Understanding Special Enrollment Periods and Qualified Life Change Events

For ACA Marketplaces Open Enrollment is a (mostly) set period between November 1st and January 31st. During those 90 days, you can enroll in any plan you like and even change it if you find you don’t like. But once Open Enrollment is over, you may not change plans – or even enroll.

Enter the Special Enrollment Period. For a limited number of circumstances, the ACA recognizes ‘Qualified Life Change Events’ or QLCEs. Moved to a new state? Congrats, you have a QLCE! Broke your leg so now you actually need health insurance? Sorry, you can’t enroll until next Open Enrollment.

A QLCE opens a 60 day Special Enrollment Period. It’s not the same as Open Enrollment – you can’t necessarily change plans within that 60 days if you don’t like the one you have – but during that time you can enroll. In some cases, like having a baby or adopting a child, you can change an existing plan – but often once that change it made, you’re stuck with it even if the 60 days haven’t elapsed yet.

So, let’s make this clearer.

Bob moves to Colorado on June 1st. His old plan from Montana won’t cover anything but emergencies so he needs a new plan. His QLCE is that he is a new resident. Bob goes online, creates an account, fills out an application and enrolls.  Bob now has a Colorado health plan (usually starting the following month). But as far as Colorado is concerned, he’s used up his QLCE. If he finds a plan he likes better he can’t change to the new plan even though it’s only June 15th and he still has nearly 45 days remaining in his Special Enrollment Period.

Mary has a Colorado plan that covers her and her husband. On June 1st, Mary gives birth to Little Baby Billy. The birth gives Mary and her husband the QLCE they need to add Billy to their plan – or to change to a completely different plan.

Why the difference? The logic is basically that Bob is a big boy and should have had a good idea of his needs when he enrolled, but the addition of Billy to Mary’s family changes the family’s needs.

Tom loses a big contract and his self employment income falls to the point that he is now eligible for Advance Premium Tax Credits (APTC – we’ll just call ’em tax credits). He already has a plan – does he have a QLCE? The answer is yes – and he can change his plan.

Jane has a plan and has tax credits to help pay for it. Her income drops and when she reports it, her tax credits are increased. Does she have a QLCE? No, Jane can’t change plans – but her new tax credits will be applied to her existing enrollment (ironically, by re-enrolling her in the same plan).

What’s the difference here? Well, the logic is a bit murkier. The assumption is that Tom would have purchased differently had his income/tax credits been different when he originally enrolled. The new eligibility (not application – this is important) changes the picture of what he can afford, and quite possibly how the Silver level plans behave (if he is also now eligible for a Cost Share Reduction) so he is allowed to adjust his plan to fit his new circumstances.

Jane, however, already had tax credits and presumably a good idea of what she could afford / what she needed. A change in tax credits doesn’t – theoretically – change that. Of course, if Jane is now receiving a much larger tax credit than she did originally, the logic falls on its poor little face. Which doesn’t help Jane – she still can’t change plans.

New resident is one of the most common QLCEs but we should also chat about Loss of Coverage. If, though no action of your own, you lose coverage, then you have a QLCE and a Special Enrollment Period (60 days from the loss of coverage) – and can enroll.

Mark has a plan through his employer but the company has just changed him over to part time and he is no longer eligible for the company insurance. His insurance ends June 30. Does Mark have a QLCE? Sure does – and he can enroll through the Marketplace.

Tina’s wages went up and she lost her Medicaid effective June 30 – does she have a QLCE? Absolutely – she can enroll just like Mark.

Vinnie decided to cancel his insurance because he didn’t like the plan. Does he have a QLCE? NO! This is his own decision and he will no receive a Special Enrollment Period – he won’t be able to enroll until Open Enrollment and then for the next calendar year. Willfully causing the loss of coverage does NOT create a QLCE – think long and hard before terminating the policy you have – you likely won’t be able to get another ACA compliant policy for the rest of the year.

The same is true if your policy is cancelled for non-payment. The ACA treats it as if you had willfully terminated the plan. If your state’s Marketplace and/or the insurance company aren’t willing to re-instate the plan, you won’t have coverage. And no, it may not matter that your payment didn’t go through due to an error – once terminated for non-payment the prospects are bleak.

And last but not least, the “Coverage is No Longer Affordable” QLCE. This one is a mine field – and here’s the map:

If the employer sponsored coverage you have costs you more than 9.5% (this varies so look up the most current numbers if you are considering applying for this) to cover JUST YOU, then the Federal government considers it unaffordable. You have 60 days from the time if becomes unaffordable to enroll through the Marketplace.

Don’t even consider terminating existing coverage until you have filled out the forms and done all the math. Insurance companies can contest a QLCE – and if you can’t prove this applies, you will lose your coverage and probably won’t be able to get back on the employer coverage.

Sally’s employer sponsored coverage is increasing her premium. Her new premium will be $177.99 each month. Sally makes $22000 each year. Does Sally have a QLCE? Yes, $177.99 times twelve equals $2135.88 which comes out to a little better than 9.7% of her income. Since 9.7 is bigger than 9.5, Sally has a QLCE. She can terminate her company’s coverage and enroll with the Marketplace. She has 60 days from the premium increase to enroll through the Marketplace.

The Arithmetic Police are screaming about now – because if her premium increased in July, then it won’t be more than 9.5% of her annual income. They’re correct – but the ACA still treats Sally as if the increase applied to the whole year because the monthly premium is still having a disproportional effect on her monthly income.

Now for the nasty sting in the tail:

Bobby and Katherine have a plan with Bobby’s company that covers them and their five kids. Bobby’s premium increases to $525.42 a month for the whole family. The household income is $65000  which is 9.7% of the household income – Do Bobby and Katherine have a QLCE? Unfortunately, no. Bobby’s own premium is only $125 each month – which is well below 9.7% of the household income. The Federal government deems this affordable. Worse, because Katherine and the kids have Bobby’s employer sponsored coverage available to them, they are not eligible for a tax credit.

So, when Open Enrollment finally comes around, Katherine and the kids can enroll in the Marketplace – but they must pay full price. If the numbers in this example are real, the chances that Bobby and Katherine will save any money by enrolling through the Marketplace are extremely low – $525 a month for six people is a hard deal to beat.

But why is it ‘affordable’ for seven people to pay more than 9.5% of their household income but not for one person? That is anyone’s guess.

 

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