An SEP if your income doesn’t exceed 150% of the federal poverty level

In September 2021, the U.S. Department of Health & Human Services finalized a new special enrollment period (SEP) in states that use HealthCare.gov (optional for other states), granting year-round enrollment in ACA-compliant health insurance if an applicant’s household income does not exceed 150% of the federal poverty level (FPL) and if the applicant is eligible for a premium tax credit (subsidy) that will cover the cost of the benchmark plan.

This SEP became available on the HealthCare.gov website — and enhanced direct enrollment entity websites — as of March 21, 2022 (it was available prior to that only by calling the HealthCare.gov call center and completing the application over the phone). Outside of the annual open enrollment period (November 1 through January 15), applicants need to select “find out if you can enroll/change” and then select the option that says “Medicaid, CHIP, or a new Special Enrollment Period based on income.” The pre-screener tool will then ask questions to determine whether the person/household’s income is in the eligible range. If so, the special enrollment period opportunity will allow them to proceed with the enrollment. Enhanced direct enrollment entities have similar enrollment pathways.

In finalizing this SEP, HHS noted it’s beneficial for low-income consumers to have additional enrollment opportunities, and that this is in keeping with the executive order to strengthen Medicaid and the ACA, signed by President Biden in January.

This special enrollment period does not have limitations on how often it can be used, or the type of health plan that can be selected. But people with income up to 150% of the poverty level are strongly encouraged to select a Silver plan. At that income level, Silver plans have built-in cost-sharing reductions that make the coverage better than a Platinum plan. And for as long as the American Rescue Plan’s subsidy enhancements are in effect — at least through the end of 2025, thanks to the Inflation Reduction Act — the two lowest-cost Silver plans are premium-free (in most states) for applicants with income up to 150% of the poverty level.

A person with an eligible household income who is already enrolled in an exchange plan can use this SEP to pick a different plan, although deductible and out-of-pocket spending would reset to $0 for the year when the new plan starts. (State-run exchanges can choose to limit this SEP only to people who aren’t already enrolled, or to make it available to both new and current enrollees.)

However, the new rules do clarify that if a current enrollee is adding a dependent to their plan, they can either add the dependent to the existing plan, or switch to a Silver level plan and enroll the new dependent in that plan. But the SEP cannot be used to switch the current enrollee to a non-Silver plan together with the new dependent.

You have to be eligible for premium tax credits in order to take advantage of this SEP. So regardless of income, the SEP is not available to a person who is eligible for Medicaid, premium-free Medicare Part A, or an employer-sponsored health plan that provides minimum value and is considered affordable. The SEP is also not available to people in the coverage gap (which exists in 11 states as of early 2023), because they are not eligible for premium tax credits.

As described in more detail below, only a small segment of the population is eligible for this SEP in states that have expanded Medicaid, due to the very narrow range between 138% of the current year’s poverty level (for Medicaid eligibility) and 150% of the prior year’s poverty level.

This SEP is also only available on-exchange, since premium tax credits aren’t available outside the exchange.

(Note that to get on-exchange coverage, you can enroll directly through the exchange, or through an enhanced direct enrollment website, or with the help of an agent or broker. If you have questions, you can call (619) 367-6947 to speak with one of our licensed agents.)

This special enrollment period may or may not be permanent, but will continue through at least 2025

This special enrollment period is fairly unique in that it may or may not be permanent. HHS has clarified that the new SEP is only available for as long as people at this income level are eligible for premium-free benchmark plans.

The American Rescue Plan (ARP) enhanced premium tax credits (subsidies) for 2021 and 2022, and the Inflation Reduction Act (IRA) extended the enhanced subsidies through 2025. Under the ARP/IRA, people with income up to 150% of the poverty level do not have to pay premiums for the benchmark plan. (In some states, these plans still cost a dollar or two, due to additional state-mandated benefits.)

If the ARP-style subsidy enhancements are allowed to expire at the end of 2025, this SEP will also cease to be available at that point, unless HHS takes further action to extend it. But if Congress enacts additional legislation to further extend the ARP-style subsidy enhancements, the SEP would also continue to be available.[/hio_question]

What else do you need to know about eligibility for the SEP?

Although access to this SEP is largely based on income, there are several points to keep in mind:

• In most states, there is a fairly narrow income window for eligibility for this SEP, since Medicaid is available to adults in most of the country with income up to 138% of the poverty level. So this SEP would only be available to applicants with income above 138% of the poverty level, but not more than 150% of the poverty level (note that Medicaid enrollment, for both adults and children, is always available year-round). And by March or April each year, states switch over to using the updated federal poverty level numbers for Medicaid eligibility, although they continue to use the prior year’s poverty level numbers to determine subsidy eligibility and eligibility for the low-income SEP. So once states start to use the 2023 poverty level numbers to determine Medicaid eligibility, a single person in a state that has expanded Medicaid in the continental U.S. will only be eligible for this SEP if their income is above $20,120 but not more than $20,385 (those numbers are 138% of the 2023 FPL, and 150% of the 2022 FPL, respectively).
• In the dozen states where Medicaid has not been expanded, this SEP is available to households with income between 100% and 150% of the prior year’s poverty level. So for 2023 coverage, that means an income between $13,590 and $20,385 for a single adult. (There’s a coverage gap in 11 of those states for many adults with income below the poverty level, and this SEP does not change that.)
• Recent immigrants (who aren’t eligible for Medicaid due to their new immigrant status) can qualify for this SEP with income between 0% and 150% of the prior year’s poverty level.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health marketplace updates are regularly cited by media who cover health reform and by other health insurance experts.