Understanding the "Loss of Coverage" Health Insurance Rule in 2025

1. What’s Changing?

• Expanded documentation requirement: Starting May 2025, individuals using the special enrollment period (SEP) for loss of coverage must submit proof of that loss (e.g., employer termination notice, Medicaid de-registration) within 30 days of selecting a new plan. If they don’t, their insurance coverage could be canceled.

• Pre‑enrollment verification for all SEPs: Previously, documentation was mandatory only for insurance coverage loss events. As of 2026, verification will be required for all qualifying life events, and the Marketplace must obtain proof for at least 75% of new SEP insurance enrollments.

• Shortened enrollment periods: Beginning in 2026, the annual open enrollment for health insurance window shrinks from Nov 1–Jan 15 to Nov 1–Dec 15, reducing flexibility. The low‑income SEP is also paused starting Aug 25, 2025, until the end of 2026 for federal exchanges.

2. Who is Impacted by the Loss of Coverage changes?

• Low‑income individuals: Paused low‑income SEP means that those with incomes ≤150% of the Federal Poverty Level will temporarily lose monthly health insurance enrollment access outside Open Enrollment.

• DACA recipients: DACA recipients are now ineligible for Marketplace health insurance plans, including subsidies and cost‑sharing reductions.

• All SEP users: Anyone using an SEP—especially after losing Medicaid, employer-sponsored health insurance, or aging off a parent’s plan—must provide timely documentation or risk being dropped from their insurance provider.

3. Why CMS Made These Changes

CMS asserts these tighter rules are necessary to:

• Combat fraud and improper enrollments (an estimated 5 million improper enrollments cost taxpayers ~$20B in 2024)

• Reduce premiums—by ending auto‑re‑enrollment and tightening SEP use, CMS projects a ~5% premium reduction on average and a $12B savings in 2026

4. What You Should Know

Change	Timeline	Impact on You
SEP documentation	Effective May 2025	You’ll need proof of lost coverage within 30 days.
Low-income SEP pause	Aug 25, 2025 – end 2026	No year-round enrollment for low-income plans.
Shorter Open Enrollment	Starting Jan 2027 plans	Enrollment ends Dec 15 instead of Jan 15.
Pre‑enrollment verification	For all SEPs, starting in 2026	More proof is needed for qualifying events.

5. What You Can Do Now

• Gather proof ahead of time: Keep termination notices or Medicaid disenrollment records in a safe place.

• Enroll early: Avoid deadlines, especially before Dec 15.

• Stay informed: Low-income SEPs may resume in 2027; state-based exchanges may have different rules.

• Seek support: Use broker services, such as Lion’s Pride Insurance, sooner to stay compliant.

In Summary

The loss of coverage SEP is now more gated, with stricter deadlines, documentation mandates, and reduced flexibility for low-income consumers. While the intent is to verify eligibility and restrain costs, many consumers—especially the vulnerable—risk losing coverage unless they act proactively.

If you're counting on SEP due to job loss, Medicaid disenrollment, or other life changes, start preparing now. Track your documents, plan ahead, contact an insurance agent at Lion’s Pride Insurance, and sign up early.