Special Enrollment Periods (SEPs) And The QSEHRA

Most consumers who have shopped for individual market coverage are familiar with the annual Open Enrollment Period. But, you may not understand the critical role of special enrollment periods (SEPs), especially in the context of the qualified small employer health reimbursement arrangement (QSEHRA).

An SEP is crucial for helping your employees secure individual health insurance coverage mid-year. While certain qualifying life events trigger traditional SEPs, an employee becoming newly eligible for the QSEHRA can also create one.

This article explains how SEPs work with the QSEHRA so you can confidently advise your team when you offer them their new health benefit.

In this blog post, you’ll learn:

• How a QSEHRA works and why new access to it can trigger a special enrollment period for eligible employees.

• What qualifying events allow employees to enroll in health coverage outside of Open Enrollment.

• How to navigate SEP timing to ensure compliance and seamless employee enrollment.

What is the QSEHRA?

First, let’s quickly review how a QSEHRA works if you’re considering offering the benefit. The QSEHRA is a group health insurance alternative for small employers with fewer than 50 full-time equivalent employees (FTEs). To provide the benefit, you can’t have a traditional group health plan or ancillary coverage as part of your company’s compensation package.

With a QSEHRA, you give your eligible employees a set monthly allowance amount that they can use to buy their preferred individual health plan and other qualified out-of-pocket costs. Their plan must provide minimum essential coverage (MEC) to participate. After they submit proof of an eligible expense, you reimburse them tax-free up to their allowance amount.

Here are some key features of the QSEHRA:

• Only employers can contribute to the benefit. You control how much allowance you offer as long as you stay within the IRS’s annual maximum contribution limits.
• Business owners can choose whether to reimburse just health insurance premiums or premiums plus other eligible expenses. If you’re using PeopleKeep by Remodel Health’s benefits administration software, you can also tailor allowances based on family status.
• Employers must offer the benefit fairly and equally to all full-time W-2 staff members. You can include part-time workers if they receive the same allowance as your full-time employees.
• QSEHRA reimbursements aren’t subject to payroll taxes for employers or employees. Reimbursements are also exempt from income taxes for participants.

Because of its flexibility, the QSEHRA is an attractive benefit option for small employers on a budget who want to provide their workers with a valuable health benefit.

What is the Open Enrollment Period?

Open Enrollment is the set annual period for American consumers to sign up, change, or renew their health insurance policy on the individual market. This time period gives individuals the perfect opportunity to review their coverage options and make adjustments without having to qualify or worry about penalties.

As of 2024, all states must begin Open Enrollment on November 1 and end it no earlier than January 15. This timeframe applies to states using the federal Health Insurance Marketplace or their own state-based exchange. A few states, including New York and Massachusetts, have given residents even more time by extending their enrollment deadlines.

What is a special enrollment period?

A special enrollment period gives eligible individuals a limited amount of time to enroll in or change their health insurance plans outside of the annual enrollment period.

Individuals can only enroll in or change their health coverage outside of Open Enrollment if they have a qualifying life event. After the event, they typically have a 60-day window to choose a new medical plan on a public or private exchange.

If an employee experiences one of these events but misses the 60-day timeframe, they could be left without coverage until the next Open Enrollment Period rolls around. That’s why employers and employees must understand what life events can cause an SEP.

The four categories of qualifying events that can trigger an SEP are:

1. Losing existing health coverage, such as:
   1. Ending a group or individual health insurance policy (except for voluntarily canceling your individual coverage or missing premium payments)
   2. Losing COBRA coverage
   3. No longer qualifying for Medicaid, Medicare, or CHIP
2. The offer of a new health benefit, such as an employer offering their staff a health reimbursement arrangement (HRA)
3. Household changes, such as:
   1. Marriage or divorce
   2. Having a baby, adopting, or fostering a child
   3. Losing coverage due to legal separation or divorce
4. Relocating, such as:
   1. Moving to a new ZIP code or county outside the current health insurance network (rating area)
   2. Relocating to or from the U.S.
   3. Seasonal employees who must change their home and work locations due to employment

What qualifying events trigger a special enrollment period under the QSEHRA?

Before 2020, simply offering a QSEHRA wasn’t enough to qualify your employees for an SEP. This meant that if an employee didn’t already have health insurance, they had to wait until the next Open Enrollment Period—or experience a different qualifying event—to buy individual coverage and use their QSEHRA benefit. Or, many organizations waited to offer a QSEHRA until right before enrollment.

This complication changed with the 2019 HRA final rule, which officially recognized certain QSEHRA and individual coverage HRA (ICHRA)-related events as triggers for an SEP¹.

Below are the qualifying events that will trigger a SEP under a QSEHRA:

These SEPs apply whether or not employees already have individual policies when you offer the QSEHRA. Except for mid-year renewals, your employees can choose any metal plan level on the public or private exchanges. But, they may need to show proof of QSEHRA eligibility to the Marketplace, broker, or insurance company to confirm their SEP before enrolling in coverage.

What is the timeframe for enrolling in individual coverage during an SEP?

Offering your employees a QSEHRA will trigger an SEP on the day they’re eligible for the benefit. If you give your employees advance notice of the QSEHRA (generally 90 days before the benefit’s start date), they’ll have 60 days before the start date of the QSEHRA to enroll in coverage.

Let’s look at an example timeline:

However, not every employee can receive advance notice of the benefit. For example, suppose you have a newly hired W-2 employee starting work on August 1, 2026, with full access to their QSEHRA. In that case, their SEP will begin on August 1 and continue for 60 days through September 29.

If you’re administering your QSEHRA with PeopleKeep’s HRA software, we make it easy for your employees to compare and shop for coverage. With our integrated shopping feature, your employees can compare and enroll in an individual health insurance policy and ancillary coverage right from their PeopleKeep dashboard. And if they need help reviewing their options, our in-house enrollment specialists are available whenever they need them.

Conclusion

Whether you’re new to the QSEHRA or adding more employees to the benefit, knowing how SEPs work is key to maximizing their impact. By understanding the qualifying events that trigger an SEP and executing proper planning and communication, you can help ensure that your staff and their families never miss the opportunity to enroll in necessary medical coverage.

Book a call with an HRA specialist to learn how PeopleKeep by Remodel Health can help you launch a QSEHRA.

This blog post was originally published on March 29, 2017. It was last updated on May 19, 2025.

1. 2019 HRA final rules

2. IRC 155.420 – SEP triggering events