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

Plans Covering Pre-Existing Conditions Have Limited Enrollment Windows

Health insurance is expensive, so why not just wait and buy health insurance 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.

Couple looking at health plans
David Lees / Getty Images 

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 market (which includes through the health insurance exchanges as well as outside the exchanges) during open enrollment—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.

The period of open enrollment has become shorter. Initially, it was six months, and then three months long. But open enrollment in most states is now only about six weeks long, running from November 1 to December 15 each year, with coverage effective January 1 of the coming year (state-run health insurance exchanges can have longer enrollment periods; most of them tend to extend open enrollment by at least a week or two, and two states—California and Colorado—plus Washington D.C.—have permanently extended open enrollment).

For 2021 only, however, there is a COVID-related enrollment window. In most states, it continues through May 15, 2021, and in most states, coverage purchased during this window takes effect the first of the month after a person enrolls. Although some state-run exchanges are limiting enrollment during this window only to people who are otherwise uninsured, the majority of states (including all of the states that use HealthCare.gov as their exchange platform) are treating this as another open enrollment period. This means people can newly sign up for coverage, or can switch from one plan to another. The COVID-related enrollment period is also an opportunity for people to take advantage of the new premium subsidies offered by the American Rescue Plan.

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 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. But 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 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.
  • 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 company you found on the health 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 (note that if a state-run health insurance exchange extends open enrollment into the new year, people who apply later in the enrollment window might not have coverage effective until February or March).
  • If you're buying your own coverage outside of open enrollment (using a special enrollment period) and you enroll before the 15th of the month, your coverage will start at the beginning of the next month (note that Massachusetts and Rhode Island have a later deadline; enrollments in those states can be completed as late as the 23rd of the month and coverage will still take effect the first of the following month).
  • If you're buying your own coverage and you enroll after the 15th of the month, your coverage won't start until the beginning of the second following month (except for Massachusetts and Rhode Island, where the deadline is the 23rd of the month). For example, if you experience a qualifying event and sign up on June 25, 2021, your coverage won't take effect until August 1, 2021 (unless your qualifying event is loss of other coverage or marriage, in which case special rules apply to the effective date, and your coverage could be effective July 1, 2021; note that in all cases, you can get coverage effective for a new baby or adopted child retroactive to the date of birth or adoption as long as you enroll before the special enrollment period ends). But as of 2022, this rule will no longer apply to people who use HealthCare.gov. Instead, coverage will simply take effect the first of the month after the application is submitted, regardless of the date (so an application submitted on June 25, 2022 could have coverage effective July 1, 2022, regardless of the qualifying event involved).
  • As noted above, individual/family coverage purchased in the health insurance exchanges during the one-time COVID-related enrollment window (ongoing through May 15, 2021 in most states) takes effect the first of the following month in most cases.

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.

If your income is less than about $17,774 in 2021 (for a single individual), you may qualify for Medicaid. It depends on whether your state has expanded Medicaid, but 36 states and DC have thus-far opted to expand Medicaid under the ACA, and Oklahoma and Missouri will join them in mid-2021. In states that have expanded Medicaid, you're eligible if your income doesn't exceed 138% of the poverty level (here are 2021 poverty level numbers; just multiply by 1.38 to see if your income would make you eligible for Medicaid).

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. 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 has removed this limit for 2021 and 2022. Instead, 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.

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.

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5 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Norris, Louise. healthinsurance.org. What are the deadlines for Obamacare's open enrollment period? March 9, 2021.

  2. Norris, Louise. healthinsurance.org. How the American Rescue Plan will boost marketplace premium subsidies. March 5, 2021.

  3. Cornell Law School, Legal Information Institute. 29 CFR § 2590.701-6 - Special enrollment periods.

  4. U.S. Department of Health and Human Services. Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non-Federal Governmental Plan. May 14, 2020.

  5. KFF. Status of State Action on the Medicaid Expansion Decision. March 12, 2021.