What Is a Loss of Coverage for Health Insurance?

If your premiums for health insurance are taken pre-tax, the Internal Revenue Service (IRS) regulates when you can make a change to your health insurance coverage outside of the annual open enrollment period. Premiums taken pre-tax reduce the amount of taxes you pay on your income, so the IRS only allows changes to your coverage when a qualifying event occurs. Loss of coverage is one of several qualifying events.

Qualifying Event

• A qualifying event is a life-changing event that causes a change in the level of your coverage or eligibility for coverage of your health insurance benefits. It is a personal change in your status which allows you under the IRS "Change of Status" regulations to make a change to your health insurance benefits with your employer. Qualifying events can be grouped into three categories: change in status events, significant cost or coverage changes, and other events.

Change of Status

• Marriage is a qualifying event.

  A qualifying event is most often due to a status change in your or your dependent's life. This could be for instance a marriage, divorce or death of your spouse, or an addition to your family, such as the birth or adoption of a child. It could also be due to a change in your employment. If you or your dependent's lose their job, therefore having a loss of coverage, this is also considered a qualifying event. Other examples include, changing from working full time to part time, or returning to work after a leave of absence.

Significant Cost or Coverage Changes

• If the cost of your insurance coverage changes positively or negatively during the year, and you are required to change the amount you are paying for your insurance coverage, this is a qualifying event. You are permitted to make changes to your plan coverage. Similarly, if your employer makes a change to your plan coverage, for example increasing the required deductible, you can change or drop your health care coverage.

Other Events

• You may be allowed to make changes to your health insurance plan outside of open enrollment for a few specific other events as well. These include: you or your dependent becoming eligible or no longer eligible for Medicare or Medicaid, a court order mandating coverage be added for your dependent child or when you take a leave of absence under the Family and Medical Leave Act, you can change your coverage election.

Considerations

• If you have a qualifying event, you are responsible for notifying your human resources person within 30 days of the event occurring. You are also required to provide proof of the qualifying event. Failure to provide the information within 30 days disqualifies you from being able to make changes to your health insurance coverage until the next annual open enrollment period.