Since the Affordable Care Act was implemented, new health plans in the individual market have run on a calendar-year basis, which means the plan year ends on December 31, and the new plan year begins on January 1.
Coverage can have an alternate start date initially because the applicant enrolled during open enrollment after the deadline to get January 1 coverage. (This will no longer be applicable beginning with 2019 coverage, and was no longer available in most states beginning with 2018 coverage), The start date may also differ because the applicant enrolled later in the year, during a special enrollment period.
What are non-calendar year plans?
That was often not the case in the individual market prior to 2014. Some carriers opted to align their plan years with the calendar year, but many did not. And since enrollment in individual-market plans was year-round prior to 2014, plan renewal dates could be spread across the whole year.
The majority of the individual market now consists of ACA-compliant plans: Somewhere in the range of 12 million people were enrolled through the exchanges in 2017, plus another 5 million outside the exchanges.
But there are still a considerable number of pre-2014 plans – both grandmothered (transitional) and grandfathered – that remain in force, and their plan years can continue to be non-calendar year. At ACAsignups, Charles Gaba estimated in 2016 that there were likely at least two million people still enrolled in grandmothered and grandfathered plans in the individual market. (Grandmothered plans also exist in the small-group market, and there are grandfathered plans in both the small- and large-group markets.) This number has continued to decrease over time, as nobody has been able to purchase a grandmothered or grandfathered individual market plan for the last several years, so the pool of insureds can only shrink — it cannot grow.
Grandfathered plans can continue to renew indefinitely, at the carrier’s discretion, assuming the plan remains essentially unchanged. Grandmothered plans can continue to renew until as late as October 1, 2018, and coverage can remain in force until as late as December 31, 2018, but only in states that allow it. (Even in those states, carriers can opt to discontinue grandmothered plans at an earlier date).
(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.)
Why is there a SEP?
The result of all this is that a not-insignificant number of people have plans that come up for renewal outside of open enrollment. If the plan year ends in July, the new rate that takes effect in August might be considerably higher than the previous rate. HHS recognized that these individuals would be at a disadvantage when compared with people who have calendar-year plans, since they would essentially be stuck with their new rates until open enrollment came around again.
As a result, HHS created a special enrollment period in 2014 (See pages 30296-30298.) It applied to people whose non-calendar-year plan was ending outside of open enrollment, regardless of whether the coverage was eligible for renewal. HHS also noted that the special enrollment period applied both on and off-exchange. (See CFR 147.104 (b)(2).)
This was solidified in CFR 155.420 (d)(1)(ii) for 2014, but in the Benefit and Payment Parameters for 2016, HHS deleted the 2014 expiration date for the special enrollment period, clarifying that it would continue indefinitely, and that it applies both on- and off-exchange. At the same time, HHS also noted that the special enrollment period applies to anyone whose coverage is renewing outside of open enrollment, regardless of whether that coverage is in the individual market or group market.
This issue had mostly been solidified already by the time the Benefit and Payment Parameters for 2017 were published in early 2016, but HHS did make one final clarification, noting that the special enrollment period in this case does not apply in the small business (SHOP) exchange. So if you have access to a SHOP plan from your employer or your spouse’s employer but you’re enrolled instead in a non-calendar year plan, you don’t have access to a special enrollment period for the SHOP plan when your existing coverage renews.
How does the SEP work?
If your health plan renews outside of open enrollment, you have access to a special enrollment period – either in the exchange or outside the exchange – that begins 60 days in advance of your plan’s renewal date, and continues for 60 days after your plan renews.
If you pick a new plan in the 60 days before your old plan’s renewal date, your new coverage will be effective the first of the month following your existing plan’s renewal date. If you pick a new plan in the 60 days following the renewal date, the exchange has discretion in determining your effective date. It can either be the first of the following month, or can be determined according to the exchange’s regular effective date rules. (In most exchanges, this means you have to enroll by the 15th of the month to get a plan effective the first of the following month.)
If you’re enrolling through HealthCare.gov, you’ll check the box for loss of coverage as your qualifying event, since “policy/plan year ending” is one of the subcategories that constitutes loss of coverage. This applies regardless of whether the plan is terminating or has an option to renew.
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.