The most common reason for the cancellation of health insurance policies is due to non-payment of the monthly premiums. When you miss a payment by the due date, that can trigger a termination notice which every insurance company is required to send before they cancel your coverage.
Once the notice is sent out and the payment still not received by the final due date, the company has every right to end your coverage. This might present some problems to you with respect to your health insurance status as well as any penalties you may be expected to pay at the time you file your taxes.
Paying Monthly Premiums
These are important for maintaining your health insurance. Let’s face it, though, we all get a little behind financially sometimes. Money’s tight and payments come due at a time when you’re a little short. That’s understandable, and while it’s not advisable for you to miss a payment by the due date on your statement, the insurance companies will provide you with a “grace period” for making your premium payment each month.
This grace period typically extends for 90 days, but only if you meet two qualifications. The first is that you have paid at least one premium on your plan during the benefit year, and the second is that you have a plan purchased from the Healthcare Marketplace and qualify to have your monthly premium reduced through Advance Payments of Premium Tax Credits (APTC).
If you do not meet both of these requirements, you may still receive a grace period to make your monthly premium, but the time you have to make the payment may vary and it might not be 90 days. The grace period could be as short as just one month.
The Grace Period Runs Out
If you are eligible to receive consideration for a grace period and you let that period lapse without paying your premium, your insurance company can and likely will terminate your coverage. It’s important to understand how the grace period works and when it runs out so that you can submit your payment in the required amount of time and you don’t lose your coverage.
For example, missing a premium for February means you have until April 30th to make that payment. You may still make your payments on time for March and April during that time. However, if you continue to owe money for the February premium and you do not pay it by April 30th, then your coverage can be canceled retroactive to the final day of February. Any medical expenses incurred during that timeframe will become your responsibility. Your payments for March and April will be deemed invalid and your coverage terminated. You will not get that money back.
You’ve been canceled and you are currently without insurance. You do still have options available.
The first is that you can appeal your termination; that is a right afforded to you through the Affordable Care Act. You can also apply for a hardship exemption that could trigger a “qualifying event” which will allow you to enroll for healthcare outside of the open enrollment period. If you lost your coverage during an open enrollment period, then you can re-apply for your same plan again.