Mind the Coverage Gap

Mind the (Coverage) Gap, Please!

Healthcare coverage transitions can be perilous. At Healthcare Navigation we are hearing from too many people who suddenly realize that they do not have individual insurance (past policy not renewed; they thought payment was being debited, etc.) and are surprised to learn that they can’t simply buy coverage at any time of the year.

The Affordable Care Act (“Obamacare”) has changed the health-insurance world.  Enrollment rules are strict.  As an individual you must apply for Obamacare coverage during an annual enrollment period – or have experienced a “qualifying event” that provides the opportunity to enroll outside an official enrollment period.  If you miss the time frames or let your coverage lapse, you may have a gap in coverage and pay a penalty at tax time.

A notable exception to this rule is for those whose incomes are low enough to qualify them for Medicaid.  Medicaid enrollment is ongoing.

What’s Changed?

Until December 31, 2013, one could apply for individual insurance at any time.  Of course, before 2014 you could be denied coverage due to pre-existing conditions in 45 states.

As a result of the Affordable Care Act, one cannot be denied coverage during an annual enrollment period, and no one is denied individual coverage because of pre-existing conditions. But you can apply for individual insurance only during the annual open-enrollment period (which begins November 1, 2015 for coverage effective January 1, 2016) or because you have experienced a “qualifying event” such as losing your job or losing your coverage due to divorce or the death of a spouse or COBRA’s ending, for example.  Moving to another state can mean you are not eligible for your existing coverage, so you must plan ahead for a transition to new coverage.

If you have a qualifying event, you must act in a timely fashion.  Federal law provides 63 days after a qualifying event to secure new coverage but you don’t want a gap of even a single day. Also, you must have proof of the qualifying event.  One doesn’t just apply for insurance noting that “My COBRA is ending” or “I lost my coverage due to divorce” or “I moved to another state.”  You must have documentation to substantiate the “qualifying event.”

We still get many calls from people looking to “shop around for their individual insurance.”  Again, unless you experience a qualifying event, you as an individual are locked in to coverage you have  until the next annual enrollment period.

Lapses in Coverage Due to Non-Payment of Premiums

Coverage can be terminated for non-payment.  If payment isn’t made within a grace period, you can be uninsured and subsequently have to pay a penalty for not maintaining coverage.


If you lose or become ineligible for group coverage, you should be offered COBRA, which is a temporary extension of group coverage.  If you elect COBRA and later change your mind and want to consider options in the individual market, you cannot do so unless it is during the annual enrollment period.  Once the annual enrollment period ends, you are locked into your COBRA coverage until the next annual enrollment period or until COBRA ends, which is a qualifying event that provides you the opportunity to apply for individual insurance outside the annual enrollment period.

In Sum

Healthcare coverage transitions can be problematic because there are many ways an application for coverage can be lost or mishandled. Always know that your coverage is active and the premium payments are made before the due date. If you anticipate experiencing a qualifying event, plan ahead to review your coverage situation and options because you only have only a narrow window in which to secure new coverage.