If you’ve tried to enroll in insurance and been told to wait, you’re not alone. Chances are that if you walk into a car dealership to buy a car, the dealership isn’t going to turn you away until November, but buying health insurance is a little bit different.
Insurance companies typically only sell health insurance during an “Open Enrollment” period. This can be a hassle for those who realize they need to enroll in insurance in the middle of the year. Open Enrollment has good intentions though. A designated enrollment period is designed to discourage adverse selection.
Adverse selection occurs when sick people sign up for health insurance but healthy people don’t. In order for health insurance to work, the company must take in more money than it pays. This means, they need more healthy members than sick members. If healthy people didn’t buy health insurance, the entire system would crumble. Claims would cost more than the revenue brought in and companies would go out of business.
If even one insurance company goes under, it’s bad for everyone. We all have fewer options available and less competition means higher prices and less incentive for benefits and good customer service. If prices get higher and benefits get lower, healthy people have even less incentive to pay for health insurance, which continues the cycle and eventually no one could afford health insurance.
Nothing can completely prevent adverse selection (although mandating everyone to buy health insurance comes close). However, creating an Open Enrollment period allows everyone who wants or needs insurance to sign up at the same time. This helps prevent people from enrolling in health insurance on their way to the hospital.
Generally, there is a designated Open Enrollment period during the year, usually towards the beginning of the year. This may change depending on the company you work for or the health insurance you have though. During this time, you can enroll in health insurance for you and your family. There are a few exceptions allowing people to enroll in health insurance outside of Open Enrollment. These include:
Initial Eligibility– When you get a new job you are given a month or two after your hire date to sign up for insurance. If you don’t sign up during this initial eligibility period, you have to wait until the next Open Enrollment cycle.
Life Events– Certain life events are given a special enrollment period. This includes getting married or divorced, having a baby, losing your job, or moving out of your network service area. If you experience any of these life chances, you usually have 30-60 days to change health plans.
Medicare– When you turn 65, you have a seven-month period to sign up for Medicare.
What Happens If I Miss Open Enrollment?
If you didn’t enroll in insurance during Open Enrollment, and you don’t anticipate any life changing events this year, there are a few options (but they can be expensive). Some private companies sell short-term insurance that can be helpful. This may include supplement plans, illness policies, dental/vision plans, and medical discount plants. You can use these to supplement your major medical health insurance or to fill in during a short-term lapse in coverage, but most are not a good option for long-term medical coverage.
It is important to note that Medicaid, the state-based social welfare program does not have limited enrollment. You only must meet the income and eligibility criteria, and if you qualify, you may sign up any time of the year.
If you miss your company Open Enrollment, the first step is to talk to your human resource department to see if there are any options you can take advantage of. You may be eligible for a special enrollment period you’re not even aware of.