Research · 10 min read
When You Can Join a Plan Outside Open Enrollment
A plan drops the drug, or the job that carried the plan ends. One of those opens a door to different coverage and the other usually does not, and both rules are written as closed lists you can read for yourself.
Key takeaways
- Both special enrollment rules run on closed lists of events, so the useful question is which listed event, if any, describes what changed.
- Losing eligibility for coverage and an employer ending its contributions are on the lists; a plan changing what it covers is on neither.
- Electing continuation coverage does not spend a special enrollment right, and exhausting it is a separate qualifying condition later.
- The employer-plan window is at least thirty days from the event, with coverage starting no later than the first of the following month. The exchange window is sixty days, and sixty in advance for a loss of coverage.
- The rules say in writing that the timing of enrollment is not a health factor, and that a special enrollee must be treated the same as someone who enrolled when first eligible.
Answer first: losing coverage opens a door, losing a benefit generally does not
Two different federal rules govern joining a plan between enrollment seasons, and they run on the same idea.
Each names a closed set of events. An event on the list opens a window; an event that is not on it does not.
Losing eligibility for coverage is on both lists. So is a marriage, a birth, and an employer stopping its contributions.
A plan changing what it covers is on neither list, and that is the case most likely to bring someone here.
The point of reading the lists is to find out quickly which situation you are in, because both windows are short.
The employer-plan rule, and what counts as losing eligibility
The first rule applies to a group health plan and to an issuer offering coverage in connection with one.
It requires the plan to let a current employee and dependents enroll outside the normal window when certain conditions are met. The rule adds that these rights apply without regard to the dates on which a person could otherwise enroll.
The main condition is loss of eligibility for other coverage. The regulation lists what that includes. Legal separation, divorce, and cessation of dependent status such as a child reaching the plan's maximum age. Death of an employee, termination of employment, a reduction in hours, and any loss of eligibility after a period measured by any of those.
It also includes a service-area move where an arrangement stops providing benefits outside the area. And it includes a situation where a plan no longer offers any benefits to the class of similarly situated individuals that includes the person.
Two things are expressly outside it. Loss of eligibility does not include a loss due to failure to pay premiums on time, or termination of coverage for cause, such as an intentional misrepresentation of a material fact.
A second condition stands on its own: the moment employer contributions toward the coverage terminate, whether or not the coverage does.
The window on that rule, and when the coverage starts
The plan must allow at least thirty days after the event to request enrollment.
Coverage must begin no later than the first day of the first calendar month beginning after the plan receives the request.
The regulation illustrates the point with an example worth carrying. A plan runs a late-enrollee window in November with coverage starting the following January.
An individual loses other coverage in October and applies in early November. Because that person is a special enrollee rather than a late enrollee, coverage has to start no later than the first of December, not the following January.
The rule also carries a notice duty. At or before the time an employee is first offered the chance to enroll, the plan must furnish a notice describing these rights, and the regulation supplies model wording for it.
That model wording is what most benefit handbooks are quoting when they mention declining coverage because you have other coverage.
How continuation coverage interacts with it
The two systems are wired together, and the wiring answers a question people ask in the wrong order.
Loss of eligibility counts as a condition regardless of whether the individual is eligible for or elects continuation coverage. Electing continuation does not spend the special enrollment right.
Exhausting continuation coverage is itself a separate condition. A person who could have enrolled elsewhere, did not, and instead elected and exhausted continuation coverage satisfies that condition when it runs out.
The exchange rule has its own version of the same link. Being enrolled in continuation coverage for which an employer pays all or part of the premium, or a government entity subsidizes, and having those contributions or subsidies completely cease, is a triggering event.
The triggering event is the last day of the period that was paid for or subsidized.
So the end of an employer's support for continuation coverage is a door, even though the coverage itself may still be available at full price.
The exchange rule, and its list of fifteen
The second rule requires an Exchange to provide special enrollment periods during which qualified individuals may enroll in a qualified health plan and enrollees may change plans.
Its triggering events are enumerated, and they run from one to fifteen without a gap.
The first is losing minimum essential coverage, with the date of loss defined as the last day the person would have had coverage under the previous plan.
Others include gaining or becoming a dependent through marriage, birth, adoption, placement for adoption, placement in foster care, or a court order. A permanent move that gains access to new plans is on the list. So is a change in eligibility for advance payments of the premium tax credit or for cost-sharing reductions, and newly gaining access to an individual coverage arrangement funded by an employer.
Some are about the process rather than the person. Enrollment or non-enrollment that is unintentional, inadvertent or erroneous and results from the error, misrepresentation, misconduct or inaction of an official body or an enrollment assister is a triggering event.
So is enrollment influenced by a material error related to plan benefits, service area, cost-sharing or premium, which the rule defines as an error likely to have influenced the decision to enroll.
And a plan that substantially violated a material provision of its contract in relation to the enrollee is a triggering event where the enrollee demonstrates it.
What the list does not name
The fifteen items were read end to end and counted in one pass.
Inside the whole of that paragraph the words formulary, drug list, covered drug, prescription, drug and medication do not appear at all, while ordinary words used throughout it appear as often as you would expect.
So a plan removing a medication from its list, or moving it to a worse tier, is not named as a triggering event in that paragraph.
Two items come nearer than the rest and both are worth reading against your own facts. One is the material error about plan benefits. The other is a substantial violation of a material provision of the contract.
Neither is a general remedy for a mid-year benefit change, and this is a reading of one paragraph rather than a statement about the whole of federal law.
The practical consequence is that a benefit change usually points back at the plan's own machinery, which is where the exception and appeal routes live, rather than at a door out.
The windows on the exchange rule
The general rule is sixty days from the date of a triggering event to select a plan.
Some events get advance availability. Losing coverage, among others, carries sixty days before as well as sixty days after, which is what makes it possible to arrange continuity rather than a gap.
For a small set of events, including the error and exceptional-circumstance items, the Exchange may set the length as appropriate to the circumstances.
Coverage effective dates then follow their own paragraph rather than the selection date.
The regular rule is the first day of the month following plan selection.
Marriage has its own effective date, the first day of the month following plan selection, and birth, adoption, placement for adoption or foster care can be effective on the date of the event itself.
Where coverage was lost, and in the case of an employer ceasing to fund continuation coverage, a separate effective-date paragraph applies.
One sentence that keeps the two systems honest
There is a line in the nondiscrimination rules that prevents an obvious misreading of all of this.
It says the decision whether health coverage is elected for an individual is not itself within the scope of any health factor. That includes the time chosen to enroll, such as under special enrollment or late enrollment.
That matters because the rest of that rule forbids treating people differently on health grounds.
Enrollment timing is not a health fact, so a plan may treat a late enrollee differently from someone who enrolled when first eligible without that being health discrimination.
The same paragraph adds the balancing half: a plan must treat special enrollees the same as similarly situated individuals who enrolled when first eligible.
A special enrollee is not a second-class enrollee, and the rule says so in the same breath.
How to work out which situation you are in
Start with what actually changed, because the two rules turn on that and nothing else.
If eligibility for coverage ended, or an employer stopped contributing, both rules have something for you and the clocks start at the event.
If a job ended, the continuation route and the enrollment route are both live at once, and electing one does not spend the other.
If what changed is the benefit rather than the coverage, the lists above do not name it, and the question moves to the plan's own exception and appeal machinery.
In every case the dates are the fragile part. A thirty-day request window and a sixty-day selection window both run from the event, not from the day the letter arrives.
Nothing here decides an individual case, and anyone weighing one against a specific plan needs the plan's own documents in front of them.
Sources
- 29 CFR 2590.701-6 — Special enrollment periodsThat a group health plan, and an issuer offering coverage in connection with one, must permit current employees and dependents described in the section to enroll if the stated conditions are satisfied, and that these rights apply without regard to the dates on which an individual would otherwise be able to enroll; the loss-of-eligibility condition and its listed instances, being legal separation, divorce, cessation of dependent status such as attaining the maximum age to be eligible as a dependent child, death of an employee, termination of employment, reduction in the number of hours of employment, any loss of eligibility after a period measured by reference to any of the foregoing, a service-area loss under an arrangement that does not provide benefits outside its area, and a plan no longer offering any benefits to the class of similarly situated individuals that includes the person; the exclusions from that condition for a loss due to failure to pay premiums on a timely basis and for termination of coverage for cause such as a fraudulent claim or an intentional misrepresentation of a material fact; the separate condition triggered when employer contributions toward coverage terminate; the statement that the loss-of-eligibility condition applies regardless of whether the individual is eligible for or elects continuation coverage; the separate condition satisfied on exhaustion of continuation coverage, including for a person who satisfied the loss-of-eligibility condition, did not enroll, and instead elected and exhausted continuation coverage; the requirement to allow at least thirty days after the event to request enrollment; the requirement that coverage begin no later than the first day of the first calendar month beginning after the request is received; the notice of special enrollment owed at or before the time an employee is initially offered the opportunity to enroll, together with the model language the section supplies; and the closing example in which a person who lost other coverage in October and applied in early November must have coverage effective no later than the first of December rather than the plan's January date for late enrollees.
- 45 CFR 155.420 — Special enrollment periodsThat the Exchange must provide special enrollment periods during which qualified individuals may enroll in qualified health plans and enrollees may change plans; the enumerated triggering events running one through fifteen without a gap, including loss of minimum essential coverage with the date of loss defined as the last day the consumer would have had coverage under the previous plan, gaining or becoming a dependent through marriage, birth, adoption, placement for adoption, placement in foster care or a court order, an enrollment that is unintentional, inadvertent or erroneous and results from the error, misrepresentation, misconduct or inaction of an officer, employee or agent of the Exchange or of a non-Exchange entity providing enrollment assistance, a demonstrated substantial violation by a plan of a material provision of its contract in relation to the enrollee, changes in eligibility for advance payments of the premium tax credit or for cost-sharing reductions, a permanent move gaining access to new plans, newly gaining access to an individual coverage health reimbursement arrangement or being newly provided a qualified small employer arrangement, an enrollment influenced by a material error related to plan benefits, service area, cost-sharing or premium with the definition of a material error as one likely to have influenced the enrollment decision, and enrollment in continuation coverage for which an employer pays all or part of the premiums or a government entity provides subsidies where those contributions or subsidies completely cease, with the triggering event being the last day of the period so paid for or subsidized; the general rule of sixty days from the date of a triggering event to select a plan; the advance availability of sixty days before as well as after for the listed events including a loss of coverage; the allowance for the Exchange to define an appropriate length for a small set of listed events; the regular coverage effective date of the first day of the month following plan selection; the special effective dates for marriage and for birth, adoption, placement for adoption or placement in foster care; and the separate effective-date paragraph applying where coverage is lost or where employer contributions or government subsidies toward continuation coverage completely cease.
- 29 CFR 2590.702 — Prohibiting discrimination against participants and beneficiaries based on a health factor (paragraph (a)(3), enrollment timing)That the decision whether health coverage is elected for an individual, including the time chosen to enroll, such as under special enrollment or late enrollment, is not itself within the scope of any health factor; and the accompanying statement that under the special enrollment section a plan or issuer must treat special enrollees the same as similarly situated individuals who are enrolled when first eligible.
Frequently asked questions
My plan stopped covering the medication. Can I switch plans now?
The exchange rule's triggering events are enumerated one through fifteen, and reading the whole paragraph finds no mention of a formulary, a drug list, a covered drug, or a prescription. Two items sit nearest: enrollment influenced by a material error related to plan benefits, and a plan that substantially violated a material provision of its contract. Neither is a general remedy for a mid-year benefit change, and this is a reading of that paragraph rather than a conclusion about your situation.
I lost my job. Do I have to choose between continuation coverage and a different plan?
Not immediately. Loss of eligibility counts as a special enrollment condition regardless of whether you are eligible for or elect continuation coverage, and exhausting continuation coverage is itself a separate condition later. On the exchange side there is a further trigger for when an employer completely ceases contributions toward continuation coverage, dated to the last day of the period that was paid for.
How long do I actually have?
On an employer plan, at least thirty days after the event to request enrollment, with coverage beginning no later than the first day of the first calendar month after the plan receives the request. On an exchange, sixty days from the triggering event, and for some events including a loss of coverage, sixty days before it as well.
Does a reduction in hours count?
The employer-plan rule lists a reduction in the number of hours of employment among the things that count as a loss of eligibility. It sits alongside termination of employment, and any loss of eligibility after a period measured by reference to either. The continuation statute treats a reduction of hours the same way.
What does not count as losing eligibility?
The regulation names two exclusions in the same sentence. Loss of eligibility does not include a loss due to the failure to pay premiums on a timely basis. It also does not include termination of coverage for cause, such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the plan.
If I enroll late, can the plan treat me worse?
The nondiscrimination rules address that directly. The time chosen to enroll is not itself within the scope of any health factor, so a plan may distinguish late enrollees without that being health discrimination. The same paragraph adds that a plan must treat special enrollees the same as similarly situated individuals who enrolled when first eligible.