Qualifying Life Events and Effective Dates


QLEs and SEPs

As you may know by now, individual health plans can only be purchased on or off the Health Insurance Exchange, during a short window of time known as the open enrollment period. Towards the end of open enrollment, a rule was created to allow certain individuals the option of applying on or off exchange outside of enrollment.
If you lose coverage for a number of federally-approved reasons, you are eligible for a special enrollment period (SEP). The reason you’ve lost your health benefits is your qualifying life event (QLE).
The following case involves a client, who we’ll call Cindy, who purchased coverage on the exchange. The Marketplace enrolled her for coverage set to begin August 1, 2014, and she wanted to change her effective date to July 1, 2014 to avoid a coverage gap once her COBRA ended in mid-July.


This example highlights a rule that regardless of your COBRA end date, you will be required to take the effective date of the next month after the last day of your policy — even if it means you’re uninsured for several weeks in the interim.
After months of correspondence (which the client diligently logged in a spreadsheet) with the Marketplace, the carrier and our agency, no matter how hard anyone tried, the policyholder had no way of avoiding the break in policies.

Client Email

Good morning,
I wanted to send you my final update re: my 2 1/2 month quest to obtain medical insurance from the Marketplace.  As of today, my policy with Cigna still begins 8/1/14.  I have paid my Cobra bill that covers me through 7/17/14.  I have NO INSURANCE FROM 7/18-31!
I cannot begin to describe my aggravation and depth of disgust in the inability to resolve this issue.  I am attaching my notes which may provide interesting reading for you.  I have been diligent and organized in this quest to no avail.
Thanks to you both for your assistance in this matter. Lord knows what I will happen in January???



The QLE-Effective Date Rule


COBRA insurance, continuation of employee benefits, is considered creditable coverage. If you no longer qualify for an employer-sponsored health plan when your COBRA plan terminates, you’ll have to look for options on the individual market.

If you’re insured by COBRA and your plan ends after the open enrollment period, you will qualify for an SEP.

The catch is that while Obamacare strives to avoid coverage gaps, if you lose coverage mid-month (like Cindy) you can’t obtain new coverage until the first day of the following month. This means that the Marketplace should have advised our client immediately that she couldn’t get a July 1 effective date if her COBRA ended on July 17.

The client also discovered by persistence and opening several cases with the Marketplace that there is no way around this rule. By the time her case was complete, which took over a month, she had the same August 1 effective date.

The Marketplace will not make exceptions to this rule, and therefore you’ll end up with a break in coverage.