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As life moves forward, people experience events that change their circumstances. Some of these events are happy, such as marriage or the birth of a child. Others are more negative experiences, such as divorce.
These life events can trigger a change of life insurance because they’re classified as qualifying events.
In this article, we explain what a qualifying event for insurance is, in addition to covering some of the key life events that fit into this category.
The term “qualifying event” refers to any change in your life that enables you to alter your health insurance policy, or sign up for a new policy, when you’re not within the open enrollment period. If you don’t experience a qualifying event, you must wait for the next open enrollment period before you can make any changes to your policy.
Qualifying events tend to signal a change in your life insurance policy. For example, the birth of a child may require you to place your newborn on your life insurance policy as a dependent.
In the United States, people can generally choose to cancel, alter, or start a new health insurance policy during the annual open enrollment period. The time and length of this period may vary depending on your state. However, most open enrollments start in November and run through to the middle of December.
During open enrollment periods, you’re free to make any changes you want to your health insurance. But once the enrollment period ends, you have to stick with whatever coverage you have until the next enrollment period starts.
That is unless you experience a qualifying life event. Health insurance policies can be changed if you experience an event that’s important enough to necessitate a change. These events tend to have a substantial impact on your life, forcing you to adapt to ensure you and your loved ones have appropriate cover. Most insurers include provisions in their contracts to allow a special enrollment period if one of these important health insurance events occurs.
In short, qualifying events allow you to change your health insurance policy outside the open enrollment period.
Several life events trigger the special enrollment period that allows you to alter your health insurance. Of course, that leads us to the natural question of what is considered a qualifying event?
If you lose your health coverage without choosing to cancel the policy, you likely have a qualifying event that allows you to seek new cover. The key here is that you can’t actively cancel your insurance. If you choose to end coverage voluntarily, you have to wait until the next enrollment period before searching for a new policy.
The only grey area here comes with employer-sponsored healthcare. Voluntarily choosing to leave a company counts as a qualifying event for employer-sponsored health insurance. In other words, if you lose access to insurance because of a voluntary decision to leave a job, you can still apply for a new policy outside of the open enrollment period.
Getting married triggers a 60-day special enrollment window that starts from your wedding date. However, this only occurs if one of the partners had minimum essential coverage for at least a day before this 60-day period begins.
Marriage is a major life event because many insurers allow married couples to take out joint policies that also allow for the addition of dependents.
There are several ways to gain a dependent, including birth, placement in foster care, or adoption. All are qualifying events that allow you to place the dependent on your insurance policy. Better yet, coverage is usually backdated to the date of birth, fostering, or adoption.
Interestingly, any changes you make in your policy aren’t limited to your new dependent. You can also make changes for the entire family. For example, you can make applications, including for any siblings your new dependent has, during the special enrollment period that begins when you gain a dependent.
Becoming a dependent works in the same way, though the person who becomes a dependent typically isn’t the one controlling the policy.
A divorce may lead to an involuntary loss of coverage if you’re covered by your ex’s policy. Furthermore, a court may require somebody who becomes a single parent due to divorce to alter their health insurance to include their dependent, which also triggers a qualifying event.
You may also access a special enrollment period if you were a dependent on somebody else’s policy before the divorce. This period may be available even if you haven’t lost your dependent status on an existing policy. For example, a divorced couple’s children may use this period to take out their own policies rather than remaining as dependents on one of their parents’ policies.
Special enrollment periods are available in select circumstances if you move home. First, you must have minimum essential coverage for a minimum of 60 days before moving. Second, you must move to an area where different qualified health plans are available that you couldn’t access at your previous location.
You also trigger a qualifying event if you move to a new state, as long as you meet the 60-day requirement mentioned above. That’s because every state has its own health plans, meaning each automatically qualifies in terms of offering new types of plans. In all cases, the move must be permanent. A temporary move for business or pleasure doesn’t count as a qualifying event.
Plan renewal may not seem like it falls under what qualifies as a life-changing event for insurance. But it does in cases where a plan renews outside of the open enrollment period. This applies in cases where the plan doesn’t run on the typical calendar-year schedule that most Affordable Care Act (ACA) plans operate on. Examples include grand mothered and grandfathered coverage that existed before the ACA, as well as some employer-sponsored plans.
During these renewal events, the insured may choose to renew their insurance or move to an ACA-compliant plan. They have these options for the 60 days leading up to the renewal date, as well as for 60 days afterward.
As an employer, you may choose not to pay 100% of your employees’ premiums in an employer-sponsored group plan. There is nothing wrong with this as long as the premiums the employee pays are affordable and provides minimum value.
An employer-sponsored plan breaks these conditions if the employee has to spend more than 9.61% of their household income on their premiums. The plan must also provide a minimum of 60% of the cost for standard health procedures, in addition to substantial coverage for any physician or inpatient services the employee may require.
If the employer-sponsored plan doesn’t meet these criteria, a qualifying event is triggered to allow the employee to seek a more suitable policy. Several events could trigger this period, such as the employee having their work hours or pay cut, an increase in premiums, or a change in the policy that means it no longer offers minimum value.
Errors that are not the fault of the applicant may trigger special enrollment periods. This occurs if an error occurs due to a mistake made by somebody who assists with enrollment, The Department of Health and Human Services (HHS), or by the insurer themselves.
The applicant can use their special enrollment period to remedy the mistakes or change their plan.
Now that you understand the main qualifying events that can trigger the ability to change or alter health insurance, we need to cover a few key questions related to the topic.
The above-mentioned qualifying events are the most common. Still, several others may trigger special enrollment periods:
Each of these events has conditions attached to it, meaning the applicant must check with their insurance company to ensure they’re qualified to make changes to their plan.
Life event is often used as a synonym for qualifying event. Generally speaking, you can assume a life event is the same thing as a qualifying event if you see the term used by an insurance company, broker, or similar provider.
Unfortunately, being pregnant doesn’t count as a health insurance qualifying event. The pregnancy itself doesn’t alter your need for coverage in any way, assuming you already have access to appropriate cover.
As mentioned, giving birth is a qualifying event. This is because you’ve created a dependent that you may need to account for in a life insurance policy.
Minimum essential coverage refers to the amount of coverage a health insurance policy must provide to meet the shared responsibilities in the ACA. Before 2017, people who didn’t have minimum essential coverage had to pay a financial penalty. The introduction of the Tax Cuts and Jobs Act in 2017 removed that penalty. As a result, buying health insurance is no longer a requirement at the federal level. However, some states continue to penalize individuals who don’t have health coverage. These include Vermont, California, New Jersey, Rhode Island, Massachusetts, and the District of Columbia.
You likely have minimum essential coverage if you have any of the following:
Furthermore, many plans offered by the Peace Corps and Veterans Administration meet the requirements for minimum essential coverage.
You don’t need a qualifying event to cancel individual health insurance. You can cancel at any time, regardless of whether you’re in an open enrollment period or not. However, this cancellation counts as voluntary, meaning it doesn’t trigger a special enrollment period.
For example, let’s assume you cancel your coverage in July. This means you have to wait until the open enrollment period begins in November before you can apply for a new health insurance plan.
An employee will need a qualifying event if they wish to cancel an employer-sponsored plan when they’re not in the open enrollment period. If an employee decides to cancel outside of open enrollment, both the employee and employer face tax penalties.
Yes, you must provide proof of a qualifying event to trigger a special enrollment period. This proof varies depending on the nature of the event. It may include a marriage certificate, birth certificate, evidence of loss of coverage, or any other documentation that demonstrates a serious life event.
As an employer, you may find that many of these qualifying events don’t affect the coverage you offer to employees. But some are directly related to the level of cover you offer. Employees who can no longer afford their premiums, or don’t receive the minimum level of care required, may be able to trigger qualifying events that cause them to change policies.
It’s a complicated topic that you need to stay on top of to ensure your business offers the appropriate health insurance to its people. The information in this article provides you with a deeper understanding of what qualifying events are. If you want to ensure you account for them when setting up a group health insurance plan for your business, we’re here to help you.
At Taylor Benefits Insurance Agency, we specialize in helping employers set up group healthcare plans. We’ll advise you on how to ensure your plan meets the minimum requirements to ensure it addresses the needs of all of your employees. Plus, we’ll help you find an appropriate group plan for your business and its people. If you’d like to learn more, call us at 1-800-903-6066 or contact us online.
Todd Taylor oversees most of the marketing and client administration for the agency with help of an incredible team. Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., he provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
Todd Taylor with Taylor Benefits gives our small business the kind of personal service we need. Insurance benefits are important to our employees and Todd helps us find a balance between benefits and value. Todd responds immediately to my phone calls & e-mails. He has even gotten in touch with me on a Sunday when we were in need of coverage answers immediately. We are very pleased with the hands-on service Todd and his staff provide.”
-Ken and Linda Orvick, Orvick Management Group, Inc.
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