What is a 'Qualifying Event'

A qualifying event triggers changes in a policyholder’s insurance due to new life circumstances, such as the birth of a child, and can be made at any time during the calendar year and not solely during open enrollment periods.

Breaking Down 'Qualifying Event'

A qualifying event serves as an exclusion to typical insurance contracts with durations of one year for individual policyholders. In the case of insurance offered through an employer, individuals choose the type of coverage they want during an open enrollment period. Once open enrollment is closed, the individual may no longer make changes to the type of insurance coverage they selected unless a qualifying event occurs. In some cases, insurance companies may offer more than one open enrollment period, and certain states may have regulations requiring insurers to offer multiple open enrollment periods.

In the event an employee misses the open enrollment period, they must demonstrate that a qualifying event occurred in order to be eligible for a special enrollment. Types of qualifying events that can trigger a coverage adjustment include a change in the number of dependents, a change in marriage status, and changes in employment status. In most cases the individual will need documentation as proof that a qualifying event occurred. This could be birth or death certificates, divorce papers, or where applicable, evidence the individual moved to a different geographical coverage area.

Another common related circumstance is when employees separate from their employer either voluntarily or involuntarily. In order to prevent the employee from being without insurance until a new job is found, they are often able to purchase COBRA insurance. COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act, and was created by Congress in 1986. This insurance is typically very expensive for the former employee to maintain so other options should be explored.

Examples and Timelines

In the case of a qualifying life event, you have 60 days from that event to enroll in coverage. With the advent of the Affordable Care Act (ACA), a new life event was created for younger people who could now be covered under their parents’ medical insurance up to age 26.  For this group, turning 26 is a qualifying event and they can start coverage at that time.

Other examples of qualifying circumstances include seasonal workers who can sign up for new coverage when they move. Also marriage and divorce are qualifying life events. Another situation that can arise is facing a serious illness or natural disaster during an open enrollment period. These are also considered qualifying life events. Lastly, a survivor of domestic abuse or spousal abandonment is eligible to enroll for new insurance coverage under the terms of a qualifying event.

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