One of the Most Common Insurance Questions About Health Coverage: Can I Cancel My Health Insurance at Any Time?
How your insurance plan might handle cancellations
Technically speaking, no one is going to stop you from canceling your health insurance. You can do so at any time, and there is no law against this. However, there are a few important things to understand about canceling your health insurance:
First of all, you cannot cancel your policy at any time if you are participating in a group health insurance plan through your employer. In order to cancel this type of plan, you would need to suffer a major life-changing event known as a “qualifying life event.” This might include changes in your household or a new place of residence.
Different health insurance companies handle cancellations in different ways. Your own policy might have certain penalties associated with early cancellations. Your best bet is to contact your insurance provider and ask them what might happen if you choose to cancel your coverage early.
Many plans only allow you to cancel your policy during an “open enrollment” period. The term “open enrollment” simply refers to the period of time during each year that you can sign up for health insurance or choose a new plan. Generally speaking, open enrollment occurs in the fall. For Medicare Advantage and Part D plans, open enrollment lasts from October 15th to December 7th each year. There is also a separate open enrollment period that lasts from January 1st to March 31st, although this only applies to people who already have Medicare Advantage. There are no open enrollment periods for Medigap plans, although some plans offer very limited opportunities to switch coverage. Some states allow Medigap users to make annual changes to their coverage, however.
Why is it difficult to cancel health insurance?
The exact date of your open enrollment period may also depend on your employer. If you have coverage through your employer, they will set your open enrollment period. This period may be completely at odds with the “normal” Medicare period in the fall, and it can occur at any time throughout the year. That said, many employers do choose to keep their open enrollment periods in the fall to make things more convenient.
Open enrollment in the individual market lasts from November 1st to December 15th for the most part. This period is set forth by Healthcare.gov, which is used by most states. Some states offer longer enrollment periods than others, and Native Americans always have the ability to enroll at any time throughout the year.
As with group insurance plans through your employer, other insurance plans also offer special enrollment to those who have experienced qualifying life events. During this special enrollment period, you can cancel and change your health insurance.
Cancellation might not be easy – even if you do this during the open enrollment period. Many group health plans offered by employers establish a 90-day waiting period. This means that you may need to wait for three months after getting a new job before you actually enjoy any coverage. During this period, it might be a good idea to explore alternative options, such as CrowdHealth.
As you can see, canceling your health insurance at any time is possible… but with some serious caveats. Canceling outside of the open enrollment period could create a “gap” during which you’re not covered. This is obviously something you want to avoid. In addition, some states will hit you with a tax penalty if you cancel your coverage, especially if being insured is mandated under state law.
So why do insurance companies make this so difficult? Health insurance is based on contracts that typically last 12 months. To make things more straightforward, this 12-month period begins at the same time each year. This allows insurance companies to easily negotiate new contracts with providers in their networks. But it certainly isn’t convenient for you – the consumer. This is just one example of how the health insurance system in the United States can be extremely complicated.
Why might you need to stop your health insurance?
You might need to cancel your health insurance for several reasons, including:
- A marriage or divorce
- Welcoming a child into the family
- Becoming a US citizen
- Getting a new job
- Getting a raise
- Losing your job
- Getting out of prison or jail
- Resigning from your job
- Choosing a more effective group health plan
Do some health insurance providers allow you to cancel at any time?
Some health insurance does allow you to cancel (or enroll) at any time, including:
- Medicaid: Unlike Medicare and private health insurance, Medicaid has no open enrollment period. You can sign up at any time. This means that if you cancel your existing plan and switch to Medicaid, you won’t have to worry about a “gap” in coverage for the most part. This is because Medicaid is designed to provide health coverage to America’s most vulnerable people, such as seniors. As such, it doesn’t make sense to keep them waiting if the whole point is to protect them efficiently. Canceling your Medicaid insurance is also quite easy, and you can do it online in some states.
- CHIP: The Children’s Health Insurance Program also has no open enrollment period, so you can cancel your existing insurance and switch to CHIP without waiting. Canceling CHIP is also very straightforward through your online account in some states.
- Travel insurance: Since travel insurance is temporary, there is no open enrollment period. You could technically cancel your existing health insurance, go on a vacation with travel insurance until the open enrollment period, and then return to the States to change your insurance plan.
- Short-term health insurance: As the name implies, this type of coverage is designed to cover individuals over short periods of time – such as gaps in coverage. There are no open enrollment periods for short-term coverage. However, individual states may regulate short-term insurance in various ways.
- Supplemental health insurance: Supplemental insurance products may be sold year-round. However, supplemental health insurance is not sufficient for all of your health coverage needs.
Questions to ask when choosing health insurance
Figuring out if you can cancel your plan at any time is important. But there are a few other questions you might want to ask when choosing health insurance, including:
- What kind of benefits do I get if I stay healthy?
- How does my coverage change when I get sick?
- Is my family doctor within the provider network?
- Are prescription drugs covered?
- Does my plan cover alternative options like acupuncture or a chiropractor?
- What kind of unique benefits does this plan offer?
- What kind of support does this plan offer?
- What type of plan is this?
- How much will I have to pay?
- What does this plan say about pre-existing conditions?
- What happens if the insurer disputes my claim?
What kind of health coverage is most flexible?
The most flexible health coverage is short-term insurance. This type of insurance allows you to cancel at any time, and you won’t have to worry about open enrollment periods when signing up. A solid example is CrowdHealth – although technically we’re not “health insurance”. Instead, CrowdHealth uses an innovative crowdfunding system that provides exceptional flexibility and affordability.
Is insurance my only option?
No – insurance is not your only option. Because of recent developments in crowdfunding technology, new organizations like CrowdHealth are presenting viable alternatives to the traditional health insurance system. With CrowdHealth, you can expect lower monthly payments. You also don’t need to worry about things like doctor networks when signing up, as everything falls under the same general system. Finally, CrowdHealth has no open enrollment periods, so you can quit your expensive traditional health insurance plan and sign up for CrowdHealth whenever you feel like it.
What happens if I have a gap in my insurance?
CrowdHealth is a great alternative to insurance if you’re looking for a way to bridge the gap if you’re waiting for an open enrollment period after quitting your current plan. Because CrowdHealth isn’t insurance, there’s no need to go months with no health care coverage just because you’re waiting for an enrollment period. You can bridge this gap effectively with a proven crowdfunding system and save money in the process. Check out CrowdHealth today to learn more about this effective alternative to the traditional health insurance system
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