Open Enrollment Period: Why It's So Important for Health Insurance
Each year the Affordable Care Act (ACA) – the government sponsored health insurance exchanges offering private coverage to just about everyone – hold an open enrollment period.
This is a window during which you may apply for coverage on the exchanges if you do not currently have health insurance.
Why is the open enrollment period so important for health insurance? And what happens if you are unable to apply within the time limits?
What Does the Open Enrollment Period Mean?
Ever since the ACA became law, the health insurance exchanges have been open from November 1 through December 15 of each year as an open enrollment period.
Anyone can enroll in health insurance coverage without any special circumstances or requirements.
In 2020, for instance, the open enrollment period runs from Sunday, November 1 through Tuesday, December 15.
During the open enrollment period, you’re eligible to obtain health insurance coverage on the marketplace if you are a U.S. citizen or national, you live in the US, and you’re not incarcerated.
Put another way, the health insurance exchanges are available to provide health insurance for the general population.
This takes in anyone who is not covered by Medicare or an employer-sponsored plan.
How Does Open Enrollment Apply to Employer Health Insurance?
The open enrollment period for the health insurance marketplace does not apply to employer-sponsored health insurance plans.
Instead, each employer-sponsored plan has its own specific enrollment dates.
For example, some employers may provide coverage on the first day of employment, though this is a rare arrangement.
More typically, a new employee will have to go through a waiting period before he or she is eligible to apply.
This can be anywhere from 30 days to six months after employment begins.
If you are currently employed and covered by an employer-sponsored health insurance plan, your coverage will automatically renew unless you intentionally opt out or fail to select a new coverage option after the employer has changed insurance carriers.
The waiting period applies only to new employees.
How Does Open Enrollment Apply to Marketplace Plans that You Buy on Your Own?
If you’re already enrolled in a marketplace plan open enrollment does not apply to you, so long as you renew your existing coverage by the required date of the plan.
However, if you are currently uncovered by a health insurance plan, you will need to apply for a marketplace plan during the open enrollment window.
Though the health insurance marketplace is government-sponsored and mandated, participating health insurance companies are private providers.
You’ll have the option to select both the insurance company and the specific policy type that works best for you and your family, and fits within your budget.
The open enrollment period applies only to those applying for coverage through the marketplace where there are no specific special events that would enable you to apply for coverage outside that timeframe.
There are exceptions, which we’ll cover in the next section.
Eligible Events/Life Events
If you need coverage before or after the open enrollment period, you may still qualify to get coverage under the Special Enrollment Period (SEP).
This is a time outside the open enrollment period when you can sign up for coverage if you experience certain life events.
You lost employer-sponsored health coverage
One of the most prominent is losing employer-sponsored health coverage.
Let’s say you’re separated from your employer on July 1.
Under normal circumstances, you wouldn’t be able to apply for coverage on the health insurance marketplace until November 1.
But, since separation from an employer and loss of health insurance qualifies as a SEP event, you’ll still be able to apply for coverage even outside the open enrollment period.
Under ACA rules, you’ll have up to 60 days before or 60 days following the loss of your health insurance to enroll in a health insurance plan on the health insurance marketplace (Healthcare.gov).
Divorce or legal separation
You may also be eligible to apply for coverage during the SEP pursuant to a divorce or legal separation resulting in the loss of health insurance coverage, or if someone on your marketplace plan dies, leaving you ineligible for your current plan.
Losing coverage under parent's plan
Still another SEP is aging out.
You are eligible to participate in your parent’s health insurance plan up until you reach age 26.
At that point, you would be required to get your own coverage and would be eligible under loss of health insurance coverage.
Other special events
Other common qualifying events include:
- getting married
- having a baby
- adopting a child
Each of those events will qualify you for the SEP, even outside the open enrollment window.
The same rules will apply as if you lost your health insurance coverage – you’ll need to make an application on the marketplace within 60 days before or 60 days after the event takes place.
That will give you a special window of 120 days to apply for coverage on the exchanges.
Moving has special requirements for eligibility.
You must move to a new home in a new ZIP Code or county, relocate to the U.S. from either a foreign country or a U.S. territory, move to a new location as a seasonal worker, move to or from a shelter or other transitional housing, or, if you’re a student, move to or from the place you attend school.
Other events that make you eligible for the SEP include:
- Gaining membership in a federally recognized tribe or status as an Alaska Native Claims Settlement Act Corporation (ANCSA) shareholder.
- Becoming newly eligible for marketplace coverage because you became a US citizen.
- Being discharged from incarceration.
- Starting or ending service as an AmeriCorps State and National, VISTA, or NCCC member.
What if You "Miss" the Open Enrollment Period – What Should You Do?
If you miss the open enrollment period, you should start by applying for health insurance coverage on the marketplace based on any of the special events listed in the section above.
If your application is declined even after you’ve experienced a qualifying event, you can appeal the initial decision.
The appeal process
You’ll generally have 90 days from the date of your eligibility notice – denying your eligibility – to request an appeal.
Go to HealthCare.gov’s How to appeal a Marketplace decision page and follow the steps spelled out.
You’ll need to complete the required appeal forms, and you may be able to get help from a specialist referred to as a “Navigator” (which is described on the same page).
How Does Open Enrollment Apply to Medicaid or CHIP?
Medicaid and “CHIP” – short for the Children’s Health Insurance Program – are designed to provide free or low-cost health insurance coverage to families with children, pregnant women, some low income-households, the elderly, and people with disabilities.
Because of the various reasons you can qualify, you should apply for either plan even if you don’t believe you qualify based on your income.
You can apply for either Medicaid or CHIP either through your state's Health Insurance Marketplace or directly through your state’s Medicaid agency.
The open enrollment period under the ACA does not extend to either Medicaid or to CHIP.
You may apply for either program at any time.
Types of Health Insurance Without Open Enrollment
Employer-sponsored health insurance plans
The most obvious exclusion to the open enrollment period is employer-sponsored health insurance plans.
However, each has its own enrollment period for new employees as determined by the employer. As discussed earlier, this is generally anywhere from 30 days to as long as six months.
Medicaid or CHIP
As covered in the previous section, enrollment in either Medicaid or CHIP is not determined by the open enrollment period for the ACA.
The same is true of Medicare. You’re eligible to apply for Medicare once you turn 65, or any time thereafter.
Health sharing ministries
Still another category of health insurance – or rather health insurance equivalents – are health sharing ministries.
These are probably the closest thing there is to what used to be traditional private life insurance policies.
But they’re sponsored by organizations, typically faith-based, and are restricted to applicants sharing the same faith.
They’re generally more limited in scope than traditional insurance, in that there is a fixed dollar limit on the amount of benefits you can receive in any one year, or even for a lifetime.
However, they do qualify as health insurance under the ACA. Still, health sharing ministries are not subject to the ACA open enrollment period.
Since they are privately administered, you can apply for a plan at any time.
Other Changes Related to Open Enrollment
There are certain health-related plans that are not actual health insurance, but tax-favored plans to help participants cover the cost of out-of-pocket expenses connected with their health insurance plans.
One common plan is the Flexible Spending Plan or FSA.
However, since this plan is employer-sponsored, and tied to an employer-sponsored health insurance plan, it is not subject to the ACA open enrollment period limits.
You can participate in the plan at any time your employer permits you to do so.
Health Savings Accounts (HSAs) may also be offered by employers – also in connection with a health insurance plan – or you can set up an account on your own.
An HSA requires being used in conjunction with a high deductible health insurance plan, as defined by the IRS.
Since the plans are typically tied to an employer-sponsored health insurance plan, the ACA open enrollment period does not apply.
However, if you are using a Marketplace health insurance plan as the base plan with your HSA, you will obviously be subject to the open enrollment period or an eligible special enrollment period exception.
It may seem like a serious limit to be restricted to a time period to enroll in health insurance coverage only.
But, there are enough exceptions and alternatives that the vast majority of consumers won’t be affected by the time limit.