New rules on Special Enrollment Periods give consumers more flexibility to get covered
During this last open enrollment period, more than 11 million people enrolled in affordable health care. But once open enrollment ends a person can only join a Marketplace health plan, or change to a different one, if they qualify for a Special Enrollment Period (SEP). In general, a consumer is eligible for a SEP when they have a big change in their life or circumstances, such as losing the health plan they had through work or gaining new dependents through birth or marriage. But in some cases consumers can get a SEP because they have a change in their circumstances, like an increase in income, a change in immigration status, or moving to another state.
Why are the SEP rules so important? Because millions of people need SEPs each year. A recent study found that an estimated 4 million people were likely to need a SEP due to losing their existing coverage, and “another 2.7 million adults would likely be eligible for a SEP by moving, getting married, having a child or gaining a new immigration status.” That’s a lot of people making changes to their coverage. Additionally, young adults are the most likely to need a SEP because they are the most likely to change jobs, get married and have kids.
SEPs give consumers 60 days to shop and enroll for a plan, but the timing of when they enroll is important. The initial Marketplace rules regulating SEPs had some unfair results in practice. One unanticipated result was gaps in their coverage. Under the former rules, if a consumer enrolled before the 15th of a month, their coverage started the first of the following month, leaving them with a two-to-four week coverage gap. If a person enrolled after the 15th of a month, their new coverage started on the first of the second following month, creating a six-to-eight week coverage gap.
Luckily, the Department of Health and Human Services (HHS) saw this problem early on, and responded with several rule changes to fix these issues. As a result, the Marketplace has new ways of providing consumers more flexibility, allowing them the chance to plan ahead, and avoid these gaps in coverage.
Earlier access to coverage
First, most consumers who know they will be losing their existing coverage can go online to review plans and enroll 60 days before that happens. Having this advanced access to the Marketplace helps consumers tackle the difficult task of comparing plans to find the coverage that is best for them either on their own or with the help of an enrollment assister.
In addition a new rule, which I call the “early bird” rule, helps prevent coverage gaps. It allows coverage under a Marketplace plan to kick in faster – so long as a consumer plans ahead and signs up before they lose their existing coverage.
HHS also allows consumers more flexibility to have their new coverage under the Marketplace start later, to prevent consumers from being forced to pay for duplicative coverage. An employed consumer might get pregnant, have a child, and go on maternity leave for a month or two, all while covered by their employer-sponsored insurance (ESI). If they decided to quit their job and be a full-time parent, they get a SEP, but the old rules required their coverage to start retroactively to the date of the birth, regardless of whether they already had coverage or not. If they had ESI this was wasteful, causing them to pay for double coverage. But under the new rules consumers have the option to have their new coverage start later to avoid duplicative coverage.
Increased options to enroll when a consumer’s family life or income changes
The most recent HHS rules also recognized several additional circumstances that now allow consumers to sign up for or change their existing coverage.
If a consumer has an employer-sponsored health plan that begins and ends on dates other than the first and last of the year, these consumers can now access the Marketplace to shop for and enroll in a plan up to 60 days before their non-calendar year plan ends.
HHS has also adopted a new rule to help low-income consumers in the non-Medicaid expansion states transition to the Marketplace. Residents in all the states that did not expand Medicaid eligibility can get a SEP when their household income increases enough to let them qualify for tax credits. This is a big improvement over the former rules which required these consumers to apply for Medicaid and jump through several administrative hoops before gaining access to coverage. The new rule simplifies the process and lets consumers in these states get a SEP simply if their income increases.
HHS also created a new SEP for consumers who gain a dependent as the result of a child-support order. In 2012, approximately 1.2 million child support orders were issued, and now all such orders must address how health care is to be provided for the child.
The federal and state Marketplaces also now have the option to start granting SEPs for consumers who lose a dependent, or stop being a dependent of another person, as the result of a divorce, legal separation or death. This SEP will be available no later than January 1, 2017.
For more information about SEPs, see this new Fact Sheet.