Health insurance companies are generally not allowed to cancel your insurance coverage due to health reasons. This is because many States have strict rules governing non-discrimination, guaranteed renewability, and laws mandating how insurance companies sell insurance plans. These laws prevent insurance companies from using health, age, and other factors predictive of your use of health insurance as a reason for denying you coverage. However, there are other instances when the insurance provider can cancel your coverage. Know when your insurance company can cancel your health insurance, and why, so that you can be prepared and protect your family beforehand.
Cancellation for Non-Payment
A cancellation notice from the insurance company to the insured for non-payment of premiums is generally required within 10 days of missing your premium due date. For example, if your premium is due on the 1st of the month, and you haven't paid your health insurance premium, the insurance company would send out a notification of non-payment by the 10th of the month. You will typically have up to 30 days after your original premium due date to pay your premium. However, if you fail to make your premium payment within this 30 day window, your policy will be canceled. Each state has different rules regarding cancellation notices, however, so you will need to check with your state's insurance commissioner to verify what your state law is concerning cancellation due to non-payment.
Cancellation for Violation of Terms
A violation of the insurance company's terms is cause for a policy cancellation. For example, if you lie about your health status, i.e. you fail to tell the insurance company that you have a back injury, in a state that uses health status as a determining factor for offering insurance, your policy could be canceled. The insurance company generally has 30 days to notify you of this cancellation, though this too can vary according to your state's regulations.
Voluntary Cancellation Notice
You must submit a cancellation notice to the insurance company if you wish to cancel your health insurance policy or your enrollment in your employer's health insurance plan. Once the notice is received, coverage will be canceled based on the last premium payment received for your insurance coverage. You can typically specify when you would like your coverage to terminate.
Use a written notice and include your name, the date that you are writing the notice, address, phone number, and the policy number you want to cancel in your written request. Specify the date that you want your coverage to end. Also make sure you sign your name to the request.
- "Life & Health Insurance, License Exam Manual, 6th Edition"; Dearborn Financial; 2004
- "Practicing Financial Planning for Professionals, Practitioner's 10th edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
- "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004
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