The Affordable Care Act (ACA) allows all individuals to enroll in a health plan on a guaranteed basis regardless of pre-existing conditions. To help manage selection, the ACA allows individuals to enroll only during a time-limited OEP, so individuals cannot wait until they become ill or require medical care before enrolling in a health plan. However, recognizing that a person’s circumstances may change, the ACA makes allowances for an individual to enroll in non-group coverage outside of the OEP. Periods during which this is allowed are referred to as SEPs and are triggered when an individual meets certain criteria, such as when an individual loses their employer-sponsored health coverage.
Through regulation and guidance, the eligibility categories allowing an individual to qualify for an SEP have expanded to include over 30 different criteria and there is considerable concern among issuers that individuals are using SEPs to delay purchasing health insurance until a need arises. The resulting adverse selection results in individuals enrolling through SEPs costing far more than those enrolling during the OEP. This, in turn, increases the cost to provide health care for all enrollees. Eventually, this higher cost will be passed down to consumers in the form of higher premiums.
We were engaged by America’s Health Insurance Plans (AHIP) and the Blue Cross and Blue Shield Association (BCBSA) to collect and analyze data from issuers to quantify the impact of SEPs on the non-group market. This report provides the results of our analysis and compares the cost of individuals enrolling through an SEP to individuals enrolling during the OEP.