What Is a Qualifying Event for Health Insurance?
Understand how significant life changes can impact your health insurance coverage and the options available to adjust your plan outside of open enrollment.
Understanding what constitutes a “qualifying event” is important for managing health insurance coverage. These events are specific changes in an individual’s life that permit adjustments to health plans outside of the typical annual enrollment period. Recognizing these circumstances allows individuals to maintain continuous health coverage, preventing gaps that could otherwise arise. Navigating these situations effectively helps ensure access to necessary medical care.
Defining Qualifying Events
A qualifying event is a life change that allows individuals to enroll in or change health insurance plans outside the standard open enrollment period. Without such an event, changes are generally restricted to the annual open enrollment window.
Common qualifying events often involve a loss of minimum essential coverage, such as losing job-based health insurance due to termination of employment, reduced work hours, or an employer ceasing to offer coverage. The expiration of COBRA continuation coverage also qualifies.
Changes in family status represent another significant category of qualifying events. Examples include getting married, divorce or legal separation, the birth of a child, adoption, or placement for foster care. The death of a covered family member can also be a qualifying event for remaining family members.
Relocating to a new residential area where different health plans are available can also be a qualifying event. Other qualifying events include gaining United States citizenship or lawful presence, release from incarceration, or changes in income affecting eligibility for financial assistance through the Health Insurance Marketplace.
How Qualifying Events Affect Health Coverage
Qualifying events primarily impact health coverage by opening specific avenues for individuals to enroll in or adjust their health plans. One significant pathway is through Special Enrollment Periods (SEPs) on the Affordable Care Act (ACA) Marketplace. A qualifying event triggers a 60-day window during which individuals can select and enroll in a new health plan through their state’s Health Insurance Marketplace or Healthcare.gov.
This special enrollment opportunity allows individuals to gain new coverage or switch plans if their existing coverage no longer meets their needs following a life change. For instance, someone losing job-based coverage can use an SEP to choose a plan from the Marketplace. The 60-day period begins from the date of the qualifying event, not from when the individual learns about it.
Another impact of certain qualifying events is eligibility for COBRA continuation coverage. The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to temporarily continue their employer-sponsored health coverage after specific events. These events include voluntary or involuntary job loss (except for gross misconduct), reduction in hours, or for dependents, events like divorce, legal separation, or the death of the covered employee.
COBRA generally allows individuals to maintain their existing group health plan coverage, often for up to 18 or 36 months, depending on the qualifying event. However, individuals are responsible for the full cost of the premiums, including the portion the employer previously paid, plus an administrative fee, which can make it significantly more expensive than active employee coverage. This option provides a bridge to new coverage but comes with a higher financial burden.
Navigating Your Options After a Qualifying Event
Prompt action is necessary after a qualifying event to ensure continuous health coverage. Individuals must notify relevant parties quickly to initiate their coverage options. For those seeking COBRA, it is important to inform the employer or human resources department about the qualifying event, particularly for events like divorce, legal separation, or a child losing dependent status. Employers have procedures for providing information and election notices.
For Special Enrollment Periods, individuals generally do not need to notify a specific entity immediately but should be prepared to provide documentation of their qualifying event when applying for coverage through the Health Insurance Marketplace. This documentation verifies eligibility for the SEP. Gathering necessary papers, such as a marriage certificate, birth certificate, or termination letter, can streamline the application process.
The timeline for taking action after a qualifying event is stringent. For Special Enrollment Periods through the Marketplace, individuals have 60 days from the date of the qualifying event to select and enroll in a new health plan. Missing this window usually means waiting until the next open enrollment period to secure coverage, potentially leading to a gap in insurance.
Regarding COBRA, after the employer is notified of a qualifying event, they have specific timelines to provide an election notice. Once an individual receives the COBRA election notice, they have 60 days to decide whether to elect coverage. Weighing the cost of COBRA against potential Marketplace plans, especially considering any available subsidies, is a common step in this decision-making process.