Buying health insurance outside of open enrollment
- Native Americans and people eligible for Medicaid/CHIP can enroll year-round.
- If you’ve got a qualifying event, you can enroll in coverage.
- If none of those apply, a short-term plan is the closest thing to real insurance.
- New federal regulations allow a short-term plan (with renewals) to last up to 36 months.
Open enrollment for 2018 coverage ended on December 15, 2017 in most states, marking the first time that open enrollment ended before the start of the new year. About 11.8 million people selected plans through the exchanges during open enrollment, in addition to an unknown number of people who had selected off-exchange plans. (These are not tracked as closely as on-exchange plans, but nearly 6 million people had off-exchange ACA-compliant coverage in 2017.)
But there are still millions of Americans who don’t have coverage, and the uninsured rate has been increasing throughout 2017 and 2018, due to the Trump Administration’s approach to health care reform.
If you don’t have health insurance, you may have to wait until November to sign up for a plan that will take effect in January. But you may find that you can still get coverage this year. Let’s take a look.
Native Americans, those eligible for Medicaid/CHIP can enroll year-round
Native Americans can enroll in exchange plans year-round.
And people who qualify for Medicaid or CHIP can also enroll at any time. Income limits are fairly high for CHIP eligibility, so be sure you check your state’s eligibility limits before assuming that your kids wouldn’t be eligible — benefits very much extend to middle-class households.
And in states where Medicaid has been expanded, a single individual earning up to $16,753 can enroll in Medicaid in 2018.
A qualifying event at any time of the year will likely to allow you to enroll
Applicants who experience a qualifying event gain access to a special enrollment period (SEP) to shop for plans in the exchange (or off-exchange, in most cases) with premium subsidies available in the exchange for eligible enrollees.
HHS stepped up enforcement of special enrollment period eligibility verification in 2016, and further increased the eligibility verification process in 2017. So if you experience a qualifying event, be prepared to provide proof of it when you enroll.
And although a permanent move to an area where different health plans are available used to trigger a SEP regardless of whether you had coverage before the move, that’s no longer the case. You must have coverage in force before your move in order to qualify for a SEP in your new location. The same is true of getting married: In most cases, at least one spouse must have already had coverage in order for the marriage to trigger a SEP.
But without a qualifying event, health insurance is not available outside of general open enrollment, on or off-exchange. (Nevada is an exception: off-exchange plans in Nevada are available for purchase year-round, but the carrier can impose a 90-day waiting period before coverage takes effect).
Unfortunately, this fact has caught many people by surprise over the last few years. And the open enrollment schedules have changed nearly every year for the first five years of ACA implementation, which further added to the confusion.
The first open enrollment period was six months long; the second and third were both three months, but the dates were different. And while the fourth open enrollment period followed the same schedule as the third, the fifth (for 2018 coverage) was dramatically shorter than open enrollment had been in prior years.
If you’re curious about your eligibility for a special enrollment period, call (844) 428-3344 to discuss your situation with a licensed insurance professional.
Shortened open enrollment schedule may have caught people off guard
For 2018, HHS had originally planned to keep the same November 1 – January 31 schedule, but a market stabilization rule finalized in April 2017 shortened open enrollment for 2018, scheduling it to run from November 1 to December 15 in 2017 (the same schedule that was already planned for 2019 coverage and beyond).
The change was not without controversy, as there was disagreement in terms of whether the shorter open enrollment period for 2018 coverage would ultimately have a market stabilizing effect. California’s Insurance Commissioner, for example, believes it will do the opposite. (California was one of three state-run exchanges that opted to keep the full three-month open enrollment period for 2018 coverage, and has codified a three-month open enrollment into state law for future years.)
Compounding the shorter open enrollment period was the Trump Administration’s decision to drastically cut funding for outreach, marketing, and enrollment assistance for the federally run exchange. Although the Obama Administration had already planned to switch to a shorter enrollment period in the fall of 2018, the assumption was that a Democratic administration would have maintained or increased federal funding to support enrollment — they almost certainly would not have cut it.
However, despite the shorter open enrollment period and the drastic reduction in federal funding for outreach and marketing, enrollment in HealthCare.gov ended up only slightly lower than it had been in 2017. Grassroots advocates across the country worked to educate people about open enrollment and the options available to them, and the larger premium subsidies (due to the way the cost of cost-sharing reductions was added to silver plan premiums in most states) made coverage for 2018 more affordable than it had been in past years for millions of enrollees.
The closest thing to ‘real’ insurance if you missed open enrollment
For people who didn’t enroll in coverage by the end of open enrollment, aren’t eligible for employer-sponsored coverage, and aren’t expecting a qualifying event later in the year, the options for 2018 coverage are limited to policies that are not regulated by the ACA. This includes short-term health insurance, some limited-benefit plans, accident supplements, critical/specific-illness policies, dental/vision plans, and medical discount plans.
Some of these policies are a good supplement to regular major medical health insurance. But most of them are not a good option to serve as stand-alone medical coverage—except short-term health insurance, which is available in all but five states (in addition to those five states, Hawaii enacted legislation in 2018 that will all but eliminate short-term plans in the state).
Short-term coverage is the closest thing you can get to “real” health insurance if you find yourself needing to purchase a policy outside of open enrollment without a qualifying event. Since March 31, 2017, short-term plans have been capped at three months in duration, due to an Obama Administration regulation that was finalized in late 2016 and took effect in 2017. This regulation is still in place, but HHS has finalized new rules that will reverse it as of October 2018.
The Obama-Administration HHS implemented the regulation to cap short-term plans at three months in an effort aimed at “curbing abuse” of short-term plans. At that point, under HHS Secretary Sylvia Matthews-Burwell, HHS noted that short-term plans are exempt from having to comply with ACA regulations specifically because they’re supposed to only be used to fill gaps in coverage — but instead, people had been using them for up to a year at a time, which effectively removes healthy people from the ACA-compliant risk pool, destabilizing it over the long-run.
In 2017, several GOP Senators asked HHS to reverse this regulation and go back to allowing short-term plans to be issued for durations up to 364 days. And the Trump Administration confirmed their commitment to rolling back the limitations on short-term plans in an October 2017 executive order. The new rules that HHS finalized in August 2018 (and which will take effect in October 2018, 60 days after being published in the Federal Register) implement the following provisions:
- Short-term plans will be allowed to have initial terms of up to 364 days.
- Renewal of a short-term plan will be allowed as long as the total duration of a single plan doesn’t exceed 36 months (people will be able to string together multiple plans, from the same insurer or different insurers, and thus have short-term coverage for longer than 36 months, as long as they’re in a state that permits this).
- Short-term plan information will have to include a disclosure to help consumers understand the potential pitfalls of short-term plans and how they differ from individual health insurance.
Several states already limit short-term plans to six months (or shorter durations, in some states), and those state regulations will still apply, even after the federal rules take effect.
Although premium subsidies are not available for short-term plans, the retail prices on these policies are more affordable than the retail price (ie, unsubsidized) on ACA-compliant plans, and they do still serve as a good stop-gap if you just need the policy to cover you for up to three months when you’re in between other policies. However, if your income makes you eligible for the Obamacare premium subsidies, it’s essential that you enroll through your state’s exchange during open enrollment (or a special enrollment period triggered by a qualifying event like losing access to your employer-sponsored health insurance); otherwise, you’re missing out on comprehensive health insurance and a tax credit.
Some short-term plans have provider networks, but others allow you to use any provider you choose. Unlike ACA-compliant plans, short-term policies have benefit maximums. But the limits on some short-term plans are more reasonable than the infamous “mini-med” plans that barely covered a few nights in the hospital.
Lifetime maximums of $750,000 to $2 million are common on short-term plans. While this is not as good as regular individual insurance plans that no longer have annual or lifetime benefit caps, it’s roughly similar to a lot of the plans that were available just a few years ago in the individual market. And the concept of a “lifetime” limit doesn’t really matter when you’re talking about a plan that lasts for at most 36 months (the maximum amount of time a single plan can remain in effect under the new federal rules), since you won’t be able to purchase another short-term plan if you develop a serious health condition.
But you’ll see plenty of short-term policies with much lower benefit limits. Ignore the options with benefit caps of $50,000 or $100,000. Pay attention instead to the plans that offer at least $1 million in benefits — health care is shockingly expensive).
Short-term insurance applications
The application process is very simple for short-term policies. Once you select a plan, the online application is much shorter than it is for standard individual health insurance, and coverage can be effective as early as the next day.
There are no income-related questions (since short-term policies are not eligible for any of the ACA’s premium subsidies), and the medical history section is generally quite short – nowhere near as onerous as the pre-2014 individual health insurance applications were.
Keep in mind that although the medical history section generally only addresses the most serious conditions in order to determine whether or not the applicant is eligible for coverage, short-term plans generally have blanket disclaimers stating that no pre-existing conditions are covered.
To be clear, short-term plans are not as good as the ACA-regulated policies that you can purchase during open enrollment or during a special enrollment period. Short-term insurance is not regulated by the ACA, so it doesn’t have to follow the ACA’s rules:
- The plans still have benefit maximums, and they are not required to cover the ten essential benefits. (Most often, short-term plans don’t cover maternity, preventive care, or mental health/addiction treatment), they do not have to limit out-of-pocket maximums, and they do not cover pre-existing conditions. They also still use medical underwriting, so coverage is not guaranteed issue.
- Also, the majority of short-term plans do not cover outpatient prescriptions. Using a pharmacy discount card may lower medication costs without health insurance, and some discount prices may be lower than an insurance copay.
Not a qualifying event: losing short-term coverage
Although loss of existing minimum essential coverage is a qualifying event that triggers a special open enrollment period for ACA-compliant individual market plans, short-term policies are not considered minimum essential coverage, so the loss of short-term coverage is not a qualifying event (loss of a short-term plan is a qualifying event for employer-sponsored coverage, however, so you’d be able to enroll in a new employer’s plan when you short-term plan ends). Let’s say you lose your job and your employer-sponsored health plan. You then have a 60-day window during which you can enroll in an ACA-compliant plan.
You also have the option to buy a short-term plan at that point (and starting in late 2018, you may have the option to purchase a plan that will last nearly a year, depending on where you live). But when the short-term plan ends, you would no longer have access to an ACA-compliant plan (you’d have to wait until the next open enrollment, and a plan selected during open enrollment would become effective on January 1) and although you could purchase another short-term plan, your eligibility might depend on your current medical history. Some insurers will offer guaranteed renewability under the new federal rules, meaning that people will be able to renew the plan, without going through medical underwriting, and keep it for up to 36 months. But not all insurers will offer this option, and it will certainly be more expensive than traditional non-renewable short-term plans.
In addition, since short-term health insurance is not considered minimum essential coverage, you’ll still be on the hook for the ACA’s shared responsibility penalty if you rely on a short-term plan for your coverage in 2018. There’s an exemption from the penalty if you only have a short gap in coverage that lasts no more than two months (you could have a short-term plan during that two months and would not be subject to the penalty). The penalty is still in place as of 2018, but it will no longer apply in 2019 or beyond, as it was repealed (effective in 2019) in the GOP tax bill that was implemented in 2017.
Although short-term plans do not provide the level of coverage or consumer protections that the new ACA-compliant plans offer, obtaining a short-term policy is better than remaining uninsured. But your best bet is to maintain coverage under an ACA-compliant policy; if you’re not enrolled, you’ll want to do so if you experience a qualifying event (most people don’t take advantage of their qualifying events, perhaps unaware that their opportunity to enroll is limited).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.