Health Insurance and Moving to a New Area

A permanent move is a qualifying event, but there are caveats

Smiling woman sits in the back of a moving truck with a box and a lamp
Moving to a new area? If there are different health plans available, you'll have a special enrollment period. Hero Images/Creative RF/Getty Images

Moving to a new area where different health plans are available is a qualifying event that allows you to buy a new health insurance plan. But as of July 11, 2016, that's only true if you already had health insurance coverage prior to your move.

Specifically, the new regulations require that you have "minimum essential coverage" in place for at least one of the 60 days before your move in order to qualify for a special enrollment period in your new location.

Minimum essential coverage is the term used to describe "real" major medical health insurance as opposed to coverage like short-term insurance or critical illness plans. That said, there's a long list of coverage that counts as minimum essential coverage, and not all of it is compliant with the Affordable Care Act (ACA).

So you can no longer enroll in a new health plan when you move to a new area if you were uninsured prior to your move, or if you were relying solely on something like short-term insurance prior to the move.

Three exceptions

There are some exceptions to the new rule. If you're in one of these situations, you'll still have access to a new plan when you move, even if you didn't have minimum essential coverage in the 60 days before the move:

  • You're moving back to the US after living abroad. People who live abroad at least 330 days out of the year are exempt from the requirement to maintain minimum essential coverage, and the coverage available to a person traveling outside the US for an extended period of time might not be considered minimum essential coverage.
  • You're being released from incarceration. The coverage provided to inmates isn't typically considered minimum essential coverage, and incarcerated individuals aren't eligible to buy coverage through the exchanges.
  • You're in the Medicaid coverage gap in a state that hasn't expanded Medicaid, and your move corresponds with an income increase that makes you newly-eligible for premium subsidies. HHS has previously clarified that people who are in the Medicaid coverage gap are eligible for a special enrollment period if their income increases to at least 100 percent of the poverty level (making them eligible for premium subsidies). The new regulations confirm that this special enrollment period still applies even if the move is to a state that has expanded Medicaid, and thus doesn't have a coverage gap.

    In all three of those exceptions, the people didn't have a choice - they essentially had no access to minimum essential coverage prior to their move. So it wouldn't make sense to prevent them from enrolling in a new health plan when they experience a bona fide change in circumstances.

    Why was this change made?

    Qualifying events and special enrollment periods ensure that people aren't locked out of getting health insurance when they experience a change in circumstances. But there have been concerns that people may have been using special enrollment periods as a way to "game" the system, and avoid paying for health insurance until they were in need of care. The Blue Cross Blue Shield Association noted in early 2016 that people enrolling outside of open enrollment (ie, using a qualifying event and special enrollment period) had been incurring 55 percent more in medical claims than people enrolling during open enrollment. 

    The Centers for Medicare and Medicaid Services (CMS) acknowledged these concerns in a blog post in January 2016, and issued guidance aimed at tightening up the special enrollment period associated with a permanent move.

    They noted that you must "intend to reside" in the new area and that a move to a hospital or inpatient treatment center would not count as a permanent move - you have to be moving for reasons other than obtaining healthcare.

    The new regulations that the Department of Health and Human Services (HHS) issued in May 2016 serve to further tighten the eligibility requirements for the special enrollment period associated with a permanent move. 

    By requiring that applicants must have already had coverage in their prior location, HHS is removing the ability for people to go without health insurance and then simply move to a new area if they find themselves in need of significant medical care. 

    This is important when you consider that a permanent move was one of the qualifying events that was easiest to "game." Getting married or having a baby are also qualifying events, and they still apply regardless of whether you had coverage previously. But they also have a much more significant impact on other aspects of your life beyond health insurance, and aren't as likely to be something that a person would do solely to gain health insurance.

    What about snowbirds?

    If your move is temporary and you intent to return to your original location, you don't qualify for a special enrollment period. There is an exception, however, for people who have homes in more than one location. An early retiree "snowbird" might have a house in Minnesota where he spends the summers and another house in Arizona where he spends the winters. His time is split between the two homes, and each time he moves, it's "temporary" in that he knows he'll be returning to the other home within several months.

    HHS has said that people in this situation have the option to establish residency in both states and re-enroll in a new health plan each time they move. HHS has also noted that people in this situation might be better served by a PPO health plan with a nationwide network, in order to avoid having to frequently switch health plans. But PPO options in the individual market aren't as widely available as they once were, and broad network PPOs are even less common, so this isn't always a possibility.

    For people who move back and forth between two states and obtain a new health plan each time, it's important to note that the annual deductible and out-of-pocket maximum start over with each new plan - there's no provision to transfer out-of-pocket spending from one plan to another plan if you make a plan change mid-year.

    What if I need medical care out of state?

    HHS clarified in January 2016 that it does not count as a permanent move if you're relocating to a different area for the purpose of obtaining medical care. So for example, if you seek out medical care at a hospital in a different state, you can't switch at that point to a health plan offered in that area.

    If your existing health insurance plan is a PPO, you'll have coverage outside your network although you'll pay a higher deductible and coinsurance, and you may find that the plan has no cap on your out-of-pocket costs when you seek treatment at an out-of-network facility.

    If your health plan doesn't have a national network or doesn't cover out-of-network care at all (eg, an HMO), it may be best to obtain care at a hospital within your health plan's network. But regardless of where you decide to receive care, you won't have the option to "move" to a different area for the purpose of obtaining medical care and enroll in a health plan offered in that area.

    How long does the special enrollment period last?

    The special enrollment period begins on the date of the move and continues for 60 days. Exchanges have the option of also offering a special enrollment period that begins 60 days in advance of the move, but are not required to do so (the advance special enrollment period was originally scheduled to become mandatory for all exchanges as of 2017, but HHS opted to allow it to remain optional indefinitely). 

    During the special enrollment period, normal effective date rules apply. In most states, that means enrollments completed by the 15th of the month will have coverage the first of the following month, while enrollments completed after the 15th of the month will have coverage the first of the second following month (for example, if you move on June 26th and enroll in a new health plan on July 19, your new coverage would start September 1).

    There are three states - Washington, Massachusetts, and Rhode Island - where you can enroll in a plan as late as the 23rd of the month and still get coverage effective the first of the following month.

    After 60 days in your new location, your special enrollment period closes, and you won't be able to enroll in a new plan or make changes to your plan until the following annual open enrollment period.

    If you have a health plan from your prior location, you should be able to keep it during the time while you're waiting for your new plan to take effect, although if you're outside of the plan's service area, you may only have coverage for emergency care. But even if you aren't able to keep your old plan, there's an exemption from the ACA's penalty for being uninsured if you only have one gap in coverage during the year, and it lasts less than three months.

    A stable risk pool depends on healthy enrollees

    Health insurance only works if there are enough healthy members in the risk pool to ensure that the total premiums collected are enough to pay the medical costs for the whole pool. This is particularly important now that pre-existing conditions are covered by individual health insurance plans.

    So it's understandable that there's so much focus on making sure that people are enrolled and paying premiums year-round, regardless of whether they're sick or healthy. And it makes sense that HHS is taking steps to ensure that people cannot move to a new location solely for the purpose of gaining access to health insurance.

    What remains to be seen is whether the changes will have an impact on claims costs among people who enroll during special enrollment periods. In 2014 and 2015, were people really "gaming the system" and relying on lax enforcement of special enrollment period eligibility? Were people really moving to a new area in order to get health insurance when they realized they needed significant medical care? Or were the higher medical costs among special enrollment period enrollees just due to the fact that sick people who had a bona fide qualifying event were more likely to use their special enrollment periods than healthy people?

    Special enrollment period eligibility has been tightened up considerably in 2016, requiring proof of eligibility in many cases, and requiring prior coverage for people who are enrolling due to a permanent move. There is no doubt that regulators, health insurers, and consumer advocates will all be watching over the next year or so to see how healthcare costs compare between people who enroll during open enrollment and those who enroll during special enrollment periods.

    Sources:

    Department of Health and Human Services, 45 CFR Parts 155 and 156, Patient Protection and Affordable Care Act, Amendments to Special Enrollment Periods. Accessed 5/14/2016.

    Department of Health and Human Services, FAQs on the Marketplace Residency Requirement and the Special Enrollment Period due to a Permanent Move, January 19, 2016. Accessed 7/18/2016.

    Department of Health and Human Services, Benefit and Payment Parameters for 2016, Accessed 5/14/2016.

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