This is a difficult question to which there are two conflicting answers. If you want to remain in compliance with new laws regarding healthcare, then you should know that every citizen is legally required to carry health insurance. It is mandatory, so the obvious answer would be no, you cannot cancel your health insurance. However, this is not to say that you can’t cancel a health insurance plan that isn’t working for you and your family. The Patient Protection and Affordable Care Act (ACA), commonly referred to as Obamacare, is designed to ensure that every American citizen has access to preventive and affordable medical care. However, these plans are only available during the open enrollment period or by getting a special enrollment period (SEP). So while you have to carry some sort of insurance, you definitely have the option to change plans so long as you continue to meet compulsory specifications.
It’s probably a wise decision to seek out a new plan before you cancel your old one. The reason for this is that you will be penalized for every month you go uninsured (unless you have some sort of acceptable exemption
). And the penalties have increased annually since the inception of Obamacare. In 2015, those who are uninsured will either have to pay 2% of their household income for the year or $325 per adult and $162.50 for each child under 18 in the household. The amount paid will depend on which number is higher (up to the cost of a bronze plan). Even worse, these numbers will more than double in 2016. So it pays to be insured – in more ways than one.
But even if you’re only uninsured for a short time between plans, you could be subject to penalties amounting to 1/12 of the numbers listed above (for each month you go uninsured). The point is that you do NOT want your coverage to lapse for any length of time. In fact, it might be best to secure your new insurance policy before you cancel your old one so that there is no gap in coverage between policies.
When signing up for qualified coverage you’ll have to wait for an open enrollment period to make changes to your policy. There are, however, certain circumstances in which you can make changes outside of the enrollment period known as an SEP. If you lose a job, your income changes significantly, you get married, you have a baby, or you experience other qualifying life changes, speak with a licensed agent about the possibility of canceling, changing, or upgrading your policy. You may or may not qualify for special considerations.
In truth, you can cancel a health insurance policy at any time. But you will be held responsible for your actions. If you fail to secure a new plan in a timely manner for you and your family, you could be facing some pretty serious fees at the end of the year. Before you cancel an existing health insurance plan, it’s best to explore all of your options, choose the policy that will work for you, and then make the switch.