What is a Qualifying Life Event? What are SEPs?

With the Affordable Care Act (ACA) in place, anyone applying for individual health insurance is assured of approval and enrollment. Typically, enrollment is restricted to the open enrollment period. But life can be unpredictable, and certain life events may allow you to enroll in or change your health insurance plan outside the standard period. This is known as a special enrollment period.

In this comprehensive guide, we will delve into the intricacies of special enrollment periods. We aim to simplify the process and provide you with a clear path to adjusting your health insurance in response to significant life changes.

What is a Qualified Life Event?

A Qualifying Life Event (QLE) is a significant change in an individual’s life that may affect their health insurance needs and allows them to make changes to their existing health insurance coverage outside of the regular enrollment period. These events are typically defined by health insurance regulations and may vary by country or region.

What Triggers a Special Enrollment Period?

A special enrollment period is a window outside the usual open enrollment period, allowing you to enroll in or change your health insurance plan. This period typically extends 60 days before and after the triggering event. Such events are vital as they ensure you don’t face a gap in coverage should you lose your insurance unexpectedly.

There are four primary types of events that can trigger a special enrollment period:

Loss of Health Coverage: This includes losing employer-sponsored insurance, COBRA coverage, individual health plans, or eligibility for government programs like Medicaid, CHIP, or Medicare.
New Health Benefit Offers: Becoming eligible for new health benefits like a Health Reimbursement Arrangement (HRA) can also open a special enrollment window.
Changes in Household: This covers events like marriage, birth, adoption, or divorce, which significantly alter your family composition.
Changes in Residence: Moving to a new location can impact your health insurance needs and options, triggering a special enrollment period.

Understanding the Special Enrollment Criteria

Each qualifying event has its own set of rules and criteria. Let’s explore these in more detail:

Health Coverage Loss

This category includes instances where one previously had health insurance but no longer does. Situations that fall under this include:

Loss of health insurance sponsored by an employer.
Expiration or termination of COBRA coverage.
Termination of a personal health insurance plan.
Loss of eligibility for Medicaid or the Children’s Health Insurance Program (CHIP).
No longer qualifying for Medicare.
Discontinuation of coverage obtained through a relative.

Let’s delve into these circumstances in further detail.

Job-Based Coverage Loss: Losing health insurance provided by your or a family member’s employer could make you eligible for a special enrollment period. Exceptions include voluntary discontinuation of coverage or non-payment of premiums. Common reasons for losing such coverage are:

Employer termination of your health plan.
Leaving or being terminated from a job that provided health insurance.
Reduced working hours leading to loss of coverage.
The employer’s plan not meeting minimum essential coverage standards and you qualify for a premium tax credit.

Losing COBRA Coverage: Qualification for a special enrollment period arises if COBRA coverage ends due to its term completion or if an employer stops subsidizing it. However, if COBRA is discontinued prematurely by the individual or due to non-payment, qualification for a special enrollment period is lost. Dropping COBRA during open enrollment does not require a special enrollment period.

Individual Health Coverage Loss: This can occur under circumstances like:

The insurer discontinuing the individual policy.
Loss of eligibility for student health insurance.
Moving out of a policy’s service area.
Non-renewal of individual or group health coverage mid-year.
Voluntarily dropping a health plan or failure to pay premiums or provide necessary documentation disqualifies one from a special enrollment period.
Medicaid or CHIP Eligibility Loss: Changes in income or ineligibility due to pregnancy-related factors, or a child aging out of CHIP, can lead to qualification for a special enrollment period.
Medicare Eligibility Loss: Losing eligibility for Medicare Part A may qualify for a special enrollment period, but this does not apply for loss of Parts B, C, or D, or non-payment of premiums for Part A.
Losing Coverage Through a Family Member: Events such as reaching age 26 and losing dependent status, a family member’s employer plan ceasing dependent coverage, death of the family member, or divorce can qualify for a special enrollment period. Voluntary termination of dependent coverage or non-payment of premiums, however, does not qualify.

New Health Benefit Offer

The second type of life event that qualifies for special considerations involves the offer of a new health benefit. Should you become eligible for a health reimbursement arrangement (HRA), including options like a qualified small employer HRA (QSEHRA) or an individual coverage HRA (ICHRA) outside the typical enrollment period, a 60-day special enrollment opportunity is available to you.

In this period, you have the option to select a health insurance policy that aligns with your HRA, allowing for tax-free reimbursement. For those whose employers provide HRAs through PeopleKeep, assistance is available through Stride, a service that assists in finding the most suitable health insurance plan, taking into account individual needs and financial constraints.

Alterations in Household Composition

This section explores how variations in your household can make you eligible for a special enrollment period. Changes in family size, either through expansion or reduction, necessitate a reassessment of your health insurance needs.

Key household changes that qualify include:

Marriage: A recent marriage within the last 60 days enables you to select a health insurance policy by the end of the month, allowing coverage to commence on the first day of the subsequent month.
Birth, Adoption, or Foster Care: If you’ve recently had a baby, adopted a child, or placed a child in foster care, applying for coverage within 60 days of the event will ensure that your coverage is backdated to the date of the event.
Divorce or Legal Separation with Resultant Loss of Insurance: Eligibility for a special enrollment period is contingent on losing health insurance due to divorce or legal separation.
Death of a Spouse or Dependent on Your Policy: The death of a person listed on your health insurance policy, which results in your ineligibility for the current plan, also qualifies you for a special enrollment period.

Relocation-Triggered Enrollment Opportunities

The final principal category for qualifying life events concerns changes in residence. Since health insurance markets and policy costs differ by location, relocating triggers a special enrollment period, allowing you to enroll in a new health insurance plan.

Circumstances that qualify under residence changes include:

Relocating to a Different Home: This applies if you move to a new home in a different zip code or county.
International or Territorial Moves: Arriving in the United States from a foreign country or a U.S. territory qualifies you for a new policy.
Student Relocations: Students moving to or from their educational institution’s location are eligible for a special enrollment period.
Seasonal Worker Moves: If you’re a seasonal worker, moving to or from your work and living location qualifies you for this period.
Transitional Housing Shifts: Moving to or from shelters or other forms of transitional housing also qualifies for a special enrollment period in health insurance.

Additional Scenarios for Special Enrollment Eligibility

While the previously mentioned life events are clear pathways to a special enrollment period, there are other unique situations that may also grant you eligibility to sign up for health insurance outside the standard enrollment window.

Here are some of these special circumstances that, while not classified as qualifying life events, could open a window for special enrollment:

Exceptional Circumstance Events: You’re entitled to a special enrollment period if you were unable to enroll during the open enrollment due to significant medical conditions or natural disasters. 

Examples include:

  Unexpected hospital stays.
  Temporary cognitive impairments.
  Natural disasters such as earthquakes, extensive floods, or hurricanes.

Enrollment or Policy Information Errors: If errors by an insurance company, exchange navigator, or an insurance agent/broker prevented your enrollment, you’re eligible for a special enrollment period. This includes misinformation, misrepresentation, or technical errors during application on your public health exchange.
Residing Previously in Non-Medicaid Expansion State: If you lived in a state that hadn’t expanded Medicaid and weren’t eligible due to low income but now qualify, you’re eligible for special enrollment. This applies if you’ve recently moved or had an income increase making you eligible for Medicaid or advance payments of your premium tax credit.
Medicaid or CHIP Ineligibility: If you applied for Medicaid or CHIP during open enrollment and were declared ineligible afterwards, you may qualify for a special enrollment period.
Dependent Changes Due to Court Order: Gaining or becoming a dependent because of a court order entitles you to a special enrollment period, with coverage starting from the court order date.
Survivors of Domestic Abuse or Spousal Abandonment: Special enrollment periods are available for survivors of domestic abuse or spousal abandonment. This includes dependents, and allows for application as unmarried in certain circumstances.
Favorable Appeal Decisions: Winning an appeal with your exchange regarding incorrect eligibility determinations for a special enrollment period or coverage effective date allows you to enroll or change policies.
Living at Federal Poverty Level: A special enrollment period exists for those living at or below 150% of the federal poverty level, especially if eligible for premium tax credits covering a benchmark plan cost.

To apply for a special enrollment period, visit the federal Health Insurance Marketplace or your state-based exchange. The process depends on whether you’re applying due to a qualifying life event or another special circumstance. For special circumstances, it’s recommended to contact the Marketplace directly for guidance and eligibility confirmation.

Applying for a Special Enrollment Period

To apply, you’ll need to contact the Health Insurance Marketplace or your state-based exchange. The process may vary slightly based on your specific situation and the nature of your qualifying event.

If your request for a special enrollment period is denied, you have the right to file an appeal. This can be done by submitting an appeal form to the Health Insurance Marketplace with the necessary documentation.

Verifying Your Qualifying Event

You may need to provide documentation to verify your qualifying life event. The required documents and submission process will depend on the nature of your event. The Health Insurance Marketplace will guide you through this process.

What If You Don’t Have a Qualifying Event?

If you don’t have a qualifying life event or special circumstance, you’ll typically need to wait for the open enrollment period. However, there may be other options available, such as reimbursement for medical expenses through a QSEHRA or ICHRA if offered by your employer.

Navigating the complexities of health insurance can be challenging, but understanding special enrollment periods can make a significant difference. At Take Command, we are committed to guiding you through these changes, ensuring you have the coverage you need when life takes unexpected turns. For more detailed guidance and state-specific information, don’t hesitate to explore our comprehensive Open Enrollment Guide.

Options When Lacking a Qualifying Event or Special Circumstance

In scenarios where you haven’t encountered any of the listed qualifying life events or special circumstances but still wish to enroll in health insurance, your primary option is to wait for the next open enrollment period.

However, for individuals whose employers provide a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or Individual Coverage Health Reimbursement Arrangement (ICHRA), there is an alternative: you’ll have a special enrollment period for 60 days once it’s offered to choose an eligible health plan through your state exchange, Healthcare.gov, or our own marketplace at Take Command. 

In some cases, you’re also eligible to seek reimbursement for qualified medical expenses under these arrangements.

The key requirement is to report these reimbursements as part of your gross income. Once you obtain a policy that fulfills the minimum essential coverage criteria, you become eligible for tax-free reimbursements.

Offering an HRA: A Strategy to Protect Employees from Job-Related Insurance Loss

In today’s dynamic job market, employees often face uncertainties, particularly in terms of job stability and the associated loss of employer-provided health insurance. This is where offering a Health Reimbursement Arrangement (HRA) can be a strategic move for employers. An HRA not only adds value to your employee benefits package but also provides a safety net for your employees against the loss of job-related health insurance.

Here’s how:

Continued Coverage in Times of Transition

One of the most significant benefits of an HRA is that it offers continued healthcare coverage, even if an employee loses their job-based insurance. This is particularly crucial during periods of unemployment or when transitioning between jobs. An HRA can be designed to provide coverage for a set period after employment ends, giving employees peace of mind and health security during job changes.

Flexibility and Personalization

HRAs offer a degree of flexibility that is often lacking in traditional employer-sponsored insurance plans. Employees can use HRA funds to purchase individual health insurance that best suits their needs and preferences. This means that if they leave their job, they can continue with the same insurance policy without any disruption, as long as they have HRA funds available.

Cost-Effective for Employers

For employers, HRAs present a cost-effective way to provide health benefits. Unlike traditional health insurance plans, HRAs allow employers to set caps on their contributions. This control over costs helps small and medium-sized businesses offer competitive health benefits without the financial strain of a conventional group health insurance plan.

Tax Benefits

HRAs offer tax advantages to both employers and employees. Employers can deduct their HRA contributions as a business expense, while employees benefit from tax-free reimbursements for qualified medical expenses. This creates a win-win situation, reducing the overall financial burden of health care costs.

Support in Compliance and Administration

Navigating the complexities of HRA compliance can be challenging. Take Command assists businesses in setting up and administering HRAs while ensuring compliance with all relevant regulations. Our expertise in HRA management ensures that your business can provide this valuable benefit without the administrative hassle.

Enhancing Employee Loyalty and Satisfaction

Providing an HRA can significantly boost employee satisfaction and loyalty. It demonstrates an employer’s commitment to the well-being of their workforce, which can be a key factor in attracting and retaining top talent. In an era where employees value health benefits highly, an HRA can be a distinguishing factor that sets a company apart.

In conclusion, by offering an HRA, employers can play a pivotal role in insulating their employees from the impacts of job-related insurance loss. It’s not just about providing a benefit but about offering a sense of security and continuity in healthcare coverage. At Take Command, we’re committed to helping you implement and manage HRAs effectively, ensuring that both you and your employees reap the full benefits of this versatile health care solution.

Simplify Your Health Benefits with Take Command

At Take Command, we understand the complexities of health insurance, especially when it comes to enrolling outside the standard open enrollment periods. Whether you’re an individual facing life changes or an employer seeking to offer more streamlined health benefits through a QSEHRA or ICHRA, we know that navigating these waters can be challenging.

That’s why we’re here to assist with HRA administration and to simplify your employee benefits. Our expertise ensures that both employers and employees make the most informed decisions, taking full advantage of their health benefits. With our support, the daunting task of health insurance navigation becomes a streamlined and rewarding experience.

We encourage you to reach out to us at Take Command. Let us guide you through the intricacies of health insurance, making it a beneficial journey for you and your team. Together, we can transform the way you manage health benefits, making it as effortless and effective as possible.