Job loss and short periods of unemployment are a relatively common part of life. But with the new open enrollment rules in the individual health insurance market, it’s important that people understand exactly how the system works in order to avoid finding themselves stuck without health insurance. Recently we’ve had several clients in this position, and we want to explain a little more about it so other people can avoid finding themselves in a similar situation.
Let’s say you’re employed and have health insurance – either through your employer, or purchased in the individual market. And then you find yourself unemployed, with no income. You might have an option to extend your employer plan with COBRA, but you might not be able to afford it. If you have an individual plan you can keep it, but again, you might not be able to afford it. And in the craziness of sorting out all the other aspects of your life, maybe you just let your coverage lapse and vow to take care of it once you find another job.
And so it goes – you figure you’ll just be uninsured for a bit, and then pick up where you left off. But it doesn’t work like that anymore. If your new job offers you a group plan, you’ll be able to join it as soon as the job allows. But if it doesn’t, and you’re going to need to purchase a new plan in the individual market, you’ll have to have a qualifying event in order to do so.
Getting a new job is NOT a qualifying event
Losing other insurance that qualifies as minimum essential coverage IS a qualifying event, but you have to enroll in a new plan within 60 days of losing your old plan. And your old plan must have been involuntarily terminated. So again, it matters HOW you lost your old plan… if you lost your job and therefore lost your employer-sponsored health plan, you qualify for a special enrollment period for the next 60 days. But if you lost your job and therefore couldn’t afford to pay for your individual health insurance plan and either cancelled it or let it lapse, you don’t qualify for a special enrollment period to purchase a new plan.
Even if you lost access to an employer-sponsored plan (which is a qualifying event), if you go more than 60 days before trying to obtain a new policy in the individual market, you’ll be out of luck. At that point, your only choice will be to wait until the next general open enrollment [the 2015 open enrollment period starts on November 15, 2014 and runs through February 15, 2015].
So what can you do?
Apply for Medicaid
The key is to make sure you apply for Medicaid as soon as you find yourself without an income or with a change in income. You apply for Medicaid and manage your eligibility anytime your income changes here: http://coloradopeak.force.com/
Let’s say you’re employed and have coverage through your job or through an individual plan. And then suddenly you’re not employed and have no access to an employer plan or can no longer afford your individual plan. Because Colorado has expanded Medicaid under the ACA, you will qualify for Medicaid as long as your total income for the year is less than 138% of poverty, and as long as you’re a legal resident. If you have no income, you will qualify for Medicaid, assuming you haven’t already earned more than 138% of poverty during the current calendar year (EDIT, 8/4/14 – this is discussed in more detail in the comments section, and becomes more of an issue the further we get in the year, as accrued earnings for the year increase). Even if you think it’s only going to be a month or two before you find another job, don’t skip the Medicaid application. The reason this is so important is that it will automatically give you a qualifying event when you get another job and no longer qualify for Medicaid because of your increased income. When your income goes back up, you report that to PEAK, and you’ll lose your Medicaid coverage. That loss triggers a 60 day special enrollment period during which you can enroll in a new individual plan.
If you end up getting a job that offers health insurance, all is well and it won’t matter anyway (you’ll just have to follow the eligibility rules that your new employer sets). But if you end up needing to get a plan in the individual market, you must have a qualifying event to get coverage any earlier than January 1, 2015 (open enrollment starts in November, but coverage won’t be effective until January). Losing Medicaid coverage is the qualifying event that you’ll need, but you can only get it if you applied for Medicaid when you were eligible for it.
Medicaid enrollment is year-round; there is no open enrollment period for it. But you can’t back-date your Medicaid enrollment – you have to enroll in real time when you’re actually eligible for it. In order to preserve your access to health insurance once your income increases again, it’s essential that you apply for Medicaid as soon as you find yourself in a situation where you qualify for it and are unable to afford your previous coverage. It will provide you with health insurance during the time you’re unemployed, but just as importantly, losing it will provide you with a qualifying event when you’re ready to get private coverage again.
As always, if you have questions or need help with any of this, please let us know.