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If you’ve missed the ACA’s enrollment deadline, SEPs may hold the answer

A Picture of Alex Hitcherson Alex Hitcherson
12/10/2015

The 2016 Open Enrollment Period (OEP) began on Nov. 1, 2015, and runs through Jan. 31, 2016. Come February, those Americans who have not enrolled in an approved health insurance plan, whether through the Federal Marketplace or a private company, may face an IRS-imposed tax penalty.

Fortunately, the Obama Administration has made provisions, in the form of a Special Enrollment Period (SEP). Occurring outside of the regular open enrollment period, SEPs are federally approved extension periods. They provide you and your family with an additional chance to enroll, thereby avoiding the penalty for missing the OEP deadline.

One important thing to know is that you actually have to qualify for SEPs. This applies to Affordable Care Act (ACA)-compliant, employer-based and Medicare plans. But as previous years have shown, many Americans have eagerly taken the necessary qualifying steps. As of yet, no Special Extension Period has been announced for the 2016 OEP. Regardless, enrollees will likely welcome the additional opportunities to purchase coverage.

The effects of missing the OEP deadline

The OEP was designed to provide ample time for enrollees and their families to carefully research and make plan selections. But while there are three months available, you actually need to purchase a plan by Dec. 15, 2015. This will enable your coverage to begin on Jan. 1, 2016.

In regard to the potential tax penalty, these amounts have increased from 2015. For 2016, the penalty will be the greater of:

  • $695 per adult and $347.50 per child, for a maximum of $2,085 per family
  • 2.5 percent of your income above the tax filing threshold

Beyond the penalties’ financial burden, failing to enroll during the OEP can have other, serious consequences. You could end up without any coverage at all, forcing you to pay out of pocket for any health issues. And whether minor or major, these can impact your budget, now and in the future.

Or, faced with the looming deadline, you may be forced to make a snap decision. And that means that you could end up a worse policy than your current one. That could mean fewer benefits, higher costs, restrictions on doctors and little or no prescription drug coverage.

Qualifying life events can take their toll

Despite our best intentions, and even with a three-month window, millions fail to enroll in annual coverage. But that’s where the Special Enrollment Period comes to the rescue. The 2015 SEP period ran from Feb. 23- April 30, 2015. During this period, an estimated 944,000 beneficiaries signed up through the Federal Marketplace either utilizing private exchanges managed by private companies, licensed agents and brokers or going directly to the Federal Marketplace.

By the way, this OEP only applies to Americans who purchase their own Affordable Care Act (ACA)-compliant plans. For those with employer-based plans, 30-day SEPs must be provided, offering no less than 30 days of coverage until a Marketplace policy is purchased.

You will actually have to qualify for an Obamacare SEP. Typically, this means waiting until 60 days after a Qualifying Life Event (QLE) has occurred. However, most SEPs may allow beneficiaries to enroll up to 60 days before the QLE, thereby avoiding any coverage gaps. QLEs are changes in family status or those resulting in the loss of health coverage. Under the ACA, these events may qualify you for a 60-day SEP following the QLE. Examples of these events include:

  • Childbirth, adoption, foster care — If you enroll within the 60-day period, new coverage starts on the day of the birth, adoption, or placement. This coverage applies to those who enroll in the 2015 coverage during 2016, as well.
  • Marriage — If you get married on or before Nov. 30, 2015, you can enroll in an insurance plan that starts Dec. 1, 2015. But if you get married Dec. 1 or later, you’ll have to fill out an application for 2016; coverage will start on Jan. 1, 2016. This applies to divorce, as well.
  • Loss of coverage -– Those who leave a job can enroll in a plan that starts Dec. 1, 2015. This also applies to losing any coverage on or before Nov. 30, 2015. This includes ACA, employer-sponsored or private plans and COBRA plans. New plans must be selected on or before Nov. 30, 2015. For coverage lost Dec. 1 or later, a 2016 application is required, with coverage starting Jan. 1, 2016. However, this does not include voluntarily quitting other coverage or being terminated for not paying premiums.
  • Losing coverage not considered minimum essential coverage also fails to qualify. Under the ACA, minimum essential coverage is that meeting the law’s individual responsibility requirements. This includes Marketplace and private policies, Medicare, Medicaid, CHIP and TRICARE, healthcare for active-duty and retired uniformed services members and their families. Those with this coverage don’t have to pay the uninsured fee.
  • Medicaid or CHIP changes – You may qualify if found ineligible for Medicaid or the Children’s Health Insurance Program (CHIP), the joint federal-state health insurance program for low-income children.
  • Marketplace plan changes, including not being enrolled, enrolling in the wrong plan and any related plan contract violations.
  • Changes in income affecting payment for coverage, including qualifying or disqualifying for subsidies. This includes those who are newly determined to be eligible or ineligible for advance payments of the premium tax credits or cost-sharing reductions.
  • Experiencing domestic abuse, violence or spousal abandonment; i.e., you may want to enroll in your own health plan separate from your abuser or abandoner.
  • Hardships preventing enrollment – This includes events such as natural disasters or serious medical conditions occurring during the OEP.
  • Changes in citizenship, including gaining status as a citizen, national or lawfully present individual. One particular area of focus is gaining or maintaining status as a member of a federally recognized tribe or Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder.
  • Relocating to a new state – This includes states that haven’t expanded Medicaid or those with new Marketplace plan options.
  • Leaving incarceration

While the above list is extensive, you may experience some situation or event not covered. You may want to contact your local agent for more information or feel free to call the phone number on this website.

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