Involuntary loss of coverage can be a qualifying life event

If your insurer exits the market, you may qualify for an SEP.

There are different circumstances that may be considered an involuntary loss of coverage and each of these is a qualifying life event that triggers a special enrollment period (SEP). If you lose your coverage for reasons other than voluntary cancellation, nonpayment of premiums, or rescission, you’ll have a chance to enroll in a new health insurance plan, either through the exchange/Marketplace in your state, or off the exchange (directly through an insurer).

Here’s how it works:

The coverage you’re losing has to be considered minimum essential coverage. So if, for example, your short-term plan is ending, that doesn’t count as loss of coverage, since a short-term plan is not considered minimum essential coverage.

An exception to this rule has to do with loss of pregnancy-related Medicaid coverage, CHIP unborn child, and Medically Needy Medicaid. These are not considered minimum essential coverage, but if you’re enrolled in this coverage and it ends, the termination does trigger a special enrollment period.¹ In 2018, the Department of Health & Human Services (HHS) updated the rules to also allow a pregnant woman with CHIP coverage for her unborn child — but who technically does not have minimum essential coverage for herself — to qualify for a loss of coverage SEP for herself when the unborn child CHIP coverage ends. These exceptions were clarified in rules that HHS published in 2019.²

(Note: Although this guide applies to special enrollment periods in the individual ACA-compliant market, the termination of a short-term plan does trigger a special enrollment period for employer-sponsored coverage.³ So, if you are eligible to participate in an employer’s plan and your short-term plan is ending, you’ll be able to enroll in the employer’s plan at that point.)

It’s important to understand that plans can be considered minimum essential coverage even if they’re not compliant with the Affordable Care Act (ACA). Grandmothered and grandfathered plans count as minimum essential coverage, but do not have to be ACA-compliant. If those plans terminate, the insured has access to a special enrollment period.

Loss of coverage due to rescission does not count as a qualifying life event.

Loss of coverage due to rescission does not count as a qualifying life event. The ACA does still allow for rescission in the event of fraud or intentional misrepresentation on the part of the insured. Rescission is still used by short-term health insurance plans, but again, the termination of a short-term plan – for any reason – does not trigger an SEP in the individual market. (Note that Idaho’s enhanced short-term plans do allow enrollees who have had coverage for at least 11 months to transition to the same carrier’s ACA-compliant major medical plans when their short-term coverage is ending.⁴ )

But other than rescission, “involuntary” loss of coverage just means that you didn’t cancel the plan yourself, or didn’t lose your coverage because you stopped paying premiums.⁵

If you leave your job and, as a result, lose your health insurance, you’re eligible for an SEP in the individual market.

Most adults under age 65 have coverage through an employer-sponsored plan. If they leave their employer – voluntarily or involuntarily – and lose access to their employer-sponsored health insurance as a result, that’s considered involuntary loss of coverage.⁶

So if you choose to leave your job and as a result lose your health insurance, you’ve got access to a special enrollment period to get a new plan in the individual market.

An SEP even if you have the option to keep your coverage with COBRA.

Even if you have the option to continue your employer-sponsored plan with COBRA, the fact that your group health plan would otherwise terminate is still considered a loss of coverage qualifying life event.⁷ You can choose to elect COBRA, or you can use your special enrollment period to pick a new plan in the individual market. Your special enrollment period begins 60 days before your employer-sponsored policy ends, and continues for another 60 days after the plan ends, even if you had the option to extend your coverage past that end date by using COBRA.

The rule allows people to have their full special enrollment period (including 60 days after the date their coverage would have ended if they hadn’t elected COBRA) regardless of whether they initially elect COBRA.

You’ve also got 60 days to decide whether you want to elect COBRA (starting on the later of the date your coverage would end or the date you are given the COBRA election notice), with coverage retroactive to coincide with the date your employer-sponsored plan would have ended. Between the two windows, you have time to decide what coverage will work best for you. If you sign up for a plan in the individual market after your employer-sponsored plan ends, your first available effective date will be the first of the following month. So you will have a gap in coverage if you don’t sign up for your new plan before your employer-sponsored plan ends. However, the retroactive availability of COBRA helps to mitigate this because you can sign up for COBRA to cover you during the gap month if you want uninterrupted coverage.

When comparing COBRA with a plan in the individual market, be sure to factor in premium tax credits and cost-sharing subsidies, which are available for only a plan in the individual market and only if you qualify for them. (See our articles that explain more about premium tax credits and cost-sharing reductions.) Your special enrollment period for individual-market coverage applies to both on and off the exchange, but if you’re eligible for subsidies, you’ll need to get your plan through the exchange to get the subsidies.

If you elect to take COBRA and later decide (after your special enrollment period ends) that you’d rather have an individual plan, you’ll have to wait until the next regular open enrollment, unless you have another qualifying life event. Voluntary termination of your COBRA coverage does not count as a qualifying life event. However, exhausting COBRA does trigger a special open enrollment window, because it counts as loss of other coverage (COBRA can only continue for 18 or 36 months, depending on the circumstances. Once you reach the end of the allowable continuation window, you’ve exhausted your COBRA.).

In 2021, HHS issued regulations clarifying that the termination of employer or government subsidies for COBRA premiums will also trigger a special enrollment period during which the person can switch to an individual market plan. This was clarified in regulations issued by HHS in 2021. This allows a person to initially elect COBRA to take advantage of a subsidy offered by their former employer, but then transition to an individual/family health plan once they would otherwise have to pay the full cost of their COBRA coverage.

Becoming ineligible for Medicaid or CHIP

Loss of eligibility for Medicaid or CHIP has always triggered a special enrollment period in the individual market, with the same rules that apply to loss of other coverage. But to address the fact that millions of people were expected to lose Medicaid in 2023 and 2024 (following a three-year pause on Medicaid disenrollments due to the pandemic), HHS announced an “unwinding SEP” in 2023. (The name comes from the fact that states are “unwinding” the pandemic-era rules that prohibited them from disenrolling anyone from Medicaid.)

The unwinding SEP was initially slated to continue through July 2024, but it was later extended through November 30, 2024.⁸

This SEP is optional for state-run exchanges. But in the states that use HealthCare.gov, anyone who submits a new or updated application for Marketplace coverage between March 31, 2023 and November 30, 2024 and attests that their final day of Medicaid was during the same period will have an opportunity to sign up for coverage through the exchange at any point during that window. The “unwinding” disenrollments from Medicaid are being spread out across that entire window in many states. Initially, the expectation was that states would be finished with the unwinding process by July 2024, but that timeline has been extended in many states, which is why the unwinding SEP has also been extended.⁸

By April 2024, more than 20 million people had been disenrolled from Medicaid nationwide during the unwinding process.⁹ Anyone in a state that uses HealthCare.gov who attests to a loss of Medicaid between March 31, 2023 and November 30, 2024 can sign up for a plan through HealthCare.gov anytime in that window (instead of the normal time-limited window that would be based around the date on which the person’s coverage actually ended).

State-run exchanges have the option to offer this special enrollment period, or they can use their normal protocols of offering a window that starts 60 days before the loss of coverage and ends 60 days after the loss of coverage. (As described below, HealthCare.gov has extended this window to 90 days following the loss of Medicaid/CHIP, and state-run exchanges have the option to do that as well.)

Effective date rules depend on whether you apply for a new plan before your old plan ends or after it ends

Although the “unwinding SEP” provides significant flexibility in terms of giving people a chance to sign up for coverage, you still need to submit your application before your Medicaid coverage ends if you want to have seamless coverage or a minimal gap in coverage. Your new marketplace plan won’t take effect until at least the first of the month after you apply. So you’ll have a gap in coverage if you submit your marketplace application after your Medicaid coverage has terminated.

In addition to the “unwinding SEP,” some people who transition away from Medicaid after the COVID public health emergency ends will find that they’re eligible for the year-round special enrollment opportunity for low-income households. This SEP will continue indefinitely,¹⁰ and most of the state-run exchanges offer this, as does HealthCare.gov.¹¹

Extended SEP following loss of Medicaid/CHIP

In addition to the “unwinding SEP,” HHS has also finalized (see page 271) an extended special enrollment period when a person loses eligibility for Medicaid or CHIP, starting in 2024.

Under this new rule, the exchanges have the option to give people 90 days after the loss of Medicaid/CHIP coverage to enroll in a new plan (as opposed to the normal 60 days for other loss-of-coverage scenarios). People losing Medicaid/CHIP also continue to have the normal 60-day window before the loss of coverage, during which they can enroll in a new plan with coverage effective the first of the month following the end of their Medicaid/CHIP coverage.

The new 90-day window to enroll in an individual/family plan after the loss of Medicaid is based on the fact that states must provide at least a 90-day window when a person’s Medicaid disenrollment can be reconsidered, without them having to submit a new application. The extra time allows a person in that situation to spend that time to try to get the Medicaid reinstated if such person so desires instead of applying for new coverage, and the longer SEP allows the person to fully pursue that option.

State-run exchanges have the option to offer this 90-day SEP, or to offer a longer SEP if they’re in a state where the Medicaid reconsideration window is longer than 90 days.¹²

And as described below, HHS has also finalized a rule change that will allow for an overlap in coverage when the old plan ends mid-month, which sometimes happens with Medicaid.

Plans that terminate on December 31

If your health plan terminates at the end of the year and will no longer be available as of the coming year, you get a special enrollment period that continues for the first 60 days of the new year. (Plan termination can include situations in which the insurer exits the market, a change in product type – for example, replacement of PPOs with HMOs – or an insurer opting to terminate certain plans but continue to offer plans in your coverage area.)

For 2023, insurers joined the exchanges in numerous states, but there were also some insurer exits in several states. And the same thing was true for 2024.

If your insurer is no longer offering plans in the exchange in your area for the coming year, or if they’re terminating your plan and offering new replacement plans (as opposed to allowing your plan to renew), you’re eligible for a special enrollment period. This is generally true even if maps you to a replacement plan if you didn’t select your own replacement plan during open enrollment.

As of 2024, there’s a new automatic re-enrollment hierarchy (see 45 CFR § 155.335(j)(1) and (4)) that requires the exchange, in certain circumstances, to automatically re-enroll a person into a Silver plan, even if their existing Bronze plan continues to be available. CMS has clarified (see page 255-256) that the loss-of-coverage SEP is available if the person’s plan is terminating at the end of the year and being replaced with a new plan. However, the SEP is not available if the person’s existing coverage will continue to be available but the person is being automatically reenrolled into a different plan.

The details in either scenario will be communicated by the exchange, insurer, or both, so it’s important to pay close attention to the notices that you receive before and during the open enrollment period in the fall.

The special enrollment period also applies if your off-exchange insurer exits the individual market at the end of the year, or shrinks its coverage area and no longer offers plans where you live.

Death, divorce, or legal separation

HHS had originally intended to add a new SEP (for people already enrolled in an exchange/Marketplace plan) effective in 2017 for people who lose a dependent or lose dependent status as a result of a death, divorce, or legal separation, even if they didn’t lose coverage.

But in May 2016, HHS eliminated the requirement that exchanges add this SEP in 2017. Exchanges have the option to do so, but are not required to offer an SEP triggered by death, divorce, or legal separation.

HealthCare.gov does not offer an SEP in those circumstances unless the death, divorce, or legal separation results in a loss of coverage, in which case the normal loss-of-coverage SEP applies.

Some of the state-run exchanges take the same approach as HealthCare.gov, but some others list divorce as a qualifying life event without a stipulation that it cause loss of coverage. They include Colorado, District of Columbia, Maryland, New Mexico, New York, Rhode Island, Vermont, and Virginia. This SEP is also available in California, Pennsylvania, and Washington for people already enrolled through the exchange (i.e., giving them an opportunity to pick a different plan).

Of course, if the death, divorce, or legal separation results in loss of coverage, the normal SEP rules for loss of coverage would apply in every state.

For example, a person who is covered as a dependent on an employer-sponsored plan would lose access to the plan if the employee were to die. Even if 36 months of COBRA were to be available to that person, the person would also have access to an SEP in the individual market, triggered by the loss of coverage. But on the other hand, an enrollee who loses a family member does not necessarily have access to an SEP at that point, unless one of the other qualifying events applies.

Aging off a parent’s plan

Under the ACA, young adults can remain on a parent’s health insurance plan through age 26. The coverage can terminate at the end of the month the person turns 26, but some plans allow the person to remain covered through the end of the year. (Health plans that are obtained via HealthCare.gov cannot terminate coverage until the end of the plan year in which the person turned 26, unless the enrollee requests it. See page 284.)

Either way, the loss of coverage is a qualifying life event that allows the young person a special enrollment period during which they can select a new plan.

If the coverage will end on December 31, the person can enroll during open enrollment, but they also have the option to use their special enrollment period to sign up as late as December 31 and get coverage effective the first of January, or to enroll during the first 60 days of the new year (the same as any other coverage loss that occurs at the end of the calendar year, as noted above).

If the coverage will end mid-year, the same special enrollment period rules apply, giving the person 60 days before and after the coverage loss to sign up for a new plan.

Special enrollment period details

The special enrollment period triggered by loss of coverage begins 60 days before your existing plan’s termination date, so it’s possible to get a new ACA-compliant plan without any gap in coverage, as long as your old plan is ending on the last day of the month. Under longstanding rules, the soonest the new plan could take effect was the first of the month following the loss of coverage, but as described below, there is also an option now to have overlapping coverage in situations where the old plan ends mid-month, to avoid a gap in coverage.

You also have 60 days after your plan ends during which you can select a new ACA-compliant plan. (As noted above, HealthCare.gov is offering an “unwinding SEP” that runs from March 31, 2023 through November 30, 2024, allowing anyone who attests to a loss of Medicaid during that window an opportunity to enroll in coverage. In addition, HHS finalized a separate rule change, starting in 2024, which gives people 90 days — instead of 60 — to select a new plan after the loss of Medicaid or CHIP.)

HHS has finalized new rules to protect people from coverage gaps when a plan ends mid-month.

If you enroll before the date your old plan ends, the effective date of the new plan will typically be the first of the month following the loss of coverage, regardless of the date you enroll. So for example, if your plan is ending July 31, you can enroll in June or July and your new plan will be effective August 1.

If your plan ends mid-month, however, a rule change took effect for HealthCare.gov as of 2024 that can help you avoid a gap in coverage.¹³ At the discretion of the exchange (so optional for state-run exchanges), the new rules allow a person’s new coverage to take effect the first day of the month in which their old coverage will end, as long as they apply before the first day of that month.

This will result in a partial month of overlapping coverage, as opposed to a gap in coverage: If the old plan will end on May 15, the person could apply up until April 30 and have coverage that takes effect May 1, instead of a June 1 effective date, which was the earliest possible start date under pre-2024 rules. HHS has clarified that the overlapping coverage would not eliminate a person’s eligibility for premium subsidies in that month, since they wouldn’t have the other coverage for the full month.¹⁴

But it’s important to note that a person will still have to enroll before their coverage effective date. If their old plan is ending March 15 and they enroll on March 1, their new plan won’t take effect until April 1 (they would have to enroll by the end of February to take advantage of the new rule and have the new plan effective March 1 to provide overlapping coverage). Depending on the circumstances, a short-term plan might be a good option to cover those interim days instead, as is the option to retroactively elect COBRA.

If you enroll in the 60 days after your plan ends, the exchange (or carrier, if you’re enrolling outside the exchange) can either allow a first-of-the-following-month effective date regardless of the date you enroll, or they can use their normal enrollment deadline, which can either be the 15th of the month or the end of the month, to have coverage effective the first of the following month.

As of 2022, HealthCare.gov no longer uses the 15th-of-the-month deadline. Applications submitted during a special enrollment period will have coverage effective the first of the following month, regardless of the date the application is submitted.¹⁵ And for 2025 and future years, a rule change has been finalized that requires state-run exchanges to take this same approach.¹⁰ But there will still be a gap in coverage if you enroll after your plan has ended, since the new plan will not have a retroactive effective date.

When you’re enrolling in a new marketplace plan due to loss of other coverage, the application will ask you when your coverage is ending. It’s important to note the last day that the coverage will be in force, not the first day you’ll be without coverage. So for example, if your plan is ending on June 30, you would put your loss of coverage date as June 30, rather than July 1. If you indicate July 1, the system will push your new effective date out to August 1, since that’s the first of the following month.

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Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

Footnotes

1. “Patient Protection and Affordable Care Act; Exchange and Insurance Market Stands for 2015 and Beyond” page 30298, Federal Register, Accessed March 7, 2024 ⤶
2. “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020” Federal Register. Accessed March 7, 2024 ⤶
3. “Short-Term, Limited-Duration Insurance” page 51. Federal Register. Accessed April 23, 2024 ⤶
4. “IDAPA 18 – Department of Insurance.book” page 4, Idaho.gov. Accessed March 7, 2024 ⤶
5. “§ 155.420 Special enrollment periods.” ECFR.gov, Accessed March 7, 2024 ⤶
6. “Special Enrollment Periods, SEP Verification, and Complex Case Scenarios” CMS.gov, Accessed March 7, 2024 ⤶
7. “COBRA coverage & the Marketplace” HealthCare.gov, Accessed March 7, 2024 ⤶
8. “Temporary Special Enrollment Period (SEP) for Consumers Losing Medicaid or Children’s Health Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid Continuous Enrollment Condition Operations for Plan Year 2024”Centers for Medicare & Medicaid Services. March 28, 2024 ⤶ ⤶
9. “Medicaid Enrollment and Unwinding Tracker” KFF.org Accessed April 23, 2024 ⤶
10. “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP) Program; and Basic Health Program” U.S. Department of the Treasury; U.S. Department of Health and Human Services. April 2, 2024 ⤶ ⤶
11. “I hear there is a new special enrollment opportunity for people with very low income. How does that work?” KFF.org. Accessed March 7, 2024 ⤶
12. “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment” CMS.gov. Accessed March 7, 2024 ⤶
13. “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2024” Centers for Medicare and Medicaid Services. April 2023 ⤶
14. “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2024” (page 261). CMS.gov. Accessed March 8, 2024 ⤶
15. “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non-Federal Governmental Plans” page 153, Centers for Medicare & Medicaid Services. Accessed March 8, 2024 ⤶