Leaving the coverage gap? This SEP’s for you.

A 2015 change delivered a special enrollment period to people in non-Medicaid expansion states whose income increases, making them eligible for subsidies

When the Affordable Care Act was written, it called for Medicaid expansion in every state. The idea was that all adults with household income up to 138 percent of the poverty level would be covered by Medicaid starting in 2014, as long as they met the immigration criteria for Medicaid. (In most states, that means five years of being lawfully present in the United States.)

But in 2012, the Supreme Court ruled that states could not be forced to expand Medicaid, and as of 2018, there are still 19 states that have left their Medicaid eligibility guidelines largely unchanged.

Unfortunately, the ACA also prohibits premium subsidies for applicants with income under 100 percent of the poverty level (unless they’re lawfully-present residents who have not been in the U.S. long enough to qualify for Medicaid). People with income below the poverty level were supposed to be eligible for Medicaid, so the ACA did not include a provision for them to get premium subsidies.

The coverage gap

After the Supreme Court ruled in 2012, it became apparent that numerous states would not expand their Medicaid programs, and that millions of people would be stuck in a health insurance desert – unable to qualify for Medicaid, and also unable to qualify for premium subsidies. But the political environment was too contentious for any sort of legislative fix, and that has continued to be the case in the ensuing years.

As a result, there are about 2.2 million people in the coverage gap in 16 of the 17 states that have not expanded Medicaid. (Wisconsin has not expanded Medicaid under the ACA, but does provide Medicaid for residents with income up to the poverty level, so there’s no coverage gap in Wisconsin. The number of states where Medicaid is expanded is expected to increase in 2019, due to ballot initiatives passed by voters in several states)

The special enrollment period

In 2015, HHS added a special enrollment period (see page 171 of the Benefit and Payment Parameters) for people in the coverage gap who experience an increase in income that makes them eligible for premium subsidies. The new rules are codified in 45 CFR 155.420(d)(6)(iv).

The SEP applies to an individual who:

  • Lives in a state that hasn’t expanded Medicaid.
  • Was previously ineligible for premium subsidies solely due to having an income below the poverty level.
  • Was also ineligible for Medicaid because the state has not expanded coverage
  • Experiences an increase in household income to an amount at or above 100 percent of the poverty level, and thus eligible for premium subsidies. This could occur due to a marriage between two people who both had income just below the poverty level, but whose combined income is above the poverty level for two people.

The individual/couple then has a 60-day window to enroll in a health plan through the exchange, with premium subsidies. Regular coverage effective dates apply, which means that an application must be completed by the 15th of the month in order to have coverage effective the first of the following month.

The SEP applies to people in the coverage gap in the following states: Alabama, Florida, Georgia, Idaho, Kansas, Maine, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, and Wyoming. [Virginia expanded Medicaid as of January 2019; prior to 2019, the SEP applied in Virginia. Voters in Idaho, Utah, Nebraska, and Maine have approved Medicaid expansion ballot initiatives, and coverage is expected to be expanded in those states in 2019.]

SEP is an exception to the rule

It’s important to note that a change in income is not otherwise a qualifying event for anyone who isn’t already enrolled in a plan through the exchange.

  • Low-income residents in states that have expanded Medicaid are not eligible for an income-related SEP in the exchange unless they were already enrolled in Medicaid and then became ineligible for Medicaid due to an increase in income. (The qualifying event, in that case, is loss of coverage, since they’re losing access to Medicaid.)
  • People who are enrolled in plans outside the exchange are not eligible to switch to an exchange plan when they experience a change in income that makes them eligible for subsidies. For example, a person enrolled in an off-exchange plan with an income too high for subsidies will not be allowed to switch to an exchange plan in order to obtain subsidies if she loses her job and experiences an income decrease mid-year. (Loss of a job is not a qualifying event; neither is a change in income, unless you’re already enrolled in a plan through the exchange.)
  • In the 17 states that haven’t expanded Medicaid, people in the coverage gap are allowed to purchase coverage – on or off-exchange – if they pay full price for the premiums. This is a very rare situation, as most people with income below the poverty level cannot afford to pay for unsubsidized health insurance. But if they do, they are still eligible to switch to a plan with subsidies if their income increases to at least 100 percent of the poverty level. The fact that they have obtained alternate health insurance does not eliminate their SEP.

(If you’re uncertain about your eligibility for a special enrollment period, call (844) 428-3344 to discuss your situation with a licensed insurance professional.)

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.

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Special Enrollment Guide cover illustration

Special Enrollment Guide

Table of Contents

Why a guide to 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 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

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