On September 27, 2021, the Department of Health and Human Services published a final rule that, among other items, creates a monthly special enrollment period for individuals meeting all of the following criteria:

1. Their household income does not exceed 150% of the federal poverty level;
2. They are eligible for advanced premium tax credits;
3. They enroll in coverage through the Exchange; and
4. The premium they would pay for the second lowest cost silver plan, net of advanced premium tax credits, is $0.

In effect, the new monthly special enrollment period creates a nearly continuous open enrollment process in the individual market for the portion of the population that meets these eligibility requirements. Additionally, eligible individuals enrolled in individual market coverage would be permitted to change plans mid-year under the new monthly special enrollment period, but they would be limited to switching to a silver plan. While the new policy will be permanent, it would only be in effect during periods when this population qualifies for the second lowest cost silver plan with no premium.

When thinking of the new monthly special enrollment period solely in the context of providing a nearly continuous open enrollment process and ignoring the $0 premium aspect, conventional wisdom would suggest the potential for adverse selection in the individual market. Eligible individuals with immediate health care needs may be more likely to obtain coverage through the monthly special enrollment period relative to eligible individuals with no health care needs. Eligible individuals enrolled in coverage who develop a health condition would be able to change to a silver plan that better meets their needs (e.g., access a specialist that does not participate in their current network). Once their health care needs have been met, they may be more susceptible to dropping or changing coverage relative to individuals with ongoing health care needs.

However, there are several aspects that may offset any adverse selection. First, there will be a short waiting period prior to coverage being in effect. While this may be expected to have little impact on non-emergency care, it will mitigate the effects of “just in time insurance” (e.g., an individual signing up for coverage at the hospital to cover the cost of an emergency department visit). Second, most individuals will have little incentive to drop coverage once they have received any needed care since they would pay little to no premium, assuming they enroll in the lowest cost or second lowest cost silver plan available through the Exchange. Third, being able to obtain coverage at generous cost-sharing levels with no premium may motivate eligible individuals who are healthier to enroll. Fourth, Navigators may be able to tailor outreach efforts to uninsured individuals eligible for the monthly special enrollment period, which could diversify the pool of individuals entering the individual market through the monthly special enrollment period (e.g., healthy individuals could be drawn into the individual market to offset the impact of individuals seeking coverage for health reasons). Generally, the uninsured population is younger and healthier relative to current ACA enrollees.

Assuming advance premium tax credits similar to or the same as those implemented under the American Rescue Plan Act are extended beyond 2022, there may also be a durational aspect. Currently, enrollees who do not terminate or actively switch plans during the open enrollment period would be automatically renewed in their existing plan or mapped into a new plan if their existing plan were terminated. A portion of persisting individuals taking up coverage through the monthly special enrollment period would be expected to maintain their individual market coverage beyond the year they enrolled, if they continue to have no premium requirement; a portion of these enrollees may not realize their coverage is continuing, which would benefit the individual market risk pool (e.g., carriers would receive premium but pay no claims for these enrollees). This assumes most individuals that obtain coverage through the monthly special enrollment period enroll in a $0 premium plan. In rating areas where the second lowest cost silver plan changes frequently year-to-year, the likelihood of individuals obtaining coverage through the monthly special enrollment period and unknowingly renew into the following calendar year would be expected to be lower, and potentially significantly lower, relative to a rating area where the second lowest cost silver plan is the same year-to-year. Changes in the second lowest cost silver plan impact the amount of advanced premium tax credits an individual would receive, which impacts the portion of premium paid by the enrollee. If individuals obtaining coverage through the monthly special enrollment period initially enrolled in a $0 premium plan, and at renewal were expected to pay a premium, many may actively disenroll or simply choose to not pay their premium.

The new monthly special enrollment period raises questions about the potential risks facing the individual market. However, its impact may not be detrimental for the reasons described above. With time, the true impact of the new monthly special enrollment period will be known. However, it may be a several years until the complete picture is known.

Additional information for this article

The new monthly special enrollment period covered in this article will apply in Exchanges utilizing the federal platform. State-based Exchanges may choose to implement a monthly special enrollment period. Under the American Rescue Plan Act, the applicable percentage of income that eligible individuals are required to pay when enrolling in the second lowest cost silver plan available through the Exchange in 2021 and 2022 is zero (i.e., these individuals would pay no premium for the second lowest cost silver plan), assuming the second lowest cost silver plan available through the Exchange does not cover benefits in excess of the minimum required Essential Health Benefits. Starting in 2023, when under current law the applicable percentages revert back to those originally specified under the Affordable Care Act, all individuals eligible for advanced premium tax credits would be expected to pay for a portion of the premium when enrolling in the second lowest cost premium silver plan, which would eliminate any individuals from being eligible for the monthly special enrollment period. However, under the Build Back Better plan currently being considered by Congress, the applicable percentage for these eligible individuals would remain at zero through 2025.