HHS Clarifies: Open Enrollment Deadline Applies Only To Obamacare Marketplaces, Not All Private Insurance

    The March 31, 2014 deadline for Obamacare open enrollment has been widely publicized since Healthcare.gov launched in October 2013, but, until recently, information about purchasing coverage outside of the open enrollment period was ambiguous at best.  For most of February, a page on the federal Marketplace website entitled "How can I get coverage outside of open enrollment?" answered the question as follows: "Outside open enrollment, you can enroll in a private insurance plan only if you have certain life events that give you a special enrollment period."  A screenshot of the archived page appears here, emphasis added:

    The statement did not specify where coverage could be purchased outside of the open enrollment period. An email inquiry to the Centers for Medicare and Medicaid Services (CMS) on Wednesday, February 26, seeking clarification elicited the following response on Thursday, February 27, from the agency's press office (emphasis added):

Marketplace plans will not be available until the following enrollment period, unless the person has a qualifying life event. For more information, visit: https://www.healthcare.gov/how-can-i-get-coverage-outside-of-open-enrollment/.

Some insurers off the Marketplace may choose to allow individuals to enroll in a plan at any time provided they comply with new regulations such as not discriminating based a pre-existing condition or current health status. The insurer must also make sure that the plan is available for anyone who may want to purchase it.

    Following the email inquiry, the informational page at Healthcare.gov was updated on February 27, now reading (emphasis added): "Outside open enrollment, you can enroll in Marketplace insurance only if you have certain life events that give you a special enrollment period."  Here is a screenshot of the page as it presently appears:

 
    The original version of the page (first cached on 11/13/13) was different that either of the two versions above:

    The page stayed this way until the week of February 5, 2014, when the second version that was on the site for most of February appeared.
    The application of the open enrollment period inside and outside of the Marketplace has been a source of confusion even to experts in the field.  Kaiser Health News is part of the Henry J. Kaiser Family Foundation, which bills itself as "a leader in health policy analysis, health journalism and communication."  The White House has cited Kaiser's work dozens of times in support of Obamacare. But on November 18, 2013, Kaiser Health News answered readers' questions about the open enrollment period this way (emphasis added):

Q. I know there's an enrollment period for the health law's insurance marketplaces, but people can also buy a policy directly from a company or agent, outside the marketplaces. So will people be able to buy a regular health insurance policy from a company or agent after March? If so, won't people wait until they're sick or injured to buy insurance? 

A. The open enrollment period, when people can buy an individual plan for 2014 directly through the health insurance marketplace or outside it from an insurer or agent, began in October and runs until the end of March.

The law requires that health plans sold either through the marketplace or outside it be comparable in many ways, including the benefits that are covered and consumer cost-sharing requirements, such as the rule that plans pay at least 60 percent of medical costs. In addition, all plans sold on the individual market, whether through the exchange or outside it, must offer open enrollment during the same time period.  

So there's no easy way to game the system by waiting to buy a plan until you get sick. If you skip open enrollment, you've generally missed your chance to buy coverage for the year unless you have a significant change in circumstance, such as losing your job-based insurance. You'll also face a penalty for not having insurance: $95 or 1 percent of your income in 2014, whichever is greater.

    Since the penalty for not having insurance in 2014 is based on lacking coverage for three months or longer during the year, anyone who waits until after March 31 to buy coverage outside the Marketplace will likely incur some penalty, which according to the IRS is "1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt."  Additionally, such individuals will not have access to subsidies as those are available only for policies purchased through the Marketplace.  But the fact remains that even absent the "life events" that are necessary to qualify for Marketplace coverage outside of open enrollment, coverage may be purchased directly from private insurers during that time.  Such offerings, of course, will be up to the individual carriers; CMS's response says that "insurers off the Marketplace may choose to allow" consumers to purchase plans outside of open enrollment, not that they are compelled to do so.
    Obviously it would be in the government's interest for the public to assume that no coverage, either inside or outside the Marketplace, may be purchased between April 1 and November 15 unless there is a qualifying "life event."  But as the recent clarification from CMS spells out, the private insurance market (as opposed to "Marketplace") will remain an option for those who for one reason or another resist Obamacare's deadline.


Note: A version of this post first appeared at The Weekly Standard.