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What happens if your personal health insurance policy is cancelled?

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  • Kosman
    2015-02-06 09:49:26 PM
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    So I have a personal health insurance plan I got a few years back before Obamacare. I am always worried that they may cancel it and being a little disorganized, I may not notice right away. So is there a grace period or something? Are insurance companies required to give you a warning ahead of time before cancelling? Obamacare has an open enrollment period but then what if your insurance is cancelled after the enrollment period expires? And what are the potential tax ramifications if you end up having to switch to another plan and maybe wait too long to do it?

    Sorry. Lots of questions. Wondering if anyone else has thought about this too.
  • justin412
    2015-02-07 06:17:02 PM
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    The Healthcare.gov website explains what you need to do if your grandfathered plan is cancelled.

    This is what the website says about grandfathered plans:
    As used in connection with the Affordable Care Act: A group health plan that was created—or an individual health insurance policy that was purchased—on or before March 23, 2010. Grandfathered plans are exempted from many changes required under the Affordable Care Act. Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers. A health plan must disclose in its plan materials whether it considers itself to be a grandfathered plan and must also advise consumers how to contact the U.S. Department of Labor or the U.S. Department of Health and Human Services with questions. (Note: If you are in a group health plan, the date you joined may not reflect the date the plan was created. New employees and new family members may be added to grandfathered group plans after March 23, 2010). Source: Healthcare.gov

    And this is what you need to do if you received notice that your plan is changing or is being cancelled:
    If your insurance company cancels your grandfathered plan, you have several choices. Call our special plan cancellation customer service number and a representative can explain your options: 1-866-837-0677 (TTY: 711) Monday through Friday, 9 a.m. to 7 p.m.; Saturday and Sunday, 9 a.m. to 5 p.m. ET.
    Your options include:
    Buy a plan the company offers in its place. Your insurer must allow you to buy any of its other plans available to you.

    Buy a new plan in the Marketplace. You may qualify for lower costs on monthly premiums and out-of-pocket costs based on your income. All Marketplace plans include the new rights and protections. Because your coverage is ending, you qualify for a Special Enrollment Period that lets you enroll in a plan outside the Open Enrollment period. Note: If your plan is cancelled, in some cases you can buy a catastrophic health plan. See “What if my plan is cancelled and I can’t afford a new plan?” for more information.

    Buy a plan outside the Marketplace. This can be a good option if you don’t costs based on your income. Most plans outside the Marketplace include the new rights and protections.
    The most important thing here is that your insurer will have to inform you well in advance and give you a reasonable amount of time to decide what to do next. They have to offer you another option, but you do not have to accept it. If you choose to not take the plan then you would either need to go to the health insurance Marketplace or purchase a plan that isn't in the Marketplace.
  • Kosman
    2015-02-09 04:47:03 PM
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    But what is that grace period? I know that if a health insurance company gives me notice I can buy another plan. But do we know legally the minimum "reasonable" amount of time they must give? And my real concern is getting nailed on taxes for not having health insurance (such as if you forgot to get a new plan before your old one was cancelled). Is there specific requirements for that? I was curious if anywhere it tells u exactly what results in a tax penalty and how your policy being cancelled may affect that.
  • Kosman
    2015-02-09 04:56:30 PM
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    I guess it is tax season and I am wondering for myself but for other tax filers what are specific requirements you, your accounting software or your accountant may ask in regards to not paying penalty for not having health insurance. Or is it one of those vague\ambiguous requirements open to interpretation?
  • JaredS
    2015-02-09 05:17:56 PM
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    Kosman Wrote: But what is that grace period? I know that if a health insurance company gives me notice I can buy another plan. But do we know legally the minimum "reasonable" amount of time they must give? And my real concern is getting nailed on taxes for not having health insurance (such as if you forgot to get a new plan before your old one was cancelled). Is there specific requirements for that? I was curious if anywhere it tells u exactly what results in a tax penalty and how your policy being cancelled may affect that.
    I don't think there's a specific amount of time for the grace period. I purchased a plan last year and received a mailing sometime in October or November to let me know that my rate will be the same and that I'll be automatically renewed if I chose to stick with them.

    I'm not entirely sure if that's when they have to mail you to let you know if your plan is being cancelled or not. My assumption is that they would have to inform you sometime before the open enrollment season begins, which is in the middle of November of each year.
  • justin412
    2015-02-09 05:27:44 PM
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    Kosman Wrote: I guess it is tax season and I am wondering for myself but for other tax filers what are specific requirements you, your accounting software or your accountant may ask in regards to not paying penalty for not having health insurance. Or is it one of those vague\ambiguous requirements open to interpretation?
    I'm pretty sure that everything is based off the open enrollment season, which is typically from November 15 to February 15. Your account or tax specialist will ask for proof of your health insurance coverage, unless you qualify for an exemption. You can also apply for a special enrollment period if a major life event happens, like a marriage, birth of a child, or losing your health coverage.
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