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Thursday, March 10, 2016

Changes to Special Enrollment Period Process Could Hurt Consumers

Kara Nester

Policy Analyst

At the end of February, the Centers for Medicare and Medicaid Services (CMS) announced significant changes to the process for consumers who enroll in health insurance through the federal marketplace during special enrollment periods (SEPs). While the new SEP process has not been entirely laid out yet, we have significant concerns that these changes will negatively affect consumers, especially low-income consumers and immigrants. Here we describe some principles the new process should follow to meet the needs of consumers. Update June 8: CMS announces the new process will go into effect on June 17

Special enrollment periods protect consumers from gaps in health insurance

Consumers who experience certain life changes throughout the year may enroll in marketplace insurance outside of the normal open enrollment periods. These SEPs are important because they give consumers protection from gaps in insurance and an opportunity to switch plans when their circumstances change.

SEPs are also a vital aspect of the individual health insurance market, given that the market is often a resource for those in transition, between jobs, or just starting a business. Unfortunately, public awareness about these opportunities to enroll has remained low. Fewer than 15 percent of eligible consumers have enrolled through SEPs. The changes that CMS is making will make it even less likely that consumers who could gain health insurance will take advantage of these enrollment opportunities to gain coverage.

The new requirements will make it harder for people to sign up for health insurance

Until now, to gain health insurance through an SEP, consumers have been able to attest, or make a statement on their application, that they experienced a “qualifying life event.” In the new Special Enrollment Confirmation process, CMS will now require most consumers to provide documentation of that qualifying life event later in the process. After they complete the application process and select a health plan, consumers will now be required to submit documentation. If this process is consistent with other CMS procedures requiring documentation, we expect that consumers will be able to maintain coverage during the special enrollment confirmation process. However, if consumers fail to provide documentation proving their SEP, they risk CMS terminating coverage.

This documentation will be required only for consumers who experience the most common qualifying life events SEPs:

  • Permanent move
  • Marriage
  • Birth
  • Adoption, or placement for adoption, foster care, or other court order
  • Loss of minimum essential coverage

Again, while the details of the new SEP process have not been decided, we are concerned that people experiencing these life changes will face significant barriers when trying to prove eligibility for enrollment to the Marketplace.

There is no data to support claims of fraudulent applications for special enrollment periods

Changes in SEP procedures have been created to weed out people who insurers have claimed have abused and misused SEPS. However, to date, there has been no evidence made public that consumers are actually “gaming” the system. As noted above, consumers are largely unaware of SEPs as it is and are far less likely to know how to fraudulently maneuver the current SEP enrollment process.

No evidence has been made public that consumers are actually “gaming” the system.

Insurers have also claimed that people enrolling through SEPs tend to be sicker than those enrolling during the regular enrollment period, thus leading to adverse selection that subsequently drives up premiums. However, data suggests that the opposite is true for those eligible for SEPs: The people eligible for SEPs are more likely to between the ages of 18 and 34—a relatively healthy demographic with lower health care costs—because they are more likely to experience qualifying life events and lose coverage throughout the year.

We believe the new process to confirm people’s eligibility that CMS is creating could actually increase adverse selection because those who are sick and need coverage the most will be the most motivated to jump through the new hoops required to enroll in coverage. Meanwhile, young people, who are often eligible for SEPs and help to balance the risk pool, will be dissuaded from applying for coverage.

In the coming weeks and months, we expect more information from CMS that will lay out a more detailed process. Families USA will be advocating that the new process adheres to these principles:

  • CMS should provide adequate, transparent, and clear communication to consumers and assisters so they are able to navigate the confirmation process. Given that these are significant changes to procedures that consumers and assisters are only just learning, CMS should ensure that assisters, and the consumers they serve, are equipped and trained on how to successfully enroll in coverage through SEPs. Communicating changes to the SEP application will take significant time and require multiple avenues of communication. Notices to applicants, for example, need to provide clear steps required to maintain coverage. If the past is any indication, we know that onerous, unclear documentation requirements—such as those required for individuals whose annual income does not match data on file—lead to many people losing coverage.  
  • CMS should allow for a wide range of documentation to be accepted as proof of eligibility for an SEP. The vast majority of marketplace enrollees are low- to middle-income, who will naturally have more difficulty gaining access to needed documentation. In addition, young adults—who are a target population to balance marketplace risk pools—move at high rates and often have temporary living situations, which will make it difficult to “prove” a permanent move. The same concerns exist for immigrants and seasonal farmworkers. CMS should create a process in which many different sources of documentation are accepted to ensure that the most vulnerable do not fall through the cracks. One way to make the process easier for consumers would be to provide template letters that consumers can submit as documentation.
  • CMS should provide consumers with adequate time to provide documentation. It is important that consumers have the necessary time required to gather, process, and send in documentation. As noted above, many low- to middle-income individuals may not have an easy way to obtain required documentation, so it is critical that they are provided with conditional eligibility and given the necessary time needed to verify their eligibility. Birth certificates, for example, are likely one of the optional sources of documentations CMS will permit, which often take considerable time to be produced by a state and sent to an individual. At the very least, we recommend that applicants are provided 95 days to provide documentation. This would be in line with policies for other documentation timelines for data elements in the marketplace.  

Families USA will advocate for all these consumer-friendly principles, and additional recommendations, in the new SEP process to ensure that individuals are still able to access SEPs in a timely manner and maintain coverage after enrollment. Inevitably, consumers will have many questions about these new requirements. Assisters are trusted resources and often the first point of contact for health insurance consumers. Strong in-person assistance programs need to be available to help consumers with these complicated processes.

Finally, instead of adding burdensome requirements that get in the way of people enrolling in health coverage for them and their families, CMS should focus on raising consumer awareness about special enrollment opportunities.