What Is a Qualifying Life Event?
A critical time to review and update your benefits is when you’re undergoing a qualifying life event, such as:
- having a baby
- getting married
A qualifying life event can make you eligible to sign up for a health insurance plan during what’s known as a special enrollment period. This happens outside standard open enrollment and is usually 60 days before or 60 days after the qualifying life event.
When undergoing a qualifying life event, contact your insurance company as soon as possible to start the special enrollment process.
Changes in your life circumstances usually equate to shifts in how much financial protection you need. Beyond health insurance, qualifying life events are also a great time to look at your other benefits, such as:
- Short- and Long-term disability
- Life insurance
- Health Savings Account (HSA)
Qualifying Life Events That Merit a Closer Look at Your Benefits
When you get married, you can change your health coverage in a couple ways:
- Enroll in your spouse’s insurance.
- Add your spouse to your existing plan.
Because you’re building a life together, you want to make sure that you have proper supplemental insurance and Life insurance. If one of you falls ill, gets injured, or worse, having this coverage could help pay for expenses and help you stay afloat.
Getting married is also an opportune time to review your retirement plan. Is the retirement plan offered at your workplace enough to help you and your spouse stay on track to save a nest egg? Or do you need another plan? Taking a close look will help you lay the foundation to save for your golden years.
Separation or Divorce
Getting legally separated or divorced also falls under a qualifying life event. Should you seek health coverage under a job-based plan, you’ll have the chance to sign up for insurance during a special enrollment period.
A change in marital status often means a change in your money situation. Consider how much greater financial responsibility you might bear after your divorce — for yourself, your children, and your ex-spouse. In turn, you might want to make changes to your insurance policies.
Along those same lines, a marriage ending also translates to shifts in your retirement plans. Have a date with yourself, and gauge how much you need to save on your own to be on track for retirement.
Growing Your Family
It is an exciting milestone, indeed. If you are expecting a child or are in the process of adopting, you’re eligible to enroll in health insurance for you and your loved ones.
Welcoming a child into your life also comes with added responsibilities. Make sure your family is protected financially with other important types of insurance. Should you fall sick or get into an accident, does your insurance mix help cover your living expenses?
If you’re on a high deductible health plan (HDHP), consider opening an HSA if you don’t already have one. HSAs are touted for providing a triple-tax advantage; it could serve you to consider how much you’d like to contribute.
Expanding your family also means you can contribute more to your HSA. For 2020, the HSA contribution limits for self-coverage is $3,550 and $7,100 for families.
When Your Child Turns 26
Your children can typically stay on your health insurance plan until they turn 26. Depending on the policy, your child may need to look for their own insurance once it’s their 26th birthday.
As your child moves into adulthood and becomes independent, you might want to update your benefits. For one, you might adjust the contributions to your HSA, as you can no longer tap into your HSA to cover eligible medical expenses for your grown child.
Death of a Child or Spouse
Should your partner or child pass, you’re bound to be managing many different emotions and tending to challenging matters. When you’re ready, you’ll want to review your benefits and make changes as necessary; you’re eligible for a special enrollment period during this. Doing so could help you avoid overpaying for benefits and ensure that your insurance coverage is appropriate for your family.
If you’re uprooting and your new home you might be eligible to modify your health insurance. The reasons for the move could also prompt you to update your benefits. Did you move to raise a family, buy a home, or take care of an aging parent? Those dramatic shifts could mean changing your coverage amounts or policies.
Tips for Updating Your Benefits When Undergoing a Qualifying Life Event
Review Everything at the Same Time
Look at all your benefits — health insurance, supplemental insurance, retirement plans, and an HSA if you have an HDHP — to help you see how your different benefits work in tandem.
For instance, having a child or getting married not only means updating your health insurance but could also impact your HSA contributions. Taking a holistic approach to benefits is your best bet to ensure you have enough coverage for the next chapter in life.
Factor in Affordability
How much you can afford to contribute to your retirement accounts and spend on insurance policies plays a significant role in the updates you make. Look at the following to see what adjustments you’ll need to make to afford the proper coverage:
- current living expenses
- debt load
- available assets
Should you increase coverage on one of your insurance policies? Consider bumping down other non-essential expenses in your spending to stay within your means.
When life’s changes shift your priorities, your benefits should change as well. What you need will evolve, so it’s essential to review:
- insurance policies
- retirement plans
- HSA plans
What qualifying life event are you interested in learning more about? Let us know in the comments below.