TONY WILSON: A ‘qualifying event’ could change health coverage

Tony Wilson

Tony Wilson

Now that Open Enrollment has officially closed for individuals seeking medical coverage under the Affordable Care Act (ACA), I’m asked this question several times a week by people who missed the deadline, “Well, what do I do now?”

What they and any others who have procrastinated will have to do is wait until the next Open Enrollment period, which currently is scheduled for Nov. 15, 2014, through Feb. 15, 2015, according to the healthcare.gov website. (Of course, that could change by the time you are done reading this column.)

The idea behind having an enrollment period is so that people don’t simply enroll when they need services rendered and then disenroll once the services are performed. This helps provide stability to the insurance market.

Those who missed open enrollment should also be prepared to pay up to $95 for a single person/$285 for a family or 1 percent of their household income in the form of a penalty when they file their taxes for calendar year 2014 in 2015 — assuming they file a return.

The penalty applies to each month a person is uninsured. Those assessed a penalty will owe 1/12 of the penalty for each of those uninsured months. If a person is uninsured for three months or less no penalty will be due.

But what happens if you were covered at the time of Open Enrollment, but you subsequently lost or lose that coverage? If you have a qualifying event you can enroll without waiting until November and you could avoid the penalty by being enrolled.

Healthcare.gov defines a qualifying event as “a change in your life that can make you eligible for a Special Enrollment Period to enroll in health coverage.”

Some of the more common qualifying events I see in working with clients include: marriage/divorce/legal separation; birth or adoption; loss of employer sponsored health coverage through employment termination or a reduction in hours; loss of coverage for a dependent child who has reached the dependent limiting age; exhaustion of COBRA/state continuation; loss of eligibility for Medicaid or CHIP; death of the policyholder; or no longer incarcerated.

While “loss of employer sponsored health coverage” as outlined above is a common issue we are starting to see another qualifying event added to this list: the cancellation by the employer of the group health insurance coverage.

As health insurance costs continue to increase — especially with the new fees and taxes the ACA has layered on top of rising premiums — more and more business owners are asking themselves if they want to continue offering coverage at all. This is a point of discussion regularly with employers in the small group market (less than 50 employees).

Should your employer decide to no longer offer a health plan or make contributions to an existing plan, you would be eligible to enroll for coverage under these circumstances as a qualifying event.

In most cases the law allows you up to 60 days from the date of the qualifying event to enroll for coverage. If you enroll prior to the 15th of the month your coverage is effective on the first of the following month. If you enroll between the 16th and the end of the month then your coverage is effective on the first of the second subsequent month.

There is an exception to this 60-day rule: if your current plan is renewing outside of Open Enrollment, you do have a 30-day window for enrollment.

The key, regardless of your situation, is to act as quickly as possible to seek other coverage and get enrolled as soon as you have “a change in your life.” You do not want to delay unnecessarily and not be able to enroll — especially when it could lead to a penalty.

Questions or comments? Feel free to email me at twilson@nfp.com.

Tony L. Wilson is a partner with NUVISION Financial Corporation based in Conyers. NUVISION is a subsidiary of National Financial Partners Corp. (NFP), which provides benefits solutions for companies.