The emphatic answer is NO!   UNLESS?

UNLESS WHAT?

In this article, we set out the grounds on which either you or your insurer can cancel your health insurance plan and the consequences.

The good news is that you can change your current plan to meet a change of need in certain circumstances.  Consequently, you can cancel your policy at any time, but only for the specific reasons which qualify you for a Special Enrollment Period. We deal with this first.  Secondly, we look at circumstances in which an insurer has the right to cancel a plan.

Certain lifetime events justify cancelling your health insurance plan to enroll in another, which will reflect your new needs more accurately.

These ‘lifetime events are set out in our article Special Enrollment (https://truecoverage.com/blog/special-enrollment-period-for-aca-health-insurance-2019/ )

We list here the events most likely to apply to you, as an existing plan holder–

  • Marriage or divorce
  • Birth or adoption of a child
  • A dependent is no longer eligible (e.g., when dependents reach 26 or qualify for Medicare)
  • One of your dependents moves off your plan e.g., to another state, to another plan.
  • When there is significant change in your financial circumstances which affects your entitlement to premium tax credits

OR

  • Your employer introduces/ceases to offer a group plan
  • You move to a State where alternative legislation applies
  • Your insurer cannot provide the same coverage/ does not operate in your new location
  • Your move results in more favorable conditions becoming available
  • You become eligible to join your spouse’s employer sponsored plan

These ‘lifetime events’ offer you a unique special enrollment period.  Your special enrolment window lasts from 60-days prior to the event and a 60-days following the ‘event’ itself. 

During this 120-period you may change your insurance company, enroll in a new plan change metal tiers, apply for the appropriate premium reliefs and subsidies.

The process itself is not difficult but you must be sure not to cancel your existing policy before the new one begins.

Contact your Exchange or broker to advise them of your intentions.  You may find it more flexible to work with an independent broker.  If you have a Special Enrolment Period you may regard the need to change plans as an unnecessary chore.  In reality it is an opportunity to alter your coverage to suit your changed circumstances 

If you terminate your plan without for any other reason you will not be able to enrol in a new ‘marketplace’ plan until the next open enrollment.  You will be restricted to an ‘off market plan’ and these do not attract premium tax relief nor cost sharing options.

On the other side of the coin, insurance companies also have the right to with draw coverage.  And there are rules about that too! 

Your health insurance plan is a contract (technically, ‘of the utmost good faith’) in which you promise to pay (generally monthly) the insurance company to meet an agreed proportion of your covered healthcare costs incurred during the following year (or for the duration of the contract).

The critical point here is your promise ‘to pay.’

What happens if I can’t pay my premium on time?

If you fall behind with your payments, your insurer may grant you a grace period.  Effectively, this is a fixed period during which your coverage is maintained but you must bring your premiums up-to-date.  In the health insurance industry, the ‘grace period’ is usually 90days.  You must have paid at least one total monthly payment during the benefit year and receiving premium tax relief to qualify for a 90 day grace period. Otherwise, the grace period is thirty days, as it for all policies not bought through an exchange whether federal, state or private,

If you do not bring your account up-to-date within the grace period, your insurer can cancel your coverage.

Are there any other reasons the insurance company to cancel?

We started by using the term ‘of the utmost good faith.’ This term includes not only the promise to pay but also the promise to be truthful.  It is therefore, critical to complete all documents (including online applications) truthfully.  One of the common breaches of ‘good faith’ is to give inaccurate answers to the tobacco usage question on applications for health insurance.  Another is to make knowingly false (fraudulent) claims for services, medications persons not covered by the plan.

Either example gives the insurer the right to terminate a plan and take action to recover any uninsured expenses they may have incurred on the plan holder’s behalf.

Conclusions: –

  • Take advantage of any Special Enrollment Period to which you are entitled.  You may save on your healthcare spend
  • If you are unable to pay your insurance premiums-take action. You may be entitled to Medicaid or other federal or state support
  • Talk to an experienced trained health insurance advisor.  It will cost you nothing.  It may put you on the right track

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