In order to advise individuals about their options during a coverage transition related to job change, brokers and employers should understand the rules governing special enrollments under the Affordable Care Act (ACA).
Individuals who leave a job now have two options for obtaining health care coverage:
- Shop for an individual policy, either directly from an insurance company or through a health insurance marketplace like MNsure or healthcare.gov. Because the ACA does not permit insurers to turn down applications or set individual premiums based on an individual's medical history or pre-existing conditions, obtaining individual coverage during periods of job transition is now a more attractive option than it was before these reforms took effect. During the annual open enrollment period, individuals may enroll in coverage for any reason, without experiencing a qualifying event. The federal open enrollment period for 2017 is Nov 1st-Dec 15th, however Minnesota's Exchange MNsure has extended this open enrollment to Jan 15, 2018. Outside of the open enrollment period, an individual will have to meet certain criteria to qualify for special enrollment.
- Continue coverage through their former employer under the Consolidated Omnibus Budget Reconciliation Act (COBRA). In this situation, the individual continues to be covered by the employer's health benefits plan, but pays the full cost of the coverage without the benefit of an employer's contribution. Individuals have 60 days from their job termination to enroll in their employer's COBRA continuation plan. COBRA coverage may continue for up to 18 months as long as the individual continues to pay his or her premiums.
COBRA and the ACA's special enrollment periods
Outside of the open enrollment period, individuals who are losing access to employer-based coverage due to a job transition or whose COBRA coverage is expiring will qualify for a "special enrollment" into individual or family coverage from a health insurance marketplace or insurance company. Individuals have 60 days from the date that the employer-based coverage ended to enroll in individual or family coverage or elect to continue on their employer's plan through COBRA. Individuals whose COBRA coverage is expiring also have 60 days from the date their COBRA coverage ends to enroll in a qualified health plan through a health insurance marketplace or directly with an insurance company.
It's important to note that voluntarily terminating COBRA coverage or being terminated for not paying premiums DOES NOT qualify an individual for special enrollment. Individuals who enroll in COBRA coverage should do so with the intent of keeping it in force until individual coverage can be obtained during the next open enrollment period for individual coverage or until job-based coverage through a new employer is in effect. Employers, agents and brokers can assist individuals by educating them about enrollment periods and coverage options. They will need to understand that COBRA premiums will be higher than what they paid as an employed member of the group and that they will likely be locked into their coverage choice - individual or COBRA coverage - until at least the next open enrollment period.