Understanding Qualifying Life Events
Published on February 04, 2017
Most people living in the U.S. have one chance a year to change their major medical health insurance or to purchase a plan from the marketplace, unless they have special circumstances called “qualifying life events”. This “open” enrollment generally starts at the beginning of December and ends towards the end of January. Small business owners and HR staff can reinforce that knowledge by reminding employees when they sign up for health insurance about open enrollment dates and sending out reminders before and during this period.
Occasionally, life throws a curve outside the enrollment period and you or your staff may need to make a change. The Affordable Care Act allows for certain “life events” that earn a special enrollment period. What are these qualifying life events and how does special enrollment work?
What is Special Enrollment?
The ACA allows for a special enrollment period to handle those changes that don’t happen during the open enrollment. Qualifying life events (QLE) enable employees to get health insurance either through their employer or by purchasing a policy independently from their employer. If an employee does qualify for special enrollment period thanks to a life event, they must change or get a plan within the enrollment window, which for most events is 60 days. For example, if they get married on March 30th, they have until May 30th to take advantage of the special enrollment period or wait for open enrollment. Small business owners can help ensure they meet this deadline.
What are Qualifying Life Events?
The exact list of life changing events that qualify for special enrollment can vary based on circumstances but some common events that generally create a 60-day special enrollment period include:
- Adding or losing a dependent—This generally covers birth, adoption, and giving up a child for adoption or to foster care.
- Marriage—This generally means a spouse can be added to an existing policy or an entirely new policy may be selected for both spouses.
- Divorce—Divorce might mean a staff member needs to drop someone off their insurance or might need to get their own insurance if they were previously covered by their spouse.
- Death—The passing of a family member (whether a dependent or a spouse) can change an employee’s eligibility for tax subsidies or lead them to purchase a new plan.
If the company or employee loses coverage on an ACA-compliant plan, they would qualify for special enrollment. There are a number of reasons one might lose coverage such as:
- The plan becomes unaffordable, generally meaning it costs more than 9.5 percent of the employee’s income.
- The company must lay people off without benefits
- Employee termination
- The company loses its employer-based health insurance plan
- The employee loses COBRA benefits
- The individuals loses access to a state program like Medicaid, TRICARE or CHIP
Healthcare.gov breaks QLE down into four categories:
- Loss of health coverage— for example, turning 26 and losing existing coverage from a parent’s plan
- Changes in the household— for example, getting married or having a baby
- Changes in residence—for example, moving to a different county or move into transitional housing
- Other—for example, a drastic change in income or becoming a U.S. Citizen
A special enrollment period generally does not kick in if the employee voluntarily leaves the company or if the insurance company drops them for missing payments.
Staying informed about what qualifying life events trigger special enrollment is a proactive way for employers to counsel staff on maintaining affordable insurance if there is a change in their lives and it ensures they don’t miss that window of opportunity to get the best coverage.