While open enrollment is the time of year when individuals typically make changes to their health insurance plan, it’s not the only time modifications can be made. During the course of a year, many people experience life-altering events that necessitate changes in their health insurance.
In this article, we’ll look at what types of life-changing events allow an employee or someone with coverage through the Affordable Care Act (ACA), also known as Obamacare, to make changes to their health insurance plan.
We’ll also define what a special enrollment period is, how you prove you’ve experienced a qualifying life event, how your other insurance plans are affected by these events, and more.
Let's get started.
- What is a qualifying life event?
- What is a special enrollment period?
- How do qualifying life events affect your HSA?
- How do you provide proof of a qualifying life event?
- Can you cancel health insurance without a qualifying event?
- Is quitting or getting fired from your job a qualifying event?
- How do qualifying events impact other insurance policies?
- Consider the overall impact on your finances
According to the IRS, a qualifying life event is an event that causes a change in your life that affects your health insurance requirements or options.
When this happens, it triggers a special enrollment period that makes you eligible to make changes to your group health insurance plan outside the yearly open enrollment period or select a new individual health insurance policy under Obamacare in your state.
Healthcare.gov details four basic types of life events (these are examples, not a complete list):
1. Loss of health coverage
- Losing existing health coverage, including job-based, individual, and student plans
- Losing eligibility for Medicare, Medicaid, or CHIP
- Turning 26 and losing coverage through a parent’s plan
2. Changes in household
- Getting married or divorced
- Having a baby or adopting a child
- Death in the family
3. Changes in residence
- Moving to a different ZIP code or county
- A student moving to or from the place they attend school
- A seasonal worker moving to or from the place they both live and work
- Moving to or from a shelter or other transitional housing
4. Other qualifying events
- Changes in your income that affect the coverage you qualify for
- Gaining membership in a federally recognized tribe or status as an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder
- Becoming a U.S. citizen
- Leaving incarceration (jail or prison)
- AmeriCorps members starting or ending their service
When you experience a qualifying event, you need to notify your health insurance provider and complete the necessary forms to make the appropriate changes to your coverage.
A special enrollment period is a set period of time during which you’re allowed to enroll in or make changes to your health insurance coverage. A special enrollment period last 60 days from the date of the qualifying event.
For example, if you got married on July 1st, you would have 60 days from then (August 29th) to submit the forms needed to make changes to your health insurance, like adding your new spouse.
If you miss making changes during the special enrollment period, you will need to wait until the next open enrollment period.
If your new spouse didn’t have health insurance before the marriage, they can purchase temporary, short-term health insurance coverage or enroll in a state-run program like Medicaid if they are eligible.
If you elect to establish a Health Savings Account (HSA) during your open enrollment period, you can make adjustments to it during the special enrollment period if you experience a qualifying life event.
For example, if you adopt a child and want to increase your contribution to your HSA, you can do that during your 60-day special enrollment period.
Your insurer will most likely ask you for documentation to confirm your qualifying event and make sure you meet the special enrollment period requirements.
Once you’ve submitted paperwork concerning the changes to your health insurance during the special enrollment period, you have 30 days to submit proof of the qualifying event.
The changes you requested during the special enrollment period will not take effect until the necessary documentation has been provided and the required premiums have been paid.
For example, if you were recently married and want to add your spouse to your health insurance plan, you’ll need to provide documentation (i.e., marriage certificate, copy of marriage license) within 30 days of the end of your special enrollment period.
You can cancel your ACA individual health insurance policy whenever you wish, regardless of whether you experienced a qualifying event. But you won’t be able to enroll again until the next open enrollment period. If you get sick or injured during this time, you’ll be without coverage and will have to pay out-of-pocket for your medical expenses.
While you can cancel your individual health insurance anytime, that’s not the case with the coverage you have through your employer. You can only cancel your group health insurance coverage without a penalty if you experience a qualifying life event.
If you don’t experience a qualifying life event and don’t wait for the open enrollment period to cancel your coverage, you and your employer will incur tax penalties.
Quitting your job or being terminated are both qualifying life events. They activate a special enrollment period during which you can either purchase new health insurance or extend your current coverage under the Consolidated Omnibus Reconciliation Act (COBRA).
Once you elect COBRA, you can drop it at any time during the 18-month period in which it’s active or stop paying premiums on the policy. But, that won’t be considered a qualifying life event, which could leave you without coverage unless you enroll in Medicaid (if you’re eligible), buy coverage through your state’s marketplace, or purchase a short-term health insurance plan.
[ Related: When does health insurance after leaving a job? ]
A qualifying life event will not impact any other individual insurance policies you own.
For example, if you decide to enroll in your new spouse’s health insurance plan and you also have group disability insurance through your employer, canceling your health insurance coverage would not impact your disability insurance policy.
Many employees will also leave their group life insurance and short-term disability benefits in place with their current employer even though they move to a new spouse’s health insurance plan.
If that's the case for you, consider applying for an individual disability insurance plan through Breeze. When you own a personal policy, you won't be at risk of losing your coverage if you switch employers.
If you experience a qualifying life event, it’s wise to carefully evaluate how the changes you make to your health insurance will affect your total financial picture.
You may need to decide whether COBRA or ACA coverage is better for you financially or if it would be more beneficial for you to remain on your employer’s health insurance plan even though you recently married and could move to your new spouse’s plan.
Since health insurance is a significant part of everyone’s budget, take your time and weigh your options before making changes to your plan.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.