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Involuntary loss of coverage is a qualifying event

If you’ve lost or are losing your coverage, a special enrollment period offers you time to enroll in a new health plan with no coverage gap

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:

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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 new 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.

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.

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. For 2020, we continued to see insurers joining or rejoining the exchanges and expanding their coverage areas (there are at least 19 states where new insurers joined the exchange for 2020, plus numerous states where existing insurers expanded their coverage areas), and that trend continued for 2021, with insurers joining the marketplace or expanding their coverage areas in at least half the states.

But due to coverage area changes or significant plan design changes, year-end plan terminations may continue to happen for some enrollees in some areas. And there are still some areas where insurers terminated their offerings for 2021, including New Mexico Health Connections and Virginia Premier.

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, but most of the state-run exchanges follow a similar protocol).

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 (800) 436-1566 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 is typically the 15th of the month in order to have coverage effective the first of the following month. Starting in 2022, will no longer apply 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.

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 Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Table of Contents

Insider’s Guide to Obamacare’s Special Enrollment Periods
1 Qualifying events and why we need them
2 Who doesn’t need a special enrollment period?
3 Involuntary loss of coverage is a qualifying event
4 How your ‘big move’ can trigger an SEP
5 Divorce, death, or legal separation: SEP is optional
6 A change in subsidy eligibility changes your options
7 Citizenship or lawful immigrant status can deliver coverage
8 An SEP if your employer plan doesn’t measure up
9 Non-calendar-year renewal as a qualifying event
10 Leaving the coverage gap? This SEP’s for you.
11 Proving you deserve an SEP
12 An SEP for your growing family
13 Exceptional circumstances for special enrollment
14 An SEP if you have a QSEHRA or ICHRA

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Claudia Haworth
Claudia Haworth
1 year ago

Am I eligible for a SEP in the individual market if I turned 26 and am no longer covered under my parent’s health plan?

Louise Norris
Louise Norris
1 year ago

Yes. Losing coverage under your parent’s plan is a qualifying event. You have 60 days from the date your plan ended to sign up for a new policy in the exchange or directly through an insurer (premium subsidies are only available in the exchange). Here’s an FAQ that might be useful:

1 year ago

I currently have insurance through my job, but I will be leaving my job in December. My husbands enrollment period is in November. When open enrollment comes around for him can I go back on his insurance?

Louise Norris
Louise Norris
1 year ago
Reply to  Jeannie

Yes, but you might not be able to leave your employer’s plan until you leave your job. Once you’re enrolled in a plan through your employer, you generally cannot disenroll until your plan’s open enrollment window (with the disenrollment effective at the start of the next plan year) or until you leave the job or otherwise lose eligibility (eg, a reduction in hours, etc.). To address the COVID-19 pandemic, the IRS is giving employers the option to offer some flexibility on this, but it would depend on whether your employer opts to allow that flexibility and whether the pandemic is still ongoing at that point:
If your husband’s plan year starts on January 1, the timing should be fine if your existing coverage can run through the end of December and your coverage under his plan starts in January. But if his plan renews in December (following an open enrollment period in November), you might have one month of double coverage.

Mary Ann Kingston
Mary Ann Kingston
1 year ago

I was furloughed in March and then declined offer to return to my job in May but my employer-sponsored health insurance has not been discontinued — apparently my employer has not notified the insurer that I am not working. I understand that if my employer notifies the insurer now, I could get insurance under COBRA or Special Enrollment Period (SEP) rules for qualifying life event. However, could my employer terminate my insurance retroactively and thereby cause me to be outside the 60-day period to qualify under the SEP rules? Should I alert my employer that the insurer has not been notified that the employment has ended?

Louise Norris
Louise Norris
1 year ago

Yes, you should alert your employer that the insurer has not been notified of your termination of employment. But no, the employer cannot retroactively terminate your health insurance, as explained here:
Your special enrollment period during which you can select a plan in the individual market would end 60 days after your employer-sponsored plan ends. But the COBRA election period has been extended to address the COVID-19 situation:

Winston DiNicola
Winston DiNicola
11 months ago

I currently have COBRA coverage which will end on Sep 30th, 1 month prior to the start of the Open Enrollment Period of Nov 1st. I have a two part question:
1. Am I eligible for a SEP to enroll in an individual plan in my state of NC?
2. I will be turning 65 the following July and will be enrolling in Medicare. Does this qualify for SEP consideration for me to get off of the individual insurance plan while keeping coverage for my wife and daughter?

Louise Norris
Louise Norris
11 months ago

1. Yes, you’ll be able to enroll in an individual market plan when your COBRA coverage ends. If you enroll in the 60 days prior to your loss of coverage, your new plan will take effect October 1, so you won’t have a gap in coverage. You’ll also have a chance to enroll in the 60 days after 9/30, but then you’d have a gap of at least 1 month between your COBRA plan ending and your new plan starting.
2. Yes, you’ll be able to transition to Medicare next summer. Your wife and daughter will be able to remain on the marketplace plan (keep a close eye on the termination notices you get from the marketplace after you initiate your own coverage cancellation, just to make sure they don’t accidentally cancel the whole policy). Here’s more about the transition from an individual market plan to Medicare:

10 months ago

My husbands work just let us know that our health insurance deductible is increasing from $4,000 to $10,000, and I’m expecting a baby in 3 months.
Effectively we went from having insurance to not have usable insurance.
Can this possibly qualify for a special enrollment?

Louise Norris
Louise Norris
10 months ago
Reply to  Bonnie

I assume the plan is renewing, and the new deductible will apply to the new plan year? If so, you’ll have a special enrollment period that will allow you to switch to a plan in the individual market instead of keeping your existing plan for the upcoming plan year, even if your current plan doesn’t follow the calendar year:
I assume also that the deductible you’re describing is for the whole family? Health plans are not allowed to have an individual out-of-pocket maximum in excess of $8,150 this year, or $8,550 next year, unless they’re grandfathered or grandmothered (and that sort of deductible change would make a grandfathered plan lose its grandfathered status).
If your employer’s plan stops providing minimum value and/or no longer meets the affordability guidelines, you would also have a special enrollment period in the individual market, and could potentially qualify for premium subsidies in the individual market. Here’s more about this:
One thing to keep in mind, however, is that a new plan would mean starting over with a new deductible and out-of-pocket maximum, which would again reset at the start of 2021. Depending on how much you’ve already accrued towards your plan’s out-of-pocket limit for this year, that’s something you’ll need to take into consideration.

10 months ago
Reply to  Louise Norris

Thank you Louise for your detailed answer. Your first paragraph is exactly what we were looking for!

10 months ago

I had a full-time temporary teaching position and was offered health insurance. At the end of the summer my health insurance was terminated because the teaching position wasn’t available. Do i qualify for special enrollment?

Louise Norris
Louise Norris
10 months ago
Reply to  Mason

Yes. A plan offered by an employer is considered minimum essential coverage, and the termination of that coverage is considered a qualifying event that will allow you to enroll in an individual market plan (on-exchange or outside the exchange, but subsidies are only available in the exchange).

6 days ago

My wife will soon be starting a new job, but the health insurance is terrible. She would prefer to stay on COBRA with our kids until it expires 3/31/22. I know that by staying on COBRA she is barred from electing coverage through her employer until the next open enrollment period. But can she still be added to my health insurance through my employer once COBRA expires? Thanks.

Louise Norris
6 days ago
Reply to  James

When her COBRA expires, she will qualify for a special enrollment period for her own employer’s health plan and your employer’s health plan. She will not have to wait until her employer’s annual open enrollment period, since she’ll be experiencing an involuntary loss of coverage when she exhausts her COBRA.

Details are in 29 CFR 2590.701-6 (a)(3)(iii)

Last edited 6 days ago by Louise Norris
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