Ch-ch-ch-ch-changes: Special Enrollment Periods Provide Essential Coverage During Common Life Transitions, but Many People Don’t Know They Exist

Perhaps the only certainty in life, besides death and taxes, is change. People change jobs, move, get married, or have a baby. According to the U.S. Census Bureau, it’s estimated that people move 11 times within their lifetime with the most moves occurring between the ages of 18 to 45. And baby boomers have had at least 10 jobs by the time they are 48, with half of those jobs being held between the ages of 18 to 24. Job switching is common among millennials too.

With these life changes, most people will likely have to change the way they get health insurance. Special enrollment periods allow people experiencing a life change to access health insurance whether it’s through their employer or the Marketplace. For example, in 2015, 1.6 million people accessed health insurance from the federally facilitated Marketplace through a special enrollment period (SEP). While that may sound like a big number, it’s relatively small compared to 33.5 million people that are estimated to be eligible, but don’t enroll through a SEP. That means roughly 85 percent of people eligible for a SEP are not taking advantage of it.

So why are people not accessing marketplace coverage through special enrollments? Likely the biggest reason is that people don’t know that marketplace coverage is available, often with financial assistance, when there’s a life change. Multiple factors contribute to this lack of awareness, including little to no Marketplace advertising of special enrollments throughout the year and, in some cases, the disengagement of insurance brokers because insurers are no longer paying commission for special enrollments. There’s also an absence of a coordinated effort to raise awareness among entities that can connect the uninsured to the marketplace, such as employers when someone is leaving employer-sponsored insurance or turning 26 and aging off their parent’s plan; state departments of motor vehicles when people move and need a license; state courts when people get married; or hospitals when people have babies. While there are efforts in some states to raise awareness of special enrollments, particularly in states like California that operate their own marketplace, the majority of people don’t know special enrollment opportunities exist.

In response to insurer concerns about the risk pool, the administration has tightened rules surrounding special enrollments and implemented a confirmation process for the top five most commonly used special enrollments, which we blogged about here. These measures are aimed to strengthen the risk pool and to deter inappropriate use of special enrollments. But asking for such documentation is likely to deter eligible, healthy people that don’t want the hassle of getting and submitting verifying documentation to enroll. Since the confirmation process began, there’s been a fifteen percent reduction in plan selection through special enrollments. The administration also announced that it will be conducting a pilot to pre-verify consumers who apply for a special enrollment and asked for comments on its design and scope.

While measures to deter inappropriate use of special enrollments are understandable, there is no evidence for insurer claims that people are gaming SEPs to inappropriately obtain coverage outside of the annual open enrollment period. And to strengthen the risk pool, it is equally important to raise awareness of special enrollments – and invest in efforts to help people eligible for SEPs enroll in coverage. Not only does raising awareness of special enrollments have the potential to increase enrollment and strengthen the risk pool, it also can reduce the number of uninsured, particularly for young adults (aged 18-34) who remain the largest group without health insurance. Obtaining better data about who is using SEPs and under what circumstances would also help policymakers both improve outreach efforts and better target any needed interventions to shut down inappropriate use of SEPs. Without that data, any further restrictions may dampen enrollment and worsen the risk pool.

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