Key takeaways
- If your insurer exits the market at year-end, you qualify for an SEP.
- Loss of coverage due to rescission does not count as a qualifying event.
- If you leave your job and, as a result, lose your health insurance, you’re eligible for an SEP in the individual market.
- You qualify for a special enrollment period even if you have an option to keep your coverage with COBRA.
- Effective date rules depend on whether you apply before your old plan ends or after it ends.
Involuntary loss of coverage is a qualifying event that triggers a special enrollment period. If you lose your plan, you’ll have a chance to enroll in a new health insurance plan, either on or off the exchange in your state. Here’s how it works:
A major provision of the American Rescue Plan ensures that most Americans who receive at least one week of unemployment compensation at any time in 2021 will be able to buy a Silver health plan with $0 premiums.
The coverage you’re losing has to be considered minimum essential coverage. So if, for example, your short-term plan is ending, that doesn’t count as loss of coverage, since a short-term plan is not considered minimum essential coverage.
(An exception to this rule has to do with loss of pregnancy-related Medicaid coverage, CHIP unborn child, and Medically Needy Medicaid. These are not considered minimum essential coverage, but their termination does trigger a special enrollment period; in 2018, HHS updated the rules to also allow a pregnant woman with only CHIP coverage for her unborn child — but technically no coverage for herself — to qualify for a loss of coverage SEP for herself when the unborn child CHIP coverage ends. These exceptions were clarified in rules that HHS published in 2019.)
(Another note: Although this guide applies to special enrollment periods in the individual market, it’s worth noting that the termination of a short-term plan does trigger a special enrollment period for employer-sponsored coverage (see page 51 here). So if you have access to an employer’s plan and your short-term plan is ending, you’ll be able to enroll in the employer’s plan at that point.)
It’s important to clarify that plans can be considered minimum essential coverage even if they’re not compliant with the ACA. Grandmothered and grandfathered plans count as minimum essential coverage, but do not have to be ACA-compliant. If those plans terminate, the insured has access to a special enrollment period.
Loss of coverage due to rescission does not count as a qualifying event. Rescission is relatively rare now that the ACA has been implemented, but the law does still allow for rescission in the event of fraud or intentional misrepresentation on the part of the insured. (Post-claims underwriting and rescission are still used by short-term health insurance plans, but again, the termination of a short-term plan — for any reason — does not trigger a SEP in the individual market; note that Idaho’s enhanced short-term plans do allow enrollees who have had coverage for at least 11 months to transition to the same carrier’s ACA-compliant plans when their short-term coverage is ending.)
But other than rescission, “involuntary” loss of coverage just means that you didn’t cancel the plan yourself, or lose your coverage because you stopped paying premiums.
If you lost your employer-sponsored health insurance in 2021, you’ve got options that include subsidized individual-market coverage.
Most non-elderly adults have coverage through an employer-sponsored plan. If they leave their employer – voluntarily or involuntarily – and lose access to their employer-sponsored health insurance as a result, that’s considered involuntary loss of coverage.
So if you choose to leave your job and as a result lose your health insurance, you’ve got access to a special enrollment period to get a new plan in the individual market.
Do I qualify for a special enrollment period even if I have an option to election COBRA?
Yes. The special enrollment period applies even if you have the option to continue your employer-sponsored plan under COBRA. You can choose to elect COBRA, or you can use your special enrollment period to pick a new plan in the individual market. Your special open enrollment begins 60 days before your employer-sponsored policy ends, and continues for another 60 days after the plan would have ended, even if you had an option to extend your coverage with COBRA.
In the early days of ACA implementation, electing COBRA essentially waived the remainder of the person’s special enrollment period. But HHS changed this in late 2016, when they realized that some people were electing COBRA very soon after leaving their jobs (perhaps even during their exit interviews), without a good understanding of what their options are. So the new rules allow people to have their full special enrollment period (including 60 days after the date their coverage would have ended if they hadn’t elected COBRA) regardless of whether they elect COBRA or not.
This is codified in 45 CFR 155.420(e), which clarifies that the loss of coverage special enrollment period for individual market plans applies in various situations that pertain to special enrollment periods in the group insurance market (26 CFR 54.9801-6), including Section (a)(3)(i), which notes that the special enrollment period is available regardless of whether the person elects COBRA.
You’ve also got 60 days to decide whether you want to elect COBRA, with coverage retroactive to coincide with the date your plan would have ended. Between the two windows, you have plenty of time to decide what coverage will work best for you. If you sign up for a plan in the individual market after your employer-sponsored plan ends, your first available effective date will be the first of the following month, so you will have a gap in coverage if you don’t sign up for your new plan before your employer-sponsored plan ends. However, the retroactive availability of COBRA helps to mitigate this, as you could potentially sign up for COBRA during the gap month if you needed to.
When comparing COBRA with a plan in the individual market, be sure to factor in premium tax credits and cost-sharing subsidies if you qualify for them. Your special enrollment period for individual market coverage applies both on and off the exchange, but if you’re eligible for subsidies, you’ll need to get your plan through the exchange.
If you elect to take COBRA and later decide (after your special enrollment period ends) that you’d rather have an individual plan, you’ll have to wait until the next regular open enrollment, unless you have another qualifying event. But exhausting COBRA does trigger a special open enrollment window, because it counts as loss of other coverage.
HHS has also issued new regulations clarifying that the termination of employer or government subsidies for COBRA premiums will also trigger a special enrollment period during which the person can switch to an individual market plan. This became a pressing issue during the COVID pandemic, when many employers paid at least a few months of COBRA premiums for employees, and the federal government provided a full COBRA subsidy through September 30, 2021, for people who involuntarily lost their jobs or had their hours reduced.
For someone in that situation, the COBRA coverage might become unaffordable after the subsidy ends, but without a special enrollment period they would not have had an option to switch to a marketplace plan at that point and potentially start receiving premium subsidies. The new rule provides that flexibility.
Plans that terminate on December 31
If your health plan terminates at the end of the year, you get a special enrollment period that continues for the first 60 days of the new year.
Insurers in numerous states left the exchanges at the end of 2017 or shrank their coverage areas, and the same thing happened at the end of 2016. But that trend began to reverse in 2019, with insurers joining the exchanges in many states. That trend continued for 2020, for 2021, and for 2022. (Even in those years, there were still some year-end plan terminations, including New Mexico Health Connections and Virginia Premier exiting their respective exchanges at the end of 2020. And some. And some enrollees in Washington’s exchange experienced plan terminations at the end of 2021, with Providence exiting the exchange and Premera is shrinking its coverage area.)
For 2023, it appears that the trend of insurer expansions may be reversing once again. Oscar is leaving the exchanges in Colorado and Arkansas, and Bright Health is leaving the exchanges in six states.
If your insurer is no longer offering plans in the exchange in your area, you’re eligible for a special enrollment period. This is true even if you have an on-exchange plan and the exchange maps you to a replacement plan from another insurer when you didn’t select a plan during open enrollment. CMS confirmed in October 2017 that people whose plans are discontinued are eligible for the special enrollment period, despite the fact that the exchange would automatically match these consumers to a new plan if they didn’t pick one themselves (this applies to HealthCare.gov. Most of the state-run exchanges follow a similar protocol, but some do not allow a special enrollment period after the exchange-selected plan takes effect, making it particularly important for people to pick their own plan prior to the end of the year.).
CMS confirmed that the special enrollment period applies in cases where an insurer exits the market in a particular area (on or off-exchange, or both), but it also applies in situations where an insurer replaces all of its PPO plans with HMOs, for example. But more minor adjustments, like changes to the deductible or copay, do not result in a special enrollment period.
(If you’re uncertain about your eligibility for a special enrollment period, call (619) 367-6947 to discuss your situation with a licensed insurance professional.)
The special enrollment period also applies if your off-exchange insurer exits the individual market at the end of the year, or shrinks its coverage area and no longer offers plans where you live.
Death, divorce, or legal separation
HHS had originally intended to add a new SEP (for people already enrolled in an exchange plan) effective in 2017 for people who lose a dependent or lose dependent status as a result of a death, divorce, or legal separation, even if they didn’t lose coverage.
But in May 2016, HHS eliminated the requirement that exchanges add this SEP in 2017. Exchanges have the option to do so, but are not required to offer a SEP triggered by death, divorce, or legal separation. Of course, if the death, divorce, or legal separation results in loss of coverage, the normal SEP rules for loss of coverage would apply.
For example, a person who is covered as a dependent on an employer-sponsored plan would lose access to the plan if the employee were to die. Even if 36 months of COBRA were to be available to that person, he or she would also have access to a SEP in the individual market, triggered by loss of coverage. But on the other hand, an enrollee who loses a family member does not necessarily have access to a SEP at that point, unless one of the other qualifying events applies.
Aging off a parent’s plan
Under the ACA, young adults can remain on a parent’s health insurance plan through age 26. The coverage can terminate at the end of the month the person turns 26, but some plans allow the person to remain covered through the end of the year. Either way, the loss of coverage is a qualifying event that allows the young person a special enrollment period during which they can select a new plan.
Special enrollment period details
The special enrollment period triggered by loss of coverage begins 60 days before your existing plan’s termination date, so it’s possible to get a new ACA-compliant plan without any gap in coverage (as long as your old plan is ending on the last day of the month; new plans will only take effect on the first of the month after your old plan ends). This is true regardless of whether the health plan that’s ending is an individual plan or an employer-sponsored plan.
You also have 60 days after your plan ends during which you can select a new ACA-compliant plan.
If you enroll before the date your old plan ends, the effective date of the new plan will be the first of the month following the loss of coverage, regardless of the date you enroll. So for example, if your plan is ending July 31, you can enroll in June or July and your new plan will be effective August 1 (if your plan ends mid-month, however, the new plan would still start the first of the following month, leaving you with a gap in coverage; a short-term plan might be a good option to cover those interim days).
But if you enroll in the 60 days after your plan ends, the exchange (or carrier, if you’re enrolling outside the exchange) can either allow a first-of-the-following-month effective date regardless of the date you enroll, or they can use their normal enrollment deadline, which can either be the 15th of the month or the end of the month, in order to have coverage effective the first of the following month.
As of 2022, HealthCare.gov no longer uses the 15th-of-the-month deadline; applications submitted during a special enrollment period will have coverage effective the first of the following month, regardless of the date the application is submitted. But that would still result in a gap in coverage if you enroll after your plan has ended, since the new plan will not have a retroactive effective date.
When you’re enrolling in a new marketplace plan due to loss of other coverage, the application will ask you when your coverage is ending. It’s important to note the last day that the coverage will be in force, not the first day you’ll be without coverage. So for example, if your plan is ending on June 30, you would put your loss of coverage date as June 30, rather than July 1. If you indicate July 1, the system will push your new effective date out to August 1, since that’s the first of the following month.
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.