Why do health insurance plans only changes allow at one designated time during the year, or unless you have a qualifying event (i.e., change jobs so change in coverage, new baby)?
I thought it was so people don’t regularly sign up or increase coverage knowing they are facing upcoming expenses/medical issues, though I have to admit I don’t know where I got that from.
Imagine you can switch insurance plans for any reason whatsoever. What do you think you’d do if you suddenly had a major health crisis? Perhaps in the days when you could be rejected for pre-existing conditions that would get insurance companies out of covering you with a different plan, but they can’t do that now.
Ah. Information asymmetry.
Additionally, limited enrollment windows also prevent people from opting out of health insurance entirely when they’re healthy, and then signing up for it only when they discover that they have a health need – which entirely defeats the concept of a “risk pool.”
The idea is to avoid what they call “adverse selection”, where a healthy person gets a low cost/low coverage plan (or no plan) and then when it looks like they are going on incur costs, they get a higher-coverage plan. Theoretically, allowing this would lead to a destabilization of the insurance market (as costs and premiums would rise). I think that’s the same basic reason for the ACA Individual “Tax”.
knew a guy who missed the deadline at work but somehow they let him sign up anyway. It was a small place and he was pretty high up so I guess that helped.
I had one employer that would allow you to increase your health coverage mid-period, but then you would be locked in at the increased level for an extended period of time. (Note that this is in Canada where health insurance mostly covers dentistry and prescription drugs.)
You can also re-enroll if you get married or divorced, so you can cover (or ditch) spouse’s insurance.
I believe this is the correct answer (along with some of the others). Insurance companies employ armies of actuaries whose sole job is to understand risk. The company set’s it rates annually based on risk, and by limiting the timeframe where new enrollees enter the risk pool, it also limits the risks and enables them to make predictions about future costs. If the market were in constant churn thru the year, they would not be able to predict costs, and premiums would likely be much higher (to offset risk).