Marketplace Options for Employees If They Lose Employer-Provided Health Insurance

Many businesses are realigning and reducing their workforce due to the spread of coronavirus (COVID-19). If you’ve lost, or are losing, your group health coverage as a result, you may be able to elect Marketplace coverage under a Marketplace Special Enrollment Period.

A Marketplace Special Enrollment Period is a time outside of the standard yearly Marketplace Open Enrollment Period when you can sign up for health insurance. You qualify for a Marketplace Special Enrollment Period if you’ve had certain life events; including losing health coverage, moving, getting married, having a baby, or adopting a child.

Involuntary loss of coverage due to becoming ineligible under your employer’s plan terms is a qualifying event that triggers a Marketplace Special Enrollment Period. A qualifying event can only result if you lose Minimum Essential Coverage (which most employer-provided group plans are) but not, for example, if you lose a short-term plan or if the employer plan is a “grandmothered” or “grandfathered” plan.

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Viewpoints from Craig Hasday

If you terminate employment – voluntarily or involuntarily – and lose access to employer-sponsored health insurance as a result, that’s considered involuntary loss of coverage. To be considered an involuntary loss of coverage you cannot cancel the plan yourself or lose your coverage because you stopped paying premiums.

The Marketplace Special Enrollment Period applies even if you have the option to continue your employer-sponsored plan under COBRA. You can choose to elect COBRA, or you can use your Marketplace Special Enrollment Period to pick a new plan from the individual market options available in your state. Importantly, this means that if you are financially qualified under the rules in your state, you can receive a federal subsidy for the purchase of this coverage. These rules would also allow you to elect coverage under your spouse’s plan if you are eligible under those plan rules.

Depending on your Marketplace Special Enrollment Period type, you may have 60 days before or 60 days following the event to enroll in a plan on the exchanges. Employer plans generally allow a 30-day Marketplace Special Enrollment Period. If you miss your Marketplace Special Enrollment Period window, you may have to wait until the next Marketplace Open Enrollment Period to apply for coverage. Note that you can enroll in Medicaid or the Children’s Health Insurance Program (CHIP) any time of year, whether you qualify for a Marketplace Special Enrollment Period or not.

If you become re-employed, this would be another qualifying event. You would also lose any federal subsidy if the employer plan meets affordability guidelines.

The rules surrounding Marketplace Special Enrollment Periods and Qualifying Events are complex. This is not intended to provide legal advice, and we suggest you check plan documents and discuss your options with your own advisor before taking any action.