Lost Your Health Insurance? Not Open Enrollment? What Now?

If you’ve lost your health insurance and you’re looking for a replacement health plan, you may be alarmed to learn that your state's health insurance exchange (and off-exchange market, where you buy coverage directly from an insurer instead of through the exchange) limits plan purchases to an annual open enrollment period (November 1 to January 15 in most states).

But what happens if you’re losing your health insurance and have months to go before the next open enrollment period? How do you get health insurance and avoid being uninsured?

This article will explain what you need to know about enrolling in a new health insurance plan if you're losing your existing coverage mid-year.

We'll be focusing on how the rules work if you're going to be buying your own new coverage. But it's important to also understand that if you have access to an employer-sponsored plan, you'll be able to sign up for that coverage if you lose coverage under another health plan.

Special Enrollment Period

Depending on when and why you lost your health insurance, you may be eligible for a special enrollment period on your state’s Affordable Care Act health insurance exchange (and special enrollment periods due to loss of coverage apply outside the exchange too). A special enrollment period allows you to sign up for health insurance even though it’s not open enrollment.

Special enrollment periods are time-limited and are triggered by specific types of events. If you dawdle and don’t enroll in a new plan before the end of your special enrollment period, you’ll have to wait until the next open enrollment period to sign up. That would mean waiting until November to enroll, with coverage effective in January—not a great solution if it would mean going months without health coverage.

Are You Eligible for Special Enrollment?

Certain qualifying events trigger a special enrollment period (SEP) that will let you sign up for a plan on your state’s health insurance exchange, or directly through a health insurance carrier in the off-exchange market (no financial assistance is available outside the exchange).

Losing your existing coverage (as long as it's minimum essential coverage) will trigger a special enrollment period, as long as you didn't cancel the plan yourself, lose it due to non-payment of premiums, or lose it due to rescission. Here are some specific examples of loss of coverage events that will make you eligible for a special enrollment period:

• You get laid off and lose your job-based health insurance.
• You get divorced and lose the health insurance your former spouse’s job provided.
• You turn 26 and aren’t eligible for coverage under your parent’s health plan anymore.
• Your spouse dies causing you to lose the health insurance he or she provided.
• You move out of your current health plan’s service area and it won’t cover you at your new address (note that moving to a new area is only a qualifying event if you already had minimum essential coverage at your prior location).
• Your employer cuts back on your work hours making you ineligible for job-based health insurance.

One thing that doesn’t trigger a special enrollment period is losing your health insurance because you didn’t pay the monthly premiums or because you voluntarily canceled the coverage.

This isn’t included as a triggering event because it would allow people to game the system and switch to a new health plan whenever they wanted. For example, you could buy an inexpensive health plan and then change to a plan with better coverage when you get sick. This would defeat the purpose of an open enrollment period.

Loss of a job (without an accompanying loss of employer-sponsored health insurance) and/or a drop in income is also not a qualifying event unless you're already enrolled in an individual market plan, in which case you might have the opportunity to switch to a different plan if the change in income changes your eligibility for premium subsidies and/or cost-sharing reductions.

How Special Enrollment Works

Let's look at an example: You have health insurance through your job, but your company isn’t doing very well financially. A couple of months after the individual/family open enrollment period closes, you get laid off and lose your job-based health insurance.

You may be eligible to continue your current health plan using COBRA or state continuation, but instead, you decide you’d rather get a new health plan on your state’s health insurance exchange.

You’re eligible for a special enrollment period because you just lost your job-based health insurance due to being laid off. Note that you're eligible to get a plan in the individual market—on or off-exchange—even if you also have the option to continue your job-based insurance via COBRA or state continuation.

You have the full 60-day election period to pick COBRA or an individual market plan, and you're allowed to change your mind within that 60-day window too, which wasn't the case prior to 2017.

You go to your health insurance exchange’s website or call your exchange and enroll in a new health plan (in most states, the exchange is HealthCare.gov but some states run their own exchange websites).

If your employer’s plan was covering your spouse and kids, they’re eligible for a special enrollment period, also. You can each sign up for individual health insurance or you can get a family plan on the exchange.

Depending on your projected income for the year, you may find that you qualify for a subsidy to help you pay the monthly health insurance premiums. The subsidy is a tax credit. But instead of having to wait and claim it on your tax return, it can be paid directly to your new insurance company each month in order to lower the amount you have to pay each month for coverage.

(Note that it does then have to be reconciled on your tax return using Form 8962, once your actual income for the year is known. There is also an option to just claim it on your tax return.)

There are also subsidies that help to lower your out-of-pocket maximum and cost-sharing obligations like deductibles, copayments, and coinsurance. The subsidy that reduces your cost-sharing and out-of-pocket maximum is called cost-sharing reductions, or CSR, and it's only available if you have eligible income and you pick a silver plan in the exchange.

But the subsidy to reduce your premiums (ie, the one that's a tax credit) can be used with any metal level plans in the exchange (bronze, silver, gold, or platinum).

You apply for these subsidies through your health insurance exchange as you’re going through the health insurance enrollment process. And subsidies can only be used with health insurance purchased on your state’s Affordable Care Act health insurance exchange.

So although your special enrollment period will give you the option of enrolling outside the exchange if you prefer, you can’t get a subsidy to help pay for health insurance not purchased through your exchange. (Note that you can enroll "on-exchange" by going through an enhanced direct enrollment entity or directly through the exchange.)

Depending on your household income, Medicaid may be available, or your kids may qualify for coverage under the Children's Health Insurance Program.

If you're enrolling through your state's health insurance exchange and applying for financial assistance, the exchange will first check to see if any members of the household are eligible for Medicaid or CHIP. If not, they will next check to see if the household is eligible for premium subsidies and/or cost-sharing subsidies to help with the costs associated with private health insurance.

How Long Does the SEP Last?

It's important to understand that your window of opportunity to enroll in a new plan is time-limited. It starts 60 days before your old plan ends, and continues for 60 days after the old plan ends.

Note that this is for self-purchased plans; if you're transitioning to an employer's plan due to loss of other coverage, your window will be shorter.

Also note that the window to sign up for new health insurance is much longer in many states for people who are losing Medicaid after the pandemic.

No SEP If You're Losing Coverage That Isn't Minimum Essential Coverage

Involuntary loss of coverage is a qualifying event that triggers a special enrollment period, but only if the coverage you're losing is considered minimum essential coverage.

If you have coverage that is not considered minimum essential coverage (a short-term plan, for example, or a fixed- indemnity policy), the loss of that plan would not trigger a special enrollment period in the individual insurance market.

This is especially important to understand if you have coverage under a short-term plan, as those policies have pre-determined termination dates. Short-term plans in some states can last for up to a year and insurers have the option to renew them for a total duration of up to three years. But when a short-term plan ends, you're not eligible to sign up for an ACA-compliant individual market plan (in the exchange or outside the exchange) if it's outside of open enrollment.

(Note that there's an exception in Idaho, for people who have coverage under an "enhanced" short-term plan for at least 11 months. And the loss of short-term coverage does trigger a special enrollment period for employer-sponsored coverage, if you have access to an employer-sponsored plan.)

The Biden administration has proposed a rule change that would limit short-term health plans to initial terms of no more than three months, and total duration (if renewable) of no more than four months.

If finalized, this rule would make it more important than ever for people to understand that the mid-year loss of a short-term health plan does not trigger a special enrollment period to purchase comprehensive health insurance.

Summary

Self-purchased health insurance has a limited open enrollment window each year. But if you lose your health insurance mid-year, you'll generally have access to a special enrollment period that will allow you to enroll in a new plan. This is true as long as the health plan you're losing counted as minimum essential coverage (ie, it wasn't something like a short-term health plan), and as long as you didn't cancel it yourself or lose it due to rescission or failure to pay premiums.

A Word From Verywell

As long as you enroll in a new plan before your old plan ends, you can generally avoid a gap in coverage, since your new plan will take effect the first of the month after your old plan ends. But if you wait and enroll after your old plan ends, you'll have a gap in coverage. This is because the new plan won't be backdated; the soonest it can take effect is the first of the month after you enroll. This could leave you with a month or two without coverage. But if you have access to COBRA during this time, you could use that as a fallback if you end up needing medical care before your new plan takes effect.