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Small Business Employee Benefits and HR Blog

How a little-known Nevada insurance law benefits residents

A little-publicized Nevada law provides residents with a unique opportunity that doesn’t exist anywhere else in the Untied States. NRS 687B.480, which took How a little-known Nevada law benefits residentseffect January 2014, allows uninsured residents to buy an individual insurance policy any time during the year.

Elsewhere in the country, you’d need a qualifying life event—such as a marriage or loss of employer-sponsored coverage—to do that.

In this article, we’ll explore standard rules for open enrollment, how the Nevada law differs, and the advantages it brings to small businesses as well as to the state’s residents.

How Open Enrollment Was Created and Structured

Most Americans are familiar with the term “open enrollment”—the time period during which they can enroll in their company’s group health plan or purchase an individual or family policy on the exchange.

For Affordable Care Act (ACA) Marketplaces, open enrollment is usually restricted to three or four months. In 2017, for example, enrollment was open from November 1, 2016, to January 31, 2017.

This system was designed to incentivize people to purchase coverage immediately, rather than waiting until they develop a health condition. It was meant to protect insurance carriers from “adverse selection,” in which only sick people purchase coverage and thus expose the company to significant risk.

The Problem with Restricting Open Enrollment

Open enrollment has likely been a contributing factor to the drop in the country’s uninsured population from 48 million in 2010 to 28 million in 2016.

But 28 million is still a big number.

Some of the uninsured population are likely unaware of open enrollment deadlines each year or decide to forgo coverage for cost reasons. Others may not know of the potential tax penalty. Still more may simply miss the boat.

Regardless of the reason, it can be deflating—and even feel unfair—to learn that individual insurance cannot be purchased outside open enrollment without a qualifying life event.

For 2017, individuals and families who didn’t purchase coverage by January 31 will need to wait until November 1 to purchase coverage for 2018.

In Nevada, however, all of this is different.

How Nevada state law solves this problem

Thanks to NRS 687B.480, insurance carriers selling individual policies outside Nevada Health Link—the state’s health insurance exchange—must make policies available for purchase year-round. That means regardless of whether a Nevada resident experiences a qualifying life event, they can purchase a policy any time of the year.

And to reduce the risk to carriers, the law permits insurance companies to impose a 90-day waiting period prior to the start of coverage.

What the Law Means for Nevada Residents and Small Businesses

Uninsured Nevadans have an obvious advantage over other uninsured Americans—they can get individual health insurance months before they could in any other state.

Additionally, small businesses wanting to offer a Small Business HRA to employees could do so with the security of knowing that all their employees—including those currently without insurance—could take advantage of the tax-free benefit immediately.

No other state has taken the approach to open enrollment that Nevada has. It’s a huge benefit, and should be taken advantage of whenever it’s needed.

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