What Happens If You Don’t Do Open Enrollment?

Open enrollment is an annual period when individuals can secure, modify, or re-enroll in a health insurance plan. This timeframe is typically limited to a few weeks, often occurring in the fall, to establish coverage for the upcoming year.

Consequences of Missing Open Enrollment

Missing the open enrollment period generally means individuals will be without health insurance coverage for the upcoming year. This lack of coverage exposes individuals to substantial financial risk, as they become personally responsible for the full cost of medical care. Unexpected illnesses, injuries, or even routine medical services can lead to considerable financial burdens.

The financial impact of being uninsured can be severe, potentially leading to medical debt. Hospital stays, emergency room visits, prescription medications, and diagnostic tests can accumulate costs quickly, placing a heavy strain on personal finances. Without insurance, access to timely medical care can be restricted, potentially worsening health conditions and leading to more complex issues.

There is no longer a federal tax penalty for not having health insurance, as this federal mandate was eliminated after 2018. However, some states have implemented their own individual health insurance mandates and associated penalties for non-compliance. These state-specific penalties vary in amount and enforcement, often calculated as a flat fee or a percentage of income, and are assessed via state tax returns.

For employees covered by employer-sponsored health plans, missing the open enrollment period carries specific consequences. Employees are unable to enroll in a new plan or make changes to their existing coverage until the next annual open enrollment period. This restriction applies unless a specific qualifying life event occurs, which would then trigger a special enrollment opportunity.

Special Enrollment Periods

Missing the standard open enrollment period does not always mean an individual will remain without health coverage for the entire year. Certain life events can trigger a Special Enrollment Period (SEP), allowing individuals to enroll in or change a health plan outside the regular enrollment window. An SEP provides a crucial opportunity to obtain coverage when significant life changes occur.

Qualifying Life Events (QLEs)

Qualifying life events (QLEs) encompass a range of circumstances that necessitate a change in health coverage. These include changes in household, such as marriage, divorce, legal separation, or the birth, adoption, or placement of a child. QLEs can also involve changes in residence, like moving to a new area where different health plan options become available.
Another common QLE is the loss of other health coverage. This includes losing job-based insurance, COBRA coverage ending, or aging off a parent’s plan, typically at age 26. Changes in income that affect eligibility for subsidies or programs like Medicaid or the Children’s Health Insurance Program (CHIP) can also qualify individuals for an SEP.

SEP Timelines and Documentation

Special Enrollment Periods generally last 60 days from the date of the qualifying event. Act quickly within this window, as missing the deadline usually means waiting until the next open enrollment period.
Applying for an SEP requires documentation to verify the qualifying life event. Documentation includes a marriage certificate, birth certificate or adoption decree, termination notice from a previous insurer, or proof of new residence like a lease agreement or utility bill.

Application Process

Individuals can apply for an SEP through the Health Insurance Marketplace (Healthcare.gov) or their state’s health insurance exchange. For employer-sponsored plans, contact the employer’s human resources department. The Marketplace or employer will guide the applicant through document submission.

Alternative Coverage Options

Even if open enrollment has passed and an individual does not qualify for a Special Enrollment Period, other avenues for health coverage may exist.

Medicaid and CHIP

Medicaid and the Children’s Health Insurance Program (CHIP) are government-sponsored programs that provide free or low-cost health coverage. Eligibility for these programs is based primarily on income and family size, and enrollment is available year-round, not restricted to specific enrollment periods. Individuals can apply for Medicaid and CHIP through their state Medicaid agency or the Health Insurance Marketplace.

Short-Term Health Insurance

Short-term health insurance plans offer a temporary solution for coverage gaps. These plans provide limited benefits and are not required to comply with all federal health insurance consumer protections, such as covering pre-existing conditions or essential health benefits. They are used by individuals seeking temporary coverage, but are not a substitute for comprehensive long-term health insurance.

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to continue health coverage after leaving employment or experiencing a reduction in work hours. COBRA applies to group health plans offered by private-sector employers with 20 or more employees and state and local governments. While COBRA allows individuals to maintain existing employer-sponsored coverage, they are responsible for paying the full premium, which can include an administrative fee.

Direct Purchase from Insurers

Some health insurance companies offer plans directly to consumers outside the Health Insurance Marketplace. While these plans provide a direct purchasing option, they may not be eligible for premium tax credits or cost-sharing reductions available through the Marketplace. Individuals should compare coverage and costs when considering direct purchases from insurers.

Healthcare Sharing Ministries

Healthcare sharing ministries are an alternative where members share medical costs based on shared ethical or religious beliefs. These ministries are generally not considered health insurance and are not regulated as such. They do not guarantee payment of medical bills and may have limitations on what services or conditions are eligible for sharing.