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If you’re enrolled in a health plan that doesn’t follow the calendar year (meaning it has a renewal date that isn’t January 1), you’re eligible for a special enrollment period (SEP) triggered by your plan’s renewal. This is true regardless of whether your current plan is an individual/family plan or an employer-sponsored plan.1 This SEP for individual market coverage gives you the option to not renew your existing plan, and instead transition to an ACA-compliant individual/family health plan.
Since the Affordable Care Act was implemented, health insurance plans offered in the individual health insurance Marketplace and off-exchange 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 annual open enrollment after the deadline to get January 1 coverage. (In nearly every state, enrollments completed between December 16 and January 15 will have coverage effective February 1, but there are some states with different deadlines and schedules.) The start date may also differ because the applicant enrolled later in the year, during a special enrollment period.
But regardless of when plans begin, all plan years for ACA-compliant individual/family plans (both on and off-exchange) end on December 31, and the enrollee’s new plan year begins the following day.ay.
What are non-calendar year health insurance plans?
Plans in the individual market often did not end on December 31 and renew on January 1 prior to 2014, as it was up to the carriers to decide whether to have plans renew on January 1 or the policyholder’s coverage anniversary.. And since enrollment in individual market plans was available year-round prior to 2014, plans could renew throughout the whole year.
The majority of the individual market now consists of ACA-compliant plans: More than 21 million people enrolled in ACA-compliant individual market plans through the exchanges during the open enrollment period for 20242 and some additional people are enrolled in off-exchange ACA-compliant plans.
But there are still some pre-2014 plans – both grandmothered (transitional) and grandfathered – that remain in force, and their plan years can continue to be non-calendar-year. The number of people with these pre-ACA plans is steadily decreasing, as nobody has been able to purchase a grandmothered or grandfathered plan for the last several years, so the pool of insureds can only shrink – it cannot grow.
A grandfathered plan can continue to renew indefinitely for as long as the carrier offers it, assuming the plan remains essentially unchanged. Grandmothered plans can continue to renew until further notice, under guidance that CMS published in early 2022,3 but only in states that allow it. (Even in those states, carriers can opt to discontinue grandmothered plans at an earlier date).
And as described below, non-calendar-year plans are also found in the employer-sponsored market, so this SEP allows people to transition from an employer-sponsored plan to an individual market plan mid-year, if the employer-sponsored plan is up for renewal mid-year.
Why is there an 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. For example, if an individual’s plan year ends in July, the premium that applies once the policy renews 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 could be stuck with their new higher rates until open enrollment came around again. And if the non-calendar-year plan was an employer-sponsored plan, the person would be unable to leave the group plan during the open enrollment period for individual market plans, since group coverage can only be dropped during the group plan’s open enrollment period or a special enrollment period (unlike individual market coverage, which can be dropped anytime).
As a result, HHS created a special enrollment period in 2014.4 (See pages 30296-30298 of the reg for details.) 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 is important because employers can still purchase group coverage year-round, so renewal dates in the group market don’t have to align with the calendar year. Many employers choose to align their plan year with the calendar year, but some do not; if your employer-sponsored plan is renewing mid-year, you can choose to enroll in an individual market plan at that point instead, using your special enrollment period.
If your employer’s plan renews mid-year and you qualify for an individual market SEP as a result, you have the option to reject your employer’s offer of coverage and opt for a plan in the exchange instead. But you won’t be eligible for premium subsidies as long as your employer’s plan meets the guidelines for affordability and minimum value.
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 this special enrollment period does not apply in the small-business exchange – Small Business Health Options Program (SHOP). So if you have access to a SHOP plan from your employer or your family member’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.
ICHRAs and QSEHRAs that don’t follow the calendar year
HHS has clarified, however, that this SEP does apply to people who have a QSEHRA (qualified small business health reimbursement arrangement) or ICHRA (individual coverage health reimbursement arrangement) that does not renew following the calendar year. These employees would already be enrolled in an individual market plan (with premiums being reimbursed partially or fully by their employer), but would have an opportunity to switch to a different individual market plan when their QSEHRA or ICHRA benefit renews mid-year.
However, the plan selection limitations described in 45 CFR 155.420(a)(4) would apply in this case, limiting current exchange enrollees to selecting a different plan at the same metal level (or if that isn’t available, to a plan one metal level above or below the current plan). That’s different from the SEP that applies to people who are newly offered a QSEHRA or ICHRA (or who have the option for this benefit after declining it, or utilizing it in the past and then discontinuing it). For those individuals, there are no restrictions on which individual market plans they can select.
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 day of the calendar month following the last day of the plan year for your old plan. If you pick a new plan in the 60 days following the renewal date, the exchange has discretion in determining the effective date of your new plan.
In most states, this will mean that coverage takes effect the first of the calendar month following your enrollment month. But states that run their own exchanges also have – through 2024 – the option to make coverage effective the first day of the second calendar month following your enrollment month if the application is submitted after the 15th of the month.
This will change as of 2025, however, when all exchanges, including those that are run by the state, will have to allow coverage selected during a special enrollment period to take effect the first of the month after the plan is selected, regardless of the date the plan selection is finalized.5
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
- “45 CFR 155.420(d)(1)(ii)” Code of Federal Regulations. Accessed April 23, 2024 ⤶
- “Health Insurance Marketplaces 2024 Open Enrollment Report” CMS.gov. Accessed April 23, 2024 ⤶
- “Extension of Limited Non-Enforcement Policy through 2023 and Later Benefit Years” Centers for Medicare & Medicaid Services. March 23, 2022 ⤶
- “Special Enrollment Periods and Hardship Exemptions for Persons Meeting Certain Criteria” CMS.gov. May 2, 2014 ⤶
- “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP) Program; and Basic Health Program” U.S. Department of the Treasury; U.S. Department of Health and Human Services. April 2, 2024 ⤶
