Does My Client Need to Go Through Marketplace Open Enrollment?

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The Open Enrollment period for the Federal Marketplace started on November 1st and will run until January 15th, so now is the time for financial advisors and their clients to take action. It’s important to note though that some states have their own Marketplaces and might have different timelines, so make sure to check if your state has its own Marketplace. 

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During Open Enrollment for the Marketplace, your clients can:

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• Switch from an alternative health plan (like short-term health plans and health sharing ministries) to a Marketplace plan.
• Switch from one Marketplace plan to another.
• Enroll in the Marketplace if they’re uninsured.

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If you’re not familiar with the Marketplace, Open Enrollment, or your clients’ healthcare coverage and needs, you might be wondering which of your clients need to go through the Open Enrollment process for the Marketplace. But I guarantee you have clients who would benefit from a review of their health plan options. Keep reading to see which clients might need to go through Marketplace Open Enrollment!

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Clients who are under 65 and retired

This is a big one! Chances are you have many clients who have sold their business in their 50s or got the chance to retire “early” in their early 60s. If your client is under the age of 65 and already retired, odds are that they’re already on the Marketplace. But plans and healthcare needs change every year, and the plan that worked well for them last year may not be the best plan for them next year. You and your clients have until January 15th (in most states) to make changes to their Marketplace plan coverage, so schedule a meeting with clients who are already on the Marketplace to go over plan options for 2024 that meet their needs. You can see a full list of questions to ask clients to help them determine their ideal plan options in this blog. 

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If you have a client who is a pre-65 retiree and not already on the Marketplace, Open Enrollment is definitely the time to review their healthcare costs and coverage options with them.

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Clients on COBRA and/or are currently unemployed

If your client retired early, or is in between jobs, they might be on COBRA (The Consolidated Omnibus Budget Reconciliation Act). COBRA coverage is essentially the same health insurance coverage your client had at their former employer and covers their spouse and/or dependents if they were also on the plan. Most often, COBRA coverage extends for up to 18 months, but in some special circumstances, coverage can last up to 36 months. Clients will pay the full plan’s premium (including the part that their employer used to subsidize) plus a 2 percent administration fee. Usually, these premiums are quite high. 

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If your client’s COBRA coverage is about to run out and they don’t have a different form of health insurance lined up, you’ll definitely want to help them find a Marketplace plan. Even if your client’s COBRA coverage isn’t ending anytime soon, it might be beneficial to sit down with them and identify the ideal Marketplace plans for their needs and preferences. COBRA coverage is one of the most expensive forms of health insurance, so your client could save money if they switch. When COBRA does run out, your clients will “lose” all contributions to their deductible because their new health plan will have a brand new deductible, so we see a lot of clients switch off COBRA early during Open Enrollment if it is expiring within the next year.

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Similarly, if you have a client who is currently unemployed, I highly recommend helping them enroll in a Marketplace plan. Even if they hope to be employed again soon and gain health insurance through a new employer, there are no guarantees and no crystal balls. Dropping COBRA throughout the year is not a qualifying life event and does not grant you a Special Enrollment Period. Help your clients think ahead and plan for healthcare coverage that will help protect their finances.

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Clients who are uninsured or on alternative healthcare coverage options

If you have an uninsured client, for any reason, they will benefit from going through the Marketplace Open Enrollment process. Going without health insurance makes your client’s financial plan vulnerable to thousands (and more likely tens of thousands) of dollars in medical costs in a year. To protect them from this liability, it’s crucial to take advantage of Open Enrollment as a planning opportunity. I’ve spoken with many advisors who have ultra-high-net-worth clients who chose to self-insure. While that might be their preference, it would be incredibly beneficial to bring them through the exercise of figuring out what health insurance options are out there, in the event they have something planning, like a routine surgery, that you aren’t aware of.

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You might have some clients who are enrolled in alternative healthcare coverage, like a health-sharing ministry (HSM) or short-term health insurance. HSMs are most commonly offered through faith-based organizations, although there are a few that aren’t affiliated with any specific faith. Members of HSMs pool their money in a community fund and when a member becomes ill they submit a request for the amount to cover the bill. HSMs may seem attractive since monthly membership fees tend to be lower than full-price health insurance premiums, but HSMs are not considered traditional health insurance. Therefore, members are not protected by insurance laws and regulations in most states. The plans, while mimicking health insurance policies, are not ACA-compliant. There is no guarantee that your client’s healthcare costs will be covered and they will be denied for pre-existing conditions.

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Short-term health insurance plans offer an alternative, temporary safety net for those who feel they cannot afford ACA-compliant plans or prefer broader network coverage than an ACA-compliant plan may offer. These policies were initially intended for short-term use (hence the name) but now can be purchased for 12 months and renewed for two additional 12-month periods. Short-term plans are not ACA-compliant, meaning they are not required to cover the ACA’s essential health benefits which include maternity care, preventative care, or prescription drugs. This also means they are allowed to deny coverage based on pre-existing conditions or those who have high health risks. The network coverage varies depending on the plan: some plans will let enrollees see any doctor or go to any hospital whereas other plans have restricted networks where enrollees pay less when they see a provider in their network.

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For both of these alternative health insurance options, your client is running the risk of not having certain medical costs covered. Helping your client find the optimal Marketplace options for their needs, goals, and preferences during Open Enrollment can give them a better picture of their option and help them make a more informed decision about their healthcare coverage.

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Clients with children who are 26 and/or live in a different state 

We’ve all heard more than enough times about the impending wealth transfer that is going to be happening over the next 20 years. Well, lucky for you, healthcare planning can help you build stronger relationships with your client’s children. Under the ACA, dependents covered under their guardian’s Marketplace plan can stay on the plan until they turn 26. So if you have any clients with children who are 26 and older, now is a great time to reach out to offer guidance for health insurance. If the dependent has access to employer-sponsored health insurance they’re likely set, but if not, the Marketplace is likely their best option for healthcare coverage. 

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Additionally, if you have clients with dependents who live in a different state, such as for college, you can help them optimize their coverage. They likely can’t access doctors locally on their parents' policy and require policies for their specific location.

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Final Thoughts

If you were unsure about whether or not any of your clients need to go through Marketplace Open Enrollment before reading this blog, you should have a clearer picture now! I recommend bookmarking this blog to refer back to you as you review your client list to quickly and easily identify the criteria that necessitate a conversation about Marketplace health insurance and Open Enrollment. If you’re interested in a deeper dive into Marketplace Open Enrollment, watch the recording of Caribou's Open Enrollment 101 session from our virtual 2024 Open Enrollment Summit.