Key takeaways
- At first, SEP eligibility was generally granted on the honor system
- By 2016, the exchanges had begun requiring proof of the qualifying events
- Starting in 2023, HealthCare.gov switched to only requiring proof of loss of other coverage
- Some SEPs now require the applicant to have already had coverage prior to the qualifying event
Obviously, it’s essential that people have the ability to enroll in a health insurance plan when they have a bona fide change in circumstances. If you move to a new state in April, you can’t be expected to wait until January to have health insurance coverage in your new location (assuming you were already insured prior to the move).
And if you leave your job in June and lose your employer-sponsored insurance that month, it wouldn’t make sense for you to have to wait until open enrollment to sign up for a new plan that would take effect in January.
That’s why qualifying events and special enrollment periods (SEPs) were built into the Affordable Care Act.
Early on, qualifying events were on the ‘honor system’
Until 2016, HealthCare.gov didn’t require applicants to prove that they’d experienced a qualifying event. Applicants had to attest that they had a qualifying event, but it was basically on the honor system. Some state-run exchanges required documentation to prove qualifying events from the start, but some took the same approach as HealthCare.gov.
By late 2015, it had become apparent that healthcare utilization was significantly higher among people who enrolled during special enrollment periods, and also that those individuals tended to keep their coverage for a shorter duration than people who signed up during open enrollment.
The general consensus among health insurance carriers by late 2015 was that SEP enrollments were hurting their bottom line, and many insurers took steps to reduce or eliminate broker commissions for plans purchased outside of open enrollment, in an effort to curtail sales during that time.
2016: Exchange began require proof of qualifying events
To address insurer concerns and help stabilize the individual health insurance market, HealthCare.gov’s then-CEO Kevin Counihan noted in January 2016 that the exchange would take steps to enforce the eligibility requirements for SEPs. And by February, the Centers for Medicare and Medicaid Services (CMS) clarified that they would be implementing documentation requirements for proof of qualifying events when people enroll through HealthCare.gov outside of open enrollment.
The new SEP eligibility verification process was implemented in June 2016 (and subsequently ramped up in 2017, with the market stabilization rule). In September 2016, HHS answered several frequently asked questions regarding the verification process for qualifying events. At that point, SEP enrollments since June were about 15% below where they had been during the same time period the year before (they had been roughly even with 2015 numbers in the months leading up to the implementation of the new eligibility verification process).
Starting in June 2017, HHS was planning to implement a pilot program to further enhance SEP eligibility verification. This plan was created by HHS under the Obama Administration, but it was changed from a pilot to a universal program under the Trump administration. The new pilot program was slated to randomly select 50% of SEP enrollees and pend their enrollments until they submitted proof of a qualifying event. But the Trump administration increased this to 100% of enrollments, rather than implementing the pilot program that would have required pre-enrollment verification for half of enrollees. Applicants had 30 days to submit their proof of SEP eligibility, and as long as they did so, their new coverage is effective as of the date determined by the date of their application/plan selection (in other words, there is no deleterious effect for people who do have a valid qualifying event).
Some state-run exchanges were already requiring proof of SEP eligibility prior to 2016, and most others followed HealthCare.gov’s lead and implemented documentation requirements. HHS proposed a rule change for 2022 that would have required state-run exchanges to verify SEP eligibility for at least 75% of new enrollees who submit applications outside of the open enrollment window. That proposal was not finalized, however, as HHS determined that it wasn’t necessary.
The agency noted that as of 2021, only four of the state-run exchanges had SEP verification processes that were less stringent than HealthCare.gov’s, and that those exchanges had confirmed that their participating insurers were not seeing any “misuse of special enrollment periods” under the existing rules. But again, most of the state-run exchanges had SEP verification protocols that were just as robust as HealthCare.gov’s.
2023: SEP verification rules relaxed
Starting in 2023, HealthCare.gov opted to scale back the verification process for special enrollment periods.1 Loss of coverage is the only qualifying event that now requires the enrollee to submit proof of the qualifying event,2 although that’s the most commonly used qualifying event.3
In the state-run exchanges, used in 18 states and DC as of 2024, the exchanges have the option to continue to require proof of any qualifying events.1
As a general rule of thumb, if you already have health insurance, you’ll have a chance to switch coverage when it’s necessary. (For example, you lose access to your old plan, or move out of its service area.)
And if you don’t have coverage, you’ll still have a chance to enroll in a new plan if you experience one of a handful of life-changing events such as having a baby or gaining lawfully present resident/U.S. citizen status.
Some SEPs — like getting married or moving to a new area — used to allow uninsured people to secure coverage, but the marketplace stabilization rules imposed a prior coverage requirement for those, which is still in place.3
(If you’re uncertain about your eligibility for a special enrollment period, call (866) 553-3223 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.
Footnotes
- ”HHS Notice of Benefit and Payment Parameters for 2023 Final Rule Fact Sheet” Centers for Medicare & Medicaid Services. April 28, 2022. ⤶ ⤶
- ”Special Enrollment Periods” Centers for Medicare & Medicaid Services. Accessed March 7, 2024. ⤶
- ”Federally-facilitated Exchange (FFE) Enrollment Manual” Centers for Medicare & Medicaid Services. July 12, 2023. ⤶ ⤶