This post is brought to you by Melissa, a recent graduate and the founder of The HealthCare Kit. Learn more about Melissa at the bottom of this article.
This past summer, after college graduation, my roommates and I started our first, “real” full-time jobs. It was stressful trying to understand all our benefits and health insurance options. It was a scramble, but we finally got everything done and were signed up for our insurance plans. We thought we were good. But we totally forgot about health insurance open enrollment.
Open enrollment is the period of time where you can sign up for your health insurance plan. Typically, for ACA/Healthcare Exchange plans, this runs from November 1 – December 15 and your coverage will start on January 1 of the next year. So, for example, when you want to buy health insurance for 2022, you need to sign up for it between November 1, 2021 and December 15, 2021.
That being said, some states and regions have extensions. For example, Washington DC, Colorado, and California all have permanent extensions ranging from January 15 to January 31. Various other states have also created temporary extensions, so check to see when your state’s deadline is here. Keep in mind though, if you sign up for insurance after December 15, your coverage won’t start until later. The start date could be as late as February 15, so plan accordingly.
Note: The dates above reference ACA/Healthcare Exchange deadlines. If you are covered by your employer’s health insurance plan, the dates may differ.
So, that’s all well and good, but why do we even have an open enrollment period? It seems like it creates confusing deadlines. Wouldn’t it just be easier if we could sign up for health insurance whenever we wanted to?
Yes and no.
Why we need open enrollment?
Insurance open enrollment exists to prevent adverse selection. Adverse selection occurs when consumers choose to go without health insurance while healthy, and then try to purchase health insurance only after they are sick or have developed a health condition.
Let’s think for a second how insurance companies stay afloat. Our monthly premiums go into a big pot of money that insurance companies manage. When someone makes a claim or needs insurance to help them cover a medical expense, the insurance company pays for that claim using the big pot of money. If fewer people pay premiums, then that pot of money is reduced.
Now let’s imagine there was no open enrollment period, and you could buy insurance any time of the year that you wanted. A lot of healthy people would probably go without insurance until they got sick and really needed it. So then when this once healthy person makes a claim, insurance would have to pay out of that very small pot of money.
In order to cover these costs, insurance companies might even raise the premiums everyone else is paying. This in turn would further disincentivize healthy people to buy health insurance. And then the system continues to spiral out of control.
However, the insurance open enrollment period makes it more likely that people will buy health insurance and pay their premiums all year long. People don’t want to risk not having insurance if something bad happens. This also ensures that the insurance company has a big enough pot of money to pay expensive claims when they come, because enough healthy people are paying into the system.
A note on pre-existing conditions
One of the most important aspects of the Affordable Care Act (aka Obamacare) is that health insurance companies could no longer deny coverage to individuals with “pre-existing” conditions. This practice was similarly used to prevent adverse selection.
Insurance companies often wouldn’t cover these individuals because they were more likely to place many, expensive medical claims on the insurance company. This could potentially be a large drain on the big pot of money that insurance companies hold.
This was also the reasoning behind the individual mandate. If everyone, including healthy people, paid into the pot of money, health insurance companies would have enough to stay afloat. In the long term, this would also lead to lower premiums over time, because more people are paying into the system so the costs can be distributed more equally.
What if I miss my deadline?
So, my roommates and I had just finished signing up for health insurance in August, and thought we were good for the next year. But open enrollment came just a few months later. Luckily, my employer was very vocal that I needed to sign up again for my health insurance during open enrollment. So, I did.
But my roommate’s employer wasn’t quite so straightforward. My roommate didn’t get any notices that he needed to renew his insurance. Come January, he realized he had missed the deadline and started panicking. Luckily, his employer automatically renewed his plan. But what happens if your employer isn’t so kind?
If you miss the insurance open enrollment deadline, all is not lost! You have a few different options including:
Short term and supplemental health insurance
Note: These plans often come with limitations, payment caps, and other caveats that leave you with more risk than a typical, ACA compliance health insurance plan. See more below.
As long as you are eligible for Medicaid, you can apply at any point during the year. Each state has different policies regarding eligibility, so check out your state’s requirements.
Short term and supplemental health insurance do not adhere to the Affordable Care Act guidelines. This means they don’t offer the same guaranteed benefits such as covered preventive and wellness services. Short term health insurance can also have extremely high deductibles that may not be much help to you if you get a very high medical bill.
So, the best option if you miss your deadline is to see if you qualify for a special enrollment period. This is triggered if you have a qualifying life event. Common types of qualifying life events are getting married, having or adopting a child, aging out of your parents’ plan, or losing your health care coverage. Typically, your special enrollment period lasts 60 days after your qualifying life event has occurred.
Special enrollment periods due to COVID-19
One final, very specific, type of special enrollment period is if you lost your health coverage due to COVID-19. For example, if you lost your job as a result of the pandemic. If this is the case, go to Healthcare.gov/coronavirus to learn more information, and see if you can get a new health insurance plan.
Mark your calendar
So, don’t wait! Insurance open enrollment is one of those things that you can see coming. Put a note on your calendar as to when your state’s open enrollment period starts and ends (likely sometime between November 1 and December 15 on the Healthcare Exchange). If you receive insurance through your employer, keep an eye out for emails from HR, or reach out to them if you haven’t heard anything by early fall. These periods exist so that you can have health insurance all year round, when you really need it.
Stay healthy, and Happy Healthcare to You!
Meet Melissa!
Melissa is a recent graduate and the founder of The HealthCare Kit. Between graduating in the midst of the COVID-19 pandemic, and her background in public health, Melissa became extremely interested in healthcare and how young adults access it. That’s why she started The HealthCare Kit (aka The HeCK): to help other young adults understand their healthcare, and also to make it less boring.