Health insurance is one of the most important ways in which you can protect yourself, both from health risks and financial ones. It gives you peace of mind knowing that your medical bills will be covered should you fall ill. While the individual mandate part of the Affordable Care Act is no longer enforced at a federal level, it is still important to have suitable health insurance. Sometimes, the policy a person takes out may no longer be suitable for them, and they may wish to change or cancel their policy. Can you cancel health insurance at any time? It is possible to do this, and sometimes, it may even be necessary, but it’s important to consider your options before taking action.
Are You Required to Have Health Insurance?
The Affordable Care Act (ACA) legally requires individuals to have adequate health insurance. In the past, there was a federal tax penalty for those who did not have a suitable health insurance policy; however, the ACA reforms of 2018 mean that there is no longer a federal tax penalty for those who are uninsured or underinsured.
Some states have their own health insurance requirements. If you live in one of the following states, it is important that you maintain a valid and adequate health insurance policy:
- Rhode Island
- New Jersey
- Washington D.C.
Can You Cancel Health Insurance at Any Time?
Some people are looking for a perfect answer, can you cancel health insurance at any time? For which we can say, you can do so at any time, if you wish to cancel. Exactly how to do this depends on whether you took out a policy directly with an insurance company or via the Health Insurance Marketplace.
If you would like to end coverage for a marketplace plan, you can do so by filling out the questionnaire on the HealthCare.gov website and following the instructions provided. This will tell you how to complete the plan termination and how quickly the termination is likely to take effect.
If you would like to cancel health insurance that was taken out directly with a provider, you should contact them directly and ask what their policy is. Some companies may have a waiting period or require you to provide notice in writing.
Can You Cancel Health Insurance at Any Time and Get Money-Back?
Some providers offer prorated reimbursement for health insurance if the policy was prepaid, but this is not always the case. Contact your policy provider to find out what its requirements and terms are.
If the policy was fairly new when you cancelled it, you may be entitled to a full refund, depending on the state you live in and the provider’s policies.
For example, California and Florida both have a 10-day “free look” period, where clients can cancel their health insurance within 10 days of receiving the policy materials, getting a full refund as long as they have not yet used their policies.
Other insurance providers across the country may have similar cooling off period policies as a goodwill gesture, even if the state does not require them.
Can You Change Your Health Insurance Plan or Provider?
You are permitted to change health insurance plan or provider at any time, and there can be a variety of reasons you may wish to do so. Maybe your current policy does not offer the doctors or hospitals you like within its network. If you feel that your current health insurance provider may not be the best one for your needs, you may be wondering what the way forward looks like.
The best (and simplest) time to change plans is during the open enrollment period for the following plan year. Rather than simply auto-renewing your current plan, it makes sense to double-check the details of your coverage in order to make sure that you are still getting the best deal on health insurance, even if you are generally happy with what you have.
If you are partway through a plan year and feel that your health insurance is unsuitable, you can change provider, although you may find your current provider asks you for written notice, and there may be a final bill to pay.
Why Might You Need to Cancel Health Insurance?
There are several reasons an individual may wish to cancel their health insurance:
- Starting a job that offers its own employer health insurance
- Becoming eligible for Medicare
- Moving out of the area covered by the plan
- Cancelling part of a plan due to divorce/death/an adult child taking out their own plan
- Cancelling during the plan’s cooling off period
- Moving to a different plan due to better treatment options
- Dissatisfaction with the hospitals/doctors within the provider’s network
- Loss of income rendering you unable to pay for the current level of coverage
Before canceling a health insurance plan, call the provider to discuss your options and make sure cancellation is the best choice. In some cases, modifying the plan to suit your new circumstances could be a suitable option, giving you the peace of mind of ongoing coverage without a waiting period.
What If You Change Your Mind About Cancelling Health Insurance?
If you cancel your health insurance plan and then change your mind and decide you would like to keep the plan, you should contact your insurance provider as quickly as possible.
Many insurance providers offer a grace period during which you can request to have your insurance reinstated and have coverage resume uninterrupted.
If the policy provider allows this, they may expect you to pay your premium in full for the time period where the coverage was cancelled. However, this should mean that your coverage will be backdated for that gap and that you will not have to go through a new waiting period.
Updating Your Plan for the New Plan Year
If you wish to renew, change or update your health insurance plan for the new year, the best time to do this is during the open enrollment period. For the 2021 plan year, the open enrollment period runs from November 1 to December 15, 2020.
During this time, individuals can update their income and household information on the Health Care Marketplace or start shopping around to find the best health insurance from a provider directly.
If you do not do this, automatic re-enrollment will take place. This ensures that you will still have some health coverage even if you overlook the open enrollment period; however, it means you may not be getting the best deal.
Shopping around for affordable health insurance every year could save you money while helping you access the best care providers in your area.
Is There a Penalty for Canceling Health Insurance?
As long as you do not live in a state where ongoing health insurance is a requirement, you should not be penalized for cancelling health insurance.
It is up to individual providers to decide whether someone who has prepaid for health insurance is entitled to a refund, as well as what the final bill and notice period will be on monthly billed plans.
For this reason, it’s important to speak to your health insurance provider if you decide that your plan is no longer suitable for you or your family. They will tell you what you must do to cancel and explain the process to you.
Instead of canceling, you may find that changing plans makes more sense. Read the terms and conditions of your plan, examine the other plans that are open to you and discuss your options with the insurance provider.