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Can Your Health Insurance Drop You?

Agnus Smith | Published: June 14, 2018

Health agent and couple

Updated: September 21, 2018

The world of health insurance is always changing, and finding the right plan can prove to be difficult. After finding a health plan that fits all your needs, you’ll finally have peace of mind knowing that you’re covered and protected from any unexpected medical expenses. But what if your health insurance plan drops you? Is that even allowed?

Can health insurance companies drop you? In short, yes. Health insurance companies are allowed to drop you, but not just for any reason. There are certain criteria that need to be met, so don’t spend too much time worrying unless any of the following applies to you:

Criteria for Having your Coverage Dropped

There are three circumstances in which health insurance companies is allowed to drop you from your plan.

You Commit Insurance Fraud

This is the obvious one. If you misuse your insurance policy in any way, including faking your identity, then you break the terms of the policy contract and you can be dropped at any time. On top of being dropped, you can also face a fine or even jail time.

Your Work Situation Changes

If you’re like many Americans, you may receive your health coverage through your employer. If this is the case, your health insurance plan can drop you if you were to leave your job, or if you were terminated. If this happens there is a bit of silver lining. A change in employment status may make you eligible for a special enrollment period, or a COBRA health insurance plan.

You Don’t Pay your Premiums

If your health insurance is received through your employer, premiums may be docked automatically from your salary. If this isn’t the case, make sure you make all payments on time. Failure to pay will breach your contract, and health insurance companies will be allowed to drop you.

Can insurance companies drop you for too many claims?

This is a myth. Before Obamacare, health insurance companies were allowed to deny coverage if you had any conflicting medical history. If companies did not fully deny your coverage they were allowed to raise your premiums by as much as 175%. Now with Obamacare, carriers are forced to provide insurance despite your medical history and how many claims you filed.

Were Insurance Companies Always Allowed to Drop You?

Before Obamacare was passed, health insurance companies were still allowed to drop you. In fact, it was far more likely. For example, just making a mistake on your application could cost you your health coverage.

How has Obamacare Changed these Regulations?

Obamacare changed the scope of the of health insurance in the US. The goal was not only to create affordable health insurance plans for everyone but to educate the public on the complex world of health insurance. Obamacare placed more restrictions on health insurance companies which included not being able to drop you for application mistakes, and not denying coverage altogether for pre-existing conditions.

Do They have to Give You Notice?

While having your coverage dropped is difficult, the good news is that health insurance companies must give you 30 days notice before dropping your plan for any of the mentioned reasons. During the 30-day period, you have the option of appealing the decision or begin your search for a new plan.

What Should You Do After your Plan is Dropped?

If health insurance companies drop your plan for whatever reasons, you should immediately start your appeal process, or begin your search for a new plan. One of the controversial aspects of Obamacare is the individual mandate which can force you to pay a penalty if you don’t have health coverage and don’t qualify for an exemption. Learn more about how much you could be paying if you don’t have health coverage.

How Can I Find a New Plan?

If your health insurance company drops you, you have a few options. If you qualify for a special enrollment period you can enroll through the health insurance marketplace. If you lost your coverage through work, you can apply for a COBRA health insurance plan, or you can begin looking for an individual or family health insurance plan that fits your needs and budget. First Quote Health makes starting your search as easy as entering your zip code, and instantly letting you compare health insurance quotes.