If your company or client is offering a defined contribution health plan paired with individual health plans, how do new employees purchase insurance outside of open enrollment periods?
We've outlined four possible scenarios for employees purchasing individual health plans outside of open enrollment.
1) Employee Has an Individual Health Plan
If the new employee already has an individual or family health insurance plan, they can keep it and be reimbursed for their premium by the defined contribution plan. Because of the individual mandate, this is much more common now.
2) Employee is Leaving a Company with Group Health Insurance
If the new employee is leaving a company with group health insurance, they will qualify for a special enrollment period because one of the qualifying events is losing group health insurance coverage. Alternatively, they could elect COBRA and have those premiums reimbursed.
3) Employee's Compensation or Location Changes Significantly
If the new employee's compensation changes such that they gain or lose eligibility for a subsidy or Medicaid, a special enrollment event will be triggered. This may be common with employees fresh out of college, employees who have been job searching for a while, or employees who are taking the next step in their career.
Similarly, if a new hire is moving regions and new qualified health plans are available to them, this triggers a special enrollment period.
4) Employee Does Not Have Coverage and Does Not Qualify for a Special Enrollment Period
If the employee does not have coverage, and 1) has chosen to go uninsured (and chosen to pay the individual mandate fee) and 2) no qualifying event is triggered, the new employee can either:
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Wait until the next open enrollment period (the 2015 open enrollment period is from November 15, 2014 to February 15, 2015), or
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Purchase a short-term health insurance plan to bridge the gap until the next open enrollment period. Short-term health insurance products are designed to provide protections against unforeseen medical bills, typically for a period of between 1 and 12 months. Short-term plans are not major medical health insurance plans and don’t meet the requirements of the Affordable Care Act in 2014. This means that buying short-term health insurance won’t exempt individuals from the individual mandate tax penalty. But, it does provide individuals some financial and health protection and can be reimbursed by a defined contribution health plan, so long as the employer's plan allows it.
Qualifying Events for Special Enrollment Periods
We've listed the most common scenarios above. However, there are other qualifying events that will trigger a special enrollment period allowing an employee to enroll or change their individual health plan. The following qualifying life events are:
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Loss of Essential Health Coverage: You lose, or one of your dependents loses health coverage that meets minimum government standards.
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Change Your Family Size: You get married or divorced, have a death in the family, or have a child by birth or adoption.
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Change Citizenship Status: You become a U.S. citizen, national, or gain lawful status in the U.S.
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Experience Government Error: You lose, change, or enroll in coverage because of an error committed by an officer, employee or agent of the Exchange or the Department of Health and Human Services as determined by the Exchange.
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Change Premium Tax Credit Eligibility: You are determined newly eligible or newly ineligible for federal assistance (advance payments of the premium tax credit, cost sharing reductions, or Medicaid). See eligibility for premium tax credits here.
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Move to a New Coverage Area: You permanently move to a new area (ex: state or county) and gain access to new qualified health plans.
What other defined contribution and individual health insurance open enrollment scenarios do you have questions about? Leave a comment or question below.
