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| Health Insurance Cancellation Laws |
Health Insurance Cancellation Laws - Individual health insurance policies are typically guaranteed renewable after a 12-month contract period between you and your insurance carrier. However, your insurance provider may choose either to continue or cancel the health coverage when the policy expires. If coverage continues, your insurer may alter your plan by increasing cost-sharing (like copays and deductibles), charging higher premiums, or reducing the covered benefits.
But what happens when your insurer won’t continue providing coverage? Due to frivolous cancellations in the past, current law prohibits your health insurance provider from dropping you without notice. The written notice the insurer will send should give you time to find new coverage or appeal the decision.
Learn more about when your insurer can cancel your health policy, your rights when the policy is canceled, filing an appeal, and your insurance options after cancellation.
Key Takeaways
- An insurance company has a right to cancel your health coverage if you fail to fulfill your obligations per the policy guidelines.
- Your insurance provider must serve you with a written notice before it can drop your health coverage.
- An insurance company can’t drop your health coverage if you made an honest mistake in your insurance application.
- Your state may run a consumer assistance program that helps you file an appeal or request a review of your health insurance provider’s termination decision.
When Your Health Insurance Company Can Cancel Your Policy
Insurance companies are businesses dealing with risks, and being able to assess risks and avoid losses is part of how they operate. Their insurance policies are usually contractual agreements bound by certain rules, so they could terminate your coverage if you veer from the conditions set forth in your policy.
Luckily, current law also limits what an insurer can include as reasons for canceling your health insurance policy. For instance, an insurer typically isn’t allowed to cancel a policy midway through its term and before its expiration or renewal date.1 Your health insurance company can legally terminate your policy on these grounds:
- You fail to pay premiums by the due date.
- You voluntarily or mutually agree to end the coverage.
- You intentionally falsify information or provide incomplete information that’s crucial to the coverage on your insurance application.
- You commit fraud in obtaining insurance benefits.
- You’re no longer eligible for coverage through termination from employment or death.
While an insurance company may terminate your policy for nonpayment of premiums, you may qualify for premium payment relief or a grace period during which you can settle any premiums due. The grace period for health insurance policies is as follows:1
- At least seven days for weekly premium policies.
- At least 10 days for monthly premium policies.
- At least 31 days for all other policies.
Your Rights When Your Policy Is Canceled
When your insurance policy first comes into force, an insurer may cancel it within the first 60 days without giving a reason for the cancellation. After 60 days, an insurer must provide a written policy termination notice before the policy’s expiration date. The termination notice must clearly provide the grounds for dropping your insurance.1
In the past, an insurance company could drop your insurance, void your policy, or ask you to refund the money they’ve spent on your medical bills if it found a problem with your insurance application. Fortunately, current laws now prohibit insurance companies from canceling your health coverage for making an honest mistake or leaving out information that has minimal ramifications for your health.
Importan : When your insurance company says no to your health coverage, that doesn’t have to be the final word. You can start by appealing to the insurance company. If your coverage isn’t reinstated, you can take your appeal to an independent review organization.
An insurance company must inform you why it ended your coverage and how you can dispute the decision.
Filing an Appeal
You can appeal your insurer’s cancellation decision in these two ways.
Internal Appeal
When you challenge your insurer’s decision through an internal appeal, you’re simply asking the insurance company to revisit the decision and do a full and fair review. If the appeal is urgent, your insurer must expedite the process. If your insurance company still upholds its decision, you can proceed to the second option.
External Review
If an internal appeal fails, the law allows you to seek independent third-party intervention to review the insurance company’s decision. With an external review, the insurance company is stripped of its power to overturn the external reviewer’s decision.2
NOTE : You must request an external review within four months after the date you receive a policy termination notice from your insurer.3
In all states, insurance companies must have and adhere to an external review process that conforms with federal consumer protection standards. This way, you’ll be protected by the guidelines of the process. If your state’s external review process doesn’t meet the consumer protection standards threshold, the U.S. Department of Health and Human Services (HHS) will oversee the review process in your state.
You won’t incur any charges if your insurer used the HHS-administered external review process. However, you’ll be charged if your insurance company contracts with an independent review organization, but this won’t exceed $25 per review.3
Health Insurance Options After Cancellation
As mentioned, your insurer must provide notice and give clear reasons for canceling your policy. The notice period is at least 30 days and should help you appeal or seek alternative coverage.4 If an insurer rejects your appeal, you have the right to purchase any other health plan you qualify for. Here are your health insurance options if your current coverage is canceled.
Buy Another Plan From Your Insurer
You can still apply for another health insurance plan through your current insurer as long as you’re eligible. The insurance company shouldn’t lock you out of purchasing—either directly or through an agent—any of its other plans for which you qualify. Inquire with the insurance company which plans may be available to you.
Apply for a Marketplace Plan
You can seek health coverage through the Marketplace or any insurer that sells insurance through the Marketplace. If you lost coverage for non-payment of premiums, you could qualify for income-based financial assistance on premiums and out-of-pocket costs. You may also be eligible for low-cost or free coverage through Medicaid or CHIP (Children’s Health Insurance Program). Marketplace plans also come with their own rights and protections.
Buy a Plan From Another Insurer
You can purchase health insurance from another insurance company outside the Marketplace. Contact multiple companies to see what plans are available in your state and to compare prices. Most of the plans you buy outside the Marketplace will also include rights and protections.
Enroll in any Other Coverage Available to You
If you can’t secure coverage through and outside the Marketplace, you may sign up for any other coverage your situation qualifies you for. For instance, you could enroll in an employer-sponsored group health plan, Medicare, TRICARE, or Department of Veterans Affairs (VA) health care, among other types.
Frequently Asked Questions (FAQs)
Do current health insurance cancellation laws protect all plans?
Cancellation laws prohibiting insurers from terminating your coverage because of an oversight on your insurance application protect all Marketplace plans, including grandfathered plans. For other appeals, you’ll need to identify whether you have an individual, group, or government-sponsored plan because the protection laws may differ.
How and when will I be notified if my health insurance policy is being canceled?
If your health insurance company is terminating your policy, it must provide at least 30 days’ notice before the policy expiration date.
What should I do after I get a cancellation notice on my health insurance policy?
After you receive a cancellation notice, read through it to understand why coverage was terminated. If the cancellation was unfair, seek to understand the appeals process and timeline. You can start your appeal within the policy cancellation notice period.
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