Life Changes: When To Update Your Insurance Coverage

A life change for insurance, also known as a qualifying life event (QLE), is a significant alteration in your circumstances that may require you to adjust your insurance coverage. These events are typically divided into four categories: changes in your household, changes in residence, loss of coverage, and other qualifying life events. QLEs are important when it comes to enrolling in or modifying an insurance plan outside of the standard open enrollment period, allowing you to make necessary adjustments to your coverage. Examples of QLEs include getting married or divorced, having or adopting a child, turning 26 and aging out of parental insurance, changes in employment status, and moving to a different location. It's important to note that you may need to provide supporting documentation to prove the occurrence of a QLE to your insurance provider.

Change in residence

Moving to a new residence is a significant life change that can impact your insurance situation in several ways. Here are some essential things to consider when changing your residence:

Impact on Health Insurance

A change in residence can qualify you for a Special Enrollment Period (SEP) for health insurance. Moving, particularly to a different zip code, county, or state, may change the insurance options available to you. You may need to enrol in a new health plan if your previous coverage is no longer applicable in your new location. It is crucial to report out-of-state moves immediately to avoid a break in coverage and ensure you can enrol in a new plan. Contact your insurer or the Marketplace to understand your options and eligibility.

Homeowner's Insurance

When moving, especially between states, it is essential to review your homeowner's insurance policy. Insurance coverage and requirements can vary across states. For example, in California, due to the high risk of earthquakes, you may need to take additional precautions to secure your home. Most states require you to have homeowner's insurance before purchasing a home. Check with your insurance agent about transferring your insurance to another state and understanding the specific requirements of your new location.

Coverage for Possessions During the Move

When relocating, it is important to consider whether your possessions are covered during the moving process. Some homeowner policies cover belongings everywhere, even when they are temporarily away from the home, such as in a moving truck. However, other policies may not provide coverage once the items leave the residence. If your insurance policy does not cover your possessions during the move, you may want to consider moving insurance or supplemental insurance offered by moving companies to protect your belongings.

Auto Insurance

If you are moving to a new state, you will need to obtain a new auto insurance policy. Auto insurance laws differ by state, and it is illegal to drive without the appropriate insurance. Do not cancel your current auto insurance before securing a new policy in your new state. Additionally, wait until after you have moved to obtain the new policy, as costs and policies can vary based on location and commuting distance.

Change in legal relationship status

A change in your legal relationship status is one of the most common life changes that can impact your insurance coverage. This includes events such as getting married, legally separating, or getting divorced. These events often lead to changes in your living arrangements, shared assets, and financial responsibilities, which have a direct bearing on your insurance policies.

Marriage

When you get married, it is essential to update your insurance provider as your spouse will typically be covered by your existing insurance policies, including homeowners, renters, or condo insurance, as long as they live in the same household. Review your coverage to ensure it adequately protects any additional possessions brought into the marriage, such as jewellery or other valuables. Additionally, you and your spouse should be listed on the same car insurance policy. Combining policies can often result in discounts, but it is important to discuss driving records, as a poor record could increase premiums.

Legal Separation and Divorce

In the event of a legal separation or divorce, it is crucial to make the necessary changes to your insurance policies. If you are no longer sharing a household with your spouse, you need to remove them from your homeowners, renters, or condo insurance. Inform your insurance provider of the change in living arrangements to ensure proper coverage for any possessions you may have at your former shared home. Furthermore, if both spouses were listed as owners of a vehicle, it is essential to obtain a new title and update the car insurance policy accordingly. This process may require negotiation through divorce court and the acknowledgement of both spouses, depending on the insurance company's requirements.

Impact on Health Insurance

Changes in legal relationship status can also impact your health insurance coverage. Marriage, legal separation, and divorce are considered qualifying life events (QLEs) that allow you to make adjustments to your health insurance plan outside of the yearly Open Enrollment Period. These events may qualify you for a Special Enrollment Period (SEP), during which you can apply for new health insurance or modify your existing plan. Remember to provide the necessary documentation, such as marriage licenses or divorce paperwork, when making these changes.

Loss of health coverage

Losing health coverage is a significant life change that can impact your health insurance. This loss of coverage can include various scenarios, such as losing your job and the associated employer-sponsored insurance, or becoming ineligible for certain programs like Medicare, Medicaid, or the Children's Health Insurance Program (CHIP). Turning 26 and aging out of your parent's health plan is also considered a loss of health coverage.

If you experience this life change, it's important to understand how it affects your insurance options. Losing health coverage qualifies you for a Special Enrollment Period (SEP), allowing you to apply for new health insurance coverage or make changes to your existing plan outside of the standard annual Open Enrollment Period. This flexibility ensures that you can secure essential health insurance coverage despite the unexpected change.

During the SEP, you can explore different insurance options to suit your new circumstances. You may be able to enroll in government-run programs like Medicaid, which serves individuals and families meeting certain income and eligibility requirements. Alternatively, you can consider purchasing individual or family health insurance plans through the Health Insurance Marketplace.

It's important to act promptly when facing a loss of health coverage. Under the guidelines set by the Affordable Care Act (ACA), you typically have a window of 60 days before or after the qualifying life event to make changes to your health insurance plan. Contacting your insurer or the Marketplace as soon as possible can help you avoid a gap in coverage.

To enroll in a new plan or make changes to your existing coverage during the SEP, you may need to provide documentation of your qualifying life event. This could include proof of previous coverage, such as insurance policy documents or a coverage termination notice. Other relevant documents may include birth certificates, adoption records, or marriage licenses if your household composition has changed.

Changes in household

Marriage, Divorce, or Separation

Entering into a legal marriage, getting divorced, or legally separating from your spouse are all considered changes in household. These events can impact your insurance needs and eligibility, triggering a QLE. You may need to provide documentation such as a marriage license, divorce papers, or legal separation papers to verify the change.

Parenthood or Adoption

Becoming a parent, either through the birth of a child, adoption, or fostering, is a significant change in household. This can lead to a QLE, as you may need to add your child to your insurance plan or adjust your coverage to meet their needs. Documentation such as a birth certificate, adoption papers, or foster care placement records may be required.

Death in the Family

The death of a family member, especially one who shares your health plan, can also trigger a QLE. This may result in changes to your insurance coverage and the need to update your plan. A death certificate and other relevant documents may be required for verification.

Changes in Residency for Students and Seasonal Workers

For students and seasonal workers, moving to or from the place they attend school or work can be considered a change in household. This is because their insurance options may be impacted by their change in residency. Documentation of the move, such as rental agreements or proof of residency, may be necessary to support a QLE.

Transitional Housing

Moving into or out of transitional housing, such as a shelter, can also be classified as a change in household. This type of residency change can affect your insurance options and trigger a QLE. Again, providing proof of residency or a change in address may be required to modify your insurance plan.

It is important to note that the specific requirements and documentation needed to verify a QLE may vary depending on your insurance provider and plan. If you experience any of these changes in household, be sure to review your plan materials, contact your insurance provider, and make any necessary adjustments to your coverage in a timely manner.

Change in employment status

Changes in employment status can be considered a life-changing event that may qualify you for a Special Enrollment Period (SEP) for health insurance. This means that you can apply for essential health insurance coverage within 60 days before or after a qualifying life event.

A change in employment status can include losing your job and employer-sponsored insurance, as well as changes in employment such as a job change within the same organisation (including promotion, demotion, or transfer), a change from part-time to full-time, or a reduction in work hours. These changes may impact your current health insurance coverage and make it necessary to enrol in a new plan.

For example, if you lose your job, you may lose your employer-sponsored insurance. In this case, you can enrol in your spouse's health plan, if available, or continue your employee coverage through COBRA at your own expense for up to 18 months. On the other hand, if you change from part-time to full-time, you may obtain new coverage for yourself and your family members.

It is important to note that the changes you make to your health plan due to a change in employment status should be consistent with the event. For instance, if you get a new job with health benefits, you can only add your spouse to your coverage if they lost their insurance coverage due to the change.

If you experience a change in employment status, it is recommended to contact your insurer or the Marketplace to understand your coverage options and determine if you are eligible for a Special Enrollment Period.

Frequently asked questions