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For most people, health insurance is a necessity and a burden that must be born. If you find yourself in the situation where you need to cancel health insurance, you may find it difficult to navigate the various regulations and policies that surround the healthcare market. You may change jobs, turn 65, or simply cannot afford your premiums. Whatever the reason, there are a number of factors to consider as you begin the process.
Can You Cancel Your Health Insurance?
The complicated answer to this question is yes, but there may be some restrictions. This varies from plan to plan. There are different policies that govern how a cancellation may work, depending on the coverage that you have. You may have an employer-sponsored plan, a government plan like Medicaid, a private plan, or a plan purchased through the ACA marketplaces. Each has their own policies to navigate.
Are You Allowed To Cancel At Any Time?
This is where you may run into some obstacles. To cancel health insurance purchased from the Obamacare marketplaces, there may be a temporary waiting period, during which you are responsible for premium payments. The waiting period will be determined by how many family members are on the plan.
For these marketplace plans, you can also select a future date to cancel health insurance and have your coverage end. For employer-sponsored plans, you may encounter a few complications. Many of these plans can only be cancelled during certain times of the year, known as the Open Enrollment Period. Outside of those times, only employees who encounter certain qualifying life events, such as marriage or childbirth, can change or cancel health insurance plans. For government plans like Medicaid, enrollees can often cancel health insurance at any time.
If you are reaching the age of 65, you can enroll in Medicare in the 3 months on either side of your birth month, and can cancel your other insurance without issue.
Is There A Penalty For Cancelling Your Health Coverage?
For most health insurance plans, there are no penalties simply for cancelling your coverage. There are penalties, however, if you go without insurance for more than 3 months of each year before 2019. You will also be penalized, most often with a waiting period, before you can re-enroll in insurance. The one exception to this is Medicare.
If you are over the age of 65 and wish to cancel your Medicare policy, you will face a penalty if you chose to re-enroll in Medicare in the future. The only exception to this rule is if you are still working and your employer offers you health insurance. In that case, you can cancel your Medicare coverage without penalty, so long as you maintain the employer insurance.
How to Cancel Your Health Insurance Policy
In most cases, knowing how to cancel your health insurance policy is as simple as contacting your insurance company. A contact number can be found on the back of your insurance ID card. For most private plans, this is the best step to get started. If you have purchased your plan through the Obamacare Marketplace, whether it is a state or Federally run marketplace, you simply need to call the marketplace or log into your marketplace account and request the cancellation.
For an employer-sponsored plan, contact your company’s human resources department for guidance on how to cancel your health insurance policy. Again, you may only do this at certain times of the year, or under certain conditions, but your HR representatives will have all those details. For Medicaid plans, the process varies from state to state, so you can start by contacting your state’s Medicaid department.
Health Insurance Cancellation Laws You Need to know
The two primary health insurance cancellation laws that may affect you are the penalty for going without coverage, and the laws governing Open Enrollment Periods for employer insurance. Under the law that created the Affordable Care Act, if you spend over 3 months of any year without health insurance you will face a financial penalty at tax time. This amount varies based on individual incomes.
The second law that may affect your ability to cancel health insurance has to do with employer plans. Most employers who provide their employees with insurance, do so on a pre-tax basis. For these companies, employees can only change plans during Open Enrollment, usually each year in the fall, or after a qualifying life event. The health insurance cancellation laws governing Medicaid and Medicare do vary based on the state and situation.
If you are seeking more guidance on the issue, the best place to start is by contacting your health insurance provider. Their representatives will know the specifics of your coverage and any policies regulating that coverage. FirstQuote Health makes it easy to get in touch with a health insurance agent who can help you cancel or switch your policy. Start by filling out your zip code to get started.