Health insurance is becoming increasingly popular in today’s world. It is mostly because of the more affordable premiums that the insurance companies have started providing.
But even though people have started buying more health insurance, there are still a few blank spaces when it comes to health insurance. For example, “what happens if I stop paying my health insurance premium?” This is one of the most frequently asked questions when it comes to health insurance. And that is what we are going to answer today.
But first, let’s break it down and start from scratch.
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What is health insurance?
Health insurance provides a type of insurance coverage where your medical and surgical expenses are taken care of in case of an injury or illness.
Health insurance premiums are the amount you pay, typically on a monthly basis to keep your policy in force. However, in addition to paying premiums, the policyholder has to pay out-of-pocket costs such as deductibles, co-pays and coinsurance.
What Happens if I Stop Paying my Health Insurance Premium?
When the policyholder skips their premium payment because of any reason, the insurance company is likely to drop the health coverage they are providing you.
Some insurance companies also provide a grace period for health insurance payments of usually 30 days in which you are required to pay your premiums. This grace period is provided by insurers as they understand it might be difficult for policyholders to pay insurance premiums regularly and thus, provide them with an extension so they can have a few more days to pay the premiums. Moreover, if anything were to happen to you during this grace period, your policy will still remain a valid one and will provide coverage to you and your family. However, it should be noted that failure to pay insurance premiums will result in a lapse of policy. Which means all the premiums that you had paid before this from the moment your policy had been in effect from will go to waste.
However, you should keep in mind that every insurer is different. You should read the terms and conditions of your policy before making any decision just so you are clear about the rules set by them.
Some insurers also offer extended grace periods as part of their policy. If you have stopped paying your premiums, you will have an extended amount of time until you can pay them. You can avail all the benefits of your coverage plan and schedule visits with the doctor or get coverage for any medical expenses during this time under the policy.
You can contact your insurer and inquire whether they allow an extended grace period time before the policy lapses and whether you can pay your premiums over time once your financial situation is better.
If you are not able to pay your health insurance premiums because you have left your place of employment, you can continue your policy for up to 18 months under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). However, even though this policy is government regulated, policyholders will be required to pay their premiums on time. If they are not able to pay on time, they will have a grace period of 30 days. However, this option is only open for people whose employer has 20 or more than 20 employees and provides insurance to all their employees.
What if I Can’t Pay my Premiums in the Grace Period?
If there is nonpayment of the insurance premium even after the grace period is over, your health insurance coverage will lapse.
The duration of your grace period will depend on your insurance company’s policies, whether or not you are receiving subsidies and whether or not you have paid at least one month’s premiums for that year.
Policyholders can also get open enrollment which means they start their policy again with renewed coverage for the year. This is done after their old coverage has been terminated due to the nonpayment. However, if at this time, you are in the grace period, it is essential to know that the grace period will not reset at the end of the year if the plan has been auto-renewed.
So for example, if you have not paid for the months of October, November and December but have opted for a new coverage plan from January, you cannot get away with paying the premium for one month only. To start your new coverage plan, you would have to pay the premiums for the months of October, November, December and January before you can have health insurance coverage again as per the open enrollment policy.
However, if you opt for a new plan starting from January, your old plan would only require premiums till October after which your policy would lapse. You can then have new coverage starting from January, that is, if you pay the premium for the month of January.
What is an Inactive Health Insurance Policy?
A health insurance policy may be inactive due to the policyholder’s nonpayment of premiums. The policy can also be inactive in case the policyholder is no longer employed at the company that provided the health insurance policy. Another reason could be the waiting period for Medicare, due to which the health insurance policy can be inactive.
So to conclude, if you stop paying your premiums, your policy will be labelled inactive and you will stop getting the benefits from health insurance coverage. You will no longer be able to have your medical expenses covered unless you pay the premiums in the grace period or request your insurance company for an extended grace period so you can pay back the premiums and continue your health insurance coverage. Moreover, you can also request open enrollment and get a new coverage plan because of which you will not have to compensate for the premiums of the months you have not paid.
It all depends on the rules and policies of your insurance companies which is why it is advised to read the fine print when signing the legal document and contact your insurer for any query as they would be able to help you best.