Chapter 11: Special Enrollment Guide

Proving you deserve an SEP

Gone are the days of the 'honor system' for qualifying events; be prepared to prove you're really eligible for a special enrollment period

The Insider's Guide to Obamacare's Special EnrollmentObviously, 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.

Qualifying events on the ‘honor system’

But it hasn’t all been smooth sailing in the early years. 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.

Despite the fact that the eligibility requirements were relatively lax in 2014 and 2015, we can’t say for sure that people were “gaming the system” and signing up when they didn’t actually have a qualifying event. Another explanation could be simply that people who are sick are much more likely to seek out coverage when they do have a qualifying event, as opposed to someone who’s healthy.

A sick person who loses access to an employer-sponsored plan will go to great lengths to secure new coverage during a special enrollment period. But a healthy person in the same situation might gamble on being uninsured for a while, and just wait until open enrollment comes around again.

Some advocates have argued that SEP access should be as simple as possible in order to cast a wide net and encourage everyone with qualifying events to enroll. Families USA notes that while sick people are willing to jump through whatever hoops are necessary in order to get coverage, healthy people might not be. They contend that requiring proof of eligibility to enroll outside of open enrollment could actually have a deleterious effect on the overall risk pool.

Nonetheless, 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.

Feds pledge to require proof of qualifying events

To address insurer concerns and help stabilize the individual health insurance market, HealthCare.gov 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.

Some state-run exchanges were already requiring proof of SEP eligibility prior to 2016, but some others have followed HealthCare.gov’s lead and have recently implemented documentation requirements.

It remains to be seen whether the stepped-up enforcement of eligibility rules will have an impact on the overall utilization of healthcare services by people who enroll during SEPs. It should help prevent outright gaming of the system (ie, people waiting until they’re sick and then claiming to have a qualifying event without really having one), but there’s been no real evidence of widespread fraudulent enrollments of that nature.

Although consumers should be prepared to provide documentation to prove their qualifying events, the enrollment process is simple once that is done. And there are numerous changes in life circumstances that allow people to enroll in coverage for the first time, or switch to a different plan. In some cases – like New York’s SEP for pregnant women – they’re state-specific. But in most cases, the guidelines for qualifying events and SEPs apply uniformly in every state.

As a general rule of thumb, if you’ve already been following the rules that require you to 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 at all, 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, getting married, moving to a new area, or becoming a U.S. citizen.

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