lesser subsidy than you were when you first enrolled. If the IRS determines that you received a bigger subsidy than you should have received based on your federal taxes for that calendar year, then you’ll owe that money back to the IRS. This money will either be deducted from your federal income tax refund or will be added to the amount that you owe the government on your taxes.
In addition to a change of income that allows a person to receive a greater or lesser subsidy, if the person or family is now eligible for Medicaid or CHIP, or ineligible for Medicaid or CHIP due to the change in income, a special enrollment period will result as well. In either scenario, a 60-day SEP will begin on the date that the income change begins.
Moving your permanent address: If you are permanently moving to a new region within your state and you are told either beforehand or after the move that your insurance carrier does not offer coverage in that new area, you will qualify for a 60-day special enrollment period that begins on the date that you moved.
If you permanently move to a new state, you will trigger an SEP even if your insurance carrier offers the same or similar coverage in the new state. This means that if you want to change your plan or carrier, you can do so during this SEP. If you’re currently on Medicaid but move to a state that hasn’t expanded Medicaid under the ACA, and you lose coverage as a result, then you will also get a special enrollment period when you move. This SEP, which runs for 60 days from the date that you moved, will allow you to enroll in a health insurance plan and get subsidies to help you pay the monthly bill.
Moving to a hospital for treatment in another area is not considered permanent relocation, and an SEP would not be issued. Those moving temporarily to a new location are also ineligible. But people with homes in more than one state (e.g., retirees) can establish residency in both states and switch policies to coincide between their homes.
Hardships and issues preventing enrollment: The hardship provision covers situations like natural disasters or serious medical conditions that occur during the open enrollment period. You may also be eligible for this QLE if errors or problems affecting enrollment (or non-enrollment) were the fault of the HHS, the exchange or a person assisting with your enrollment (a Navigator). If so, an SEP would be issued, allowing you to properly enroll or change your coverage. In addition, you may qualify for an SEP due to issues related to enrollment (e.g., the wrong plan was purchased or plan contract violations occurred).
Domestic abuse, violence or spousal abandonment: Under this QLE, survivors may choose to enroll in an individual health plan that is separate from their abuser or abandoner. Those found eligible, including their dependents, have 60 days to enroll in a plan. People married to their abusers or abandoners can also mark that they’re “unmarried” on their application. This allows beneficiaries to qualify for premium tax credit and other income-based plan subsidies.
Changes in citizenship: Among the people who may be eligible for this QLE are those who have gained status as a U.S. citizen, national or lawfully present individual. However, this only applies to policies offered within the marketplace. Insurance carriers can decide whether or not they want to offer special enrollment periods for exceptional circumstances, like gaining citizenship. If you buy coverage outside of the marketplace, you can’t get federal subsidies to help offset the cost.
Change in status as a Native American/Alaska Native or Tribal Member: In particular, this QLE affects those gaining or maintaining status as members of a federally recognized tribe or Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder. The exchanges provide Native Americans with year-round enrollment; plan changes can be made up to once per month as well. If enrollment is completed by the 15th of the month, or a later date for state-run exchanges, the coverage begins the first of the following month.
Leaving incarceration: Those leaving prison, jail or detention may be eligible for special enrollment periods once they’re released, but not during incarceration. This SEP provides 60 days to enroll in coverage and apply for subsidies. This QLE doesn’t apply to those on probation, parole or home confinement. And if you’re being held for but not convicted of a crime, you aren’t eligible for this SEP either. You can enroll in Medicaid while incarcerated; once released, you may receive coverage more quickly.
What does it mean to have an ACA-compliant plan?
Enrolling in an ACA-compliant plan ensures that coverage meets minimum essential coverage guidelines. Under the law, every health insurance plan that is ACA-compliant must offer several benefits and features, including no annual or lifetime caps on essential benefits coverage for all applicants regardless of pre-existing condition. The 10 essential benefits now covered by every qualifying major medical plan are:
- Ambulatory services (outpatient care)
- Emergency services
- Pregnancy, maternity and newborn care (before and after birth)
- Mental health services and services for substance abuse disorders, including behavioral health treatment (e.g., counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive services, wellness screenings and chronic disease management
- Pediatric services, including dental and vision care
As long as you’re covered by an ACA-compliant plan, you won’t have to pay the tax penalties. While hardship exemptions are available, those found to be uninsured for longer than three months in a year will pay the tax penalty, which in 2017 was the greater of $695 per adult and $347.50 per child (for a maximum of $2,085 per family) or 2.5 percent of your taxable household income. The penalty tax increases each year with inflation.
Your ACA plan will also follow established limits on cost-sharing, including your deductible, which is the threshold that you have to meet before your insurer covers its portion of the cost; copayments, which are fixed amounts that you pay for covered services; and the out-of-pocket maximum, which is the most that you’ll pay out of pocket in a plan year. The majority of Americans enrolling in ACA-compliant plans actually qualify for tax credits that help offset the cost of premiums, which you can read more about on our article on the costs of Obamacare.