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What Is an IRS Qualifying Event for Health Insurance?

What Is an IRS Qualifying Event for Health Insurance?

Qualifying events in health insurance are events that alter the amount of health insurance you need or change what health policies you can purchase. A qualifying life event is a requirement for access to special enrollment periods.

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During these periods, you are allowed to choose a new health policy or update your existing insurance coverage. To take advantage of a special enrollment period, you usually need proof of the qualifying life event so that your health insurance changes can be approved. However, if you miss open enrollment and do not have a qualifying life event, there are still options available to you to purchase health insurance.

What is considered a qualifying life event (QLE)?

Qualifying life events are those situations that cause a change in your life that has an effect on your health insurance options or requirements. The IRS states that a qualifying event must have an impact on your insurance needs or change what health insurance plans that you qualify for. In either case, the qualifying life event would trigger a special enrollment period that would make you eligible to select a new individual insurance policy through the state marketplace.

Examples of qualifying life events
Loss of health care coverage
  • Losing health insurance for any reason except not paying premiums
  • Losing eligibility (Medicaid, Medicare or a Children's Health Insurance Program)
  • Turning 26 and losing coverage through a parent's plan
  • Loss of job-based coverage (quit or fired)
Changes in household
  • Marriage, divorce or legal separation
  • Pregnancy, adoption of a child or any adding of dependents
  • Losing coverage due to a death in the family
Changes in residence
  • Moving to a different coverage area (state or county)
  • Student moving schools
  • Workers moving to and from the place they live and work
Other qualifying events
  • Changes in income that affect the coverage you qualify for
  • Becoming a U.S. citizen
  • Released from incarceration
  • Your spouse retires, which forces you to lose coverage
  • Your spouse changes jobs

Qualifying events are evaluated on a case-by-case basis by an underwriter. You can view a complete list of qualifying life events on HealthCare.gov.

What is a special enrollment period (SEP)?

Under the Affordable Care Act (ACA), a special enrollment period is a set period in which you would be allowed to enroll in or change your health insurance coverage. The special enrollment period lasts 60 days from the date of a qualifying life event. During these 60 days, you would be allowed to enroll in a new health insurance plan.

Once the 60 days have expired, the SEP would be over. At that point, you would have had to submit an application for a new policy to receive coverage. If you did not choose a policy and don't have existing coverage, then you would have no health insurance or could enroll in state-run programs like Medicaid if you are eligible.

Qualifying events for employer-sponsored programs

Qualifying life events may change your coverage requirements and therefore affect the group health insurance and flexible spending accounts (FSA) offered through your job. FSAs are arrangements with your employer that let you pay for out-of-pocket medical expenses, dental care or vision care with tax-free dollars. You can decide how much money you put into an FSA up to a limit set by your employer.

If you encounter a qualifying life event, you will be provided the opportunity to change any of the selections previously made on your FSA plan. For example, if you had a child and wanted to increase your contribution to your flexible spending account, you would be allowed to do so because adding a dependent is a qualifying life event.

Group health insurance is affected by qualifying life events in that the event may alter the amount of insurance you need or the number of people covered under the policy. The Health Insurance Portability and Accountability Act (HIPAA) allows employees who have experienced a qualifying life event to enter a special enrollment period in which they can select a new group health plan. This can be very helpful if you were recently married, for instance, as you may want to add your spouse to the health insurance policy.

Should I use COBRA insurance?

If you were fired from your job or decided to quit, then you would trigger a qualifying life event. In this case, a special enrollment period would be activated in which you would have two options: purchase a new health insurance policy or extend your current coverage under COBRA.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is an insurance law that temporarily extends job-based insurance coverage offered by employers. This law allows employees to keep their group health insurance plans when normally they would lose coverage after being fired. However, selecting COBRA can be expensive because your employer no longer will contribute to premium payments.

You can voluntarily drop your COBRA coverage or stop paying premiums on a COBRA policy, but it is important to know that this would not be considered a qualifying life event. Therefore, you would not be eligible for a special enrollment period if you wanted to purchase individual health insurance. For this reason, if you were recently fired or quit, we recommend evaluating the costs of ACA health plans and COBRA plans before choosing one as your policy.

How to prove a qualifying event

After applying for marketplace coverage during a special enrollment period, you may need to provide documentation of your qualifying life event so the insurance provider can confirm that you meet SEP requirements.

Once you have selected a health insurance plan, you will have 30 days to send documents to the insurance provider that detail your qualifying life event. It is important to note that your policy will begin when you have picked a plan, but you will not be able to use the insurance until your eligibility has been confirmed and the initial premium has been paid. Furthermore, if you are not approved for an SEP, then the policy will be canceled or you will need to provide additional documents supporting the qualifying event.

For example, if you were recently married and wanted to change your health insurance policy, you would be required to provide documents that specify the names of you and your spouse, along with the date of the marriage. In this case, you would have 60 days from the date of your marriage to select a new health plan and 30 days from the time you choose a plan to submit supporting paperwork. Some acceptable documents you could use would be a marriage certificate or a copy of your marriage license.

Can I cancel my health insurance without a qualifying event?

You can cancel your individual health insurance plan without a qualifying life event at any time. But it is important to remember that once you cancel your policy, you cannot enroll again until the next open enrollment period. During this time you will have no health insurance coverage, which could be costly if you happen to get injured.

On the other hand, you cannot cancel an employer-sponsored health policy at any time. If you wanted to cancel an employer plan outside of the company's open enrollment, it would require a qualifying life event. Under Section 125 of the Internal Revenue Code, if you do decide to cancel without a QLE, then you and your employer will incur tax penalties.

What if I missed open enrollment and don't have a QLE?

If you missed open enrollment and do not have a qualifying life event, then you may be eligible for a public program such as:

MedicaidDesigned for low-income households
The Children's Health Insurance Program (CHIP)Low-cost health coverage for children

Both of these options have year-round enrollment and can be helpful for families who cannot afford individual health insurance. Another option if you are not eligible for Medicaid could be temporary or short-term health insurance. These types of plans are offered directly from an insurer and can be purchased at any time without a qualifying life event. But these policies can be costly and may lack benefits like prescription drug services.

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