Why Not Wait Until I'm Sick to Buy Health Insurance?

Health insurance is expensive, so why not just wait and buy coverage when you need it? Why pay months of premiums when you might not need to use it?

Since Affordable Care Act (ACA) rules require health insurers to cover pre-existing conditions, it may seem cheaper and safe to delay buying coverage until you need it. But, there are compelling reasons not to wait.

This article will explain why you'll generally find yourself out of luck if you go without health coverage and then try to enroll if and when you're in need of medical care.

Open Enrollment Isn't Open-Ended

Unless you experience a qualifying event, described below in more detail, you can only buy health insurance in the individual/family market (which includes through the health insurance exchanges as well as outside the exchanges) during open enrollment. This is a period of time when everybody can buy health insurance.

If you don’t buy your health insurance during open enrollment, you’ll have to wait until the next year's open enrollment for another opportunity. If you get sick in the meanwhile, you’ll probably be out of luck.

In most states, the open enrollment period for individual/family (self-purchased) health insurance runs from November 1 to January 15, although there are some state-run exchanges that have different deadlines.

If you work for an employer that offers health insurance, you're also limited to signing up during open enrollment. And open enrollment for employer-sponsored plans is generally quite a bit shorter than the window that applies in the individual market. Employers can set their own open enrollment windows—there's no set schedule the way there is for the individual market. They usually occur in the fall, for coverage starting January 1, but employer-sponsored plans can have plan years that differ from the calendar year, so you may find that your employer conducts open enrollment at a different time of the year.

One way or the other, your opportunity to sign up for the coverage your employer offers is going to be limited to a short window each year. You're not going to be able to wait until you need medical care to sign up for health insurance.

Exceptions to Open Enrollment

Certain situational changes in your life (but not changes in your health status) will create a special enrollment period during which you can buy health insurance or change your health plan. Special enrollment periods apply to employer-sponsored coverage as well as coverage that you buy on your own.

Qualifying events for individual market coverage include:

• Losing access to your existing health insurance plan for reasons other than non-payment of premium or fraud (for example, leaving your job and losing access to your employer-sponsored insurance, or getting divorced and losing access to health insurance that you had via your ex's plan). 
• Gaining a dependent or becoming a dependent. Getting married, having a baby, or adopting a child are examples. (In most states, becoming pregnant is NOT considered a qualifying life event, but there are a few exceptions: In New York, Connecticut, the District of Columbia, New Jersey, Maryland, and Maine, a person can enroll in health coverage through the health insurance exchange with a special enrollment period triggered by pregnancy.)
• Permanently relocating can create a special enrollment period. But since mid-2016, this has only applied if you were already insured in your previous location—you'll have an opportunity to change insurance if you move, but not to obtain coverage for the first time.

For employer-sponsored plans, qualifying events are similar, but there are some that differ (here's the Code of Federal Regulations that governs special enrollment periods for employer-sponsored coverage).

Special enrollment periods are time-limited. For employer-sponsored plans, you've generally only got 30 days from the qualifying event to enroll. In the individual market, you'll have 60 days, and some qualifying events trigger an enrollment window both before and after the event. But if you don't sign up during the applicable window, you'll have to wait for the next open enrollment period.

Health Insurance Waiting Periods

Health insurance coverage doesn’t take effect the day you buy it. Whether you're insured through work or through a plan your purchased in the health insurance exchange, there is usually a waiting period before your coverage kicks in. For example:

• If you enroll during your employer's open enrollment period, your coverage will take effect on the first day of the upcoming plan year. In most cases, this is January 1, although your employer's plan year might not follow the calendar year.
• If you enroll in your employer's plan due to a qualifying event, your coverage will start the first day of the following month.
• If you sign up during autumn open enrollment for individual market plans, your coverage will start on January 1st in most cases. But in most states, open enrollment now continues past December 15, and enrollments completed after that date will generally have coverage effective February 1 instead (or even March 1, in a few states where open enrollment continues past January 15).
• If you're buying your own coverage outside of open enrollment (using a special enrollment period) coverage will generally take effect the first of the month after you enroll, although enrollments for a newborn or newly adopted child can be backdated to the date of the birth/adoption (prior to 2022, enrollments generally had to be completed by the 15th of the month in order to have coverage effective the first of the following month, but that's no longer the case in most states as of 2022).

Short-term health insurance can take effect as soon as the day after you purchase it. But as we'll discuss in a moment, short-term health insurance generally will not cover any pre-existing conditions. So it won't work as a coverage solution once you're in need of medical care.

Health Insurance for Unforeseen Circumstances

It's not a good idea to wait to buy health insurance until you need to use it. Even if you’re young and healthy, bad things can still happen.

What if you sliced your hand when a wine glass broke as you were washing it? Stitches in an emergency room can be very expensive. What if you tripped over the cat while walking downstairs? A broken ankle can’t wait for treatment and might even require surgery.

Even if something like this happens when you're able to enroll in coverage right away (during open enrollment or during a special enrollment period), your coverage wouldn't take effect right away. It's doubtful that you'd want to wait around for weeks to go to the emergency room.

And if your unforeseen circumstance occurred outside of open enrollment and when you're not eligible for a special enrollment period, you'd potentially have to wait months just to enroll.

The Expense of Health Insurance

The most common reason people give for not having health insurance is that it's too expensive. But the ACA has helped to make coverage much more affordable for people with low and mid-range incomes. And from 2021 through 2025, the American Rescue Plan and Inflation Reduction Act have enhanced the ACA's subsidies, making self-purchased coverage even more affordable.

If your income is less than about $18,754 (for a single individual), you may qualify for Medicaid (this income limit will increase after the 2023 federal poverty level amounts are released in mid-late January 2023).

Medicaid eligibility rules depend on whether your state has expanded Medicaid, but 38 states and DC have thus-far opted to expand Medicaid under the ACA (South Dakota will join them as of July 2023, under the terms of a ballot measure that voters approved in 2022). In states that have expanded Medicaid, you're eligible if your income doesn't exceed 138% of the poverty level (multiply the current federal poverty level amount for your household size by 1.38 to see if your income would make you eligible for Medicaid).

Note that children and people who are pregnant can qualify for Medicaid with significantly higher income levels, as detailed in this chart.

If your income is too high for Medicaid, you may be eligible for premium subsidies to cover a portion of your premium in the exchange/marketplace. These subsidies are normally only available to people with income up to four times the poverty level (based on the prior year's poverty level numbers). But the American Rescue Plan removed this limit for 2021 and 2022, and the Inflation Reduction Act extended that provision through 2025.

Under the temporary new rules, people are expected to pay a set percentage of their income for the benchmark plan's premium, and it's capped at 8.5% of income, regardless of how high an applicant's income is (for people with lower incomes, the percentage of income they have to pay for the benchmark plan is lower).

To qualify for subsidies, you must buy your health insurance through the exchange. You can either take the subsidies up-front, paid directly to your insurance carrier throughout the year, or you can pay full price for your coverage and then claim your subsidy on your tax return.

Catastrophic Plans

If you're younger than 30 years old, or if you qualify for a hardship exemption (which includes affordability exemptions), you may be eligible for a catastrophic health plan. Although these plans have the highest deductibles and out-of-pocket costs allowed under the ACA, their premiums are lower than the other available options, and at least you’ll have some coverage.

Catastrophic plans cannot be purchased by people over 30 unless they have a hardship exemption. And it's also important to note that subsidies cannot be used to help pay for catastrophic plans, so they're generally not a good choice for anyone who qualifies for subsidies based on income.

And just like any other major medical health plan, catastrophic plans can only be purchased during open enrollment or a special enrollment period.

What About Short-Term Health Insurance?

Short-term health insurance is available for initial terms of up to a year in quite a few states, with some plans available to renew for total durations of up to 36 months.

Since short-term health insurance is not regulated by the ACA, it's available for purchase year-round. Short-term health insurance can also be purchased with an effective date as soon as the day after you apply.

But nearly all short-term health plans have blanket exclusions on pre-existing conditions. The insurer can reject your application altogether based on your medical history. But even if they accept you, the plan is going to include fine print noting that they're not going to cover any medical issues that you were experiencing before your plan took effect.

And post-claims underwriting is common on short-term plans. That means the insurer asks just a few general medical questions when you enroll, and policies are issued without the insurer doing a review of your medical history. But if and when you have a claim, the insurer can then comb through your medical records to see if there's any way the current claim is related to a pre-existing condition. If it is, they can deny the claim (this doesn't happen with ACA-compliant plans, because they cover pre-existing conditions).

So a short-term plan is not going to be a solution if you're hoping to wait until you need medical care and then purchase coverage at that point.

Summary

Health insurance can only be purchased during limited enrollment windows, either an annual open enrollment period or a special enrollment period stemming from a qualifying event.

So people cannot wait until they're sick and then purchase coverage. In most cases, that strategy will result in a potentially months-long wait until coverage takes effect, making it impractical in terms of having access to care for the medical condition that has arisen. Instead, the best approach is to maintain continuous coverage, even when healthy, so that coverage is already in place if and when a medical need arises.

A Word from Verywell

Like any insurance product, health insurance only works when enough claim-free or low-claim individuals are in the pool to balance out the cost of the high-claim individuals. This is why it's so important to maintain health insurance even when you're perfectly healthy. It's not just yourself you're protecting, it's the whole pool. And you never know when you might need the pool to be there for you—the healthiest among us can become a high-claim individual in the blink of an eye.