Can I lose My Short Term Health Plan?
Short term health insurance provides security during a gap in traditional medical coverage. It serves as a safety net to protect you from the threat of enormous medical bills. Unfortunately, if you lose your temporary coverage, the bottom can drop out of that safety net in an instant.
Don’t get caught in that situation. Before you sign up for a short term insurance plan, educate yourself on the ins and outs of losing temporary health coverage. Armed with knowledge, you can make good choices that reduce the likelihood of having your policy terminated.
Losing a Short Term Health Plan
A temporary health plan can have a duration of up to 90 days, but you’re not guaranteed to retain coverage for that whole time. At any point during the policy’s term, your enrollment could be canceled for one of the following reasons:
- Failure to pay the initial premium: Your coverage might start the day after you apply for the policy. However, your approval will be contingent on the insurer receiving your first payment within a specified amount of time, such as a 15-day window, for example. If the funds are not received, the company will cancel your policy, and the termination will be retroactive to the first day. That means that any claims you may have made (or that are pending) would be uncovered, leaving you with the full bill.
- Missed payments: For some short term policies, you may pay the entire cost upfront. Others will require that you send in monthly premium payments. If you miss one, the insurer can cancel your plan.
- Falsified medical history: Lying on your application for a temporary health plan is extremely risky. Not only is it considered fraud, but it can also cause you to lose your insurance coverage. If the insurer suspects that you’ve been dishonest about pre-existing conditions, it can request your medical records. Online databases provide another source of medical background information for insurance companies to consult. If the research turns up evidence that you supplied false information, the company will rescind your coverage. You may also be required to repay any claims that the insurer paid on your behalf during the term.
- Other reasons at the insurer’s discretion: Unlike major medical plans that conform to Affordable Care Act regulations, short-term health plans can end at any time. The fine print of your policy will probably specify that the insurer retains the right to terminate the plan at its discretion.
Finding New Coverage
There’s nothing saying that you can’t reapply for short term health insurance if you get dropped from your plan. Insurers ask a series of questions during the application process, but whether you recently lost temporary insurance isn’t usually one of them.
However, short term health plans can turn down your application for any reason. If you have failed to pay premiums to the company in the past, it may not be willing to approve you for coverage again. You could try another insurer, but there’s always a chance that both are owned by the same parent company.
Although regaining temporary health insurance is far from guaranteed, it doesn’t hurt to apply and see what happens. Short-term insurance isn’t subject to open enrollment periods, so you can attempt to get coverage at any time.
Losing Standard ACA Insurance
You have more protections when it comes to getting dropped from an Obamacare plan than you do with short term health insurance. ACA-compliant plans can’t deny you coverage because of your health history. Most important, major medical plans that meet minimum essential coverage requirements can’t reserve the right to cancel your policy at the company’s discretion.
Nevertheless, losing your Obamacare coverage for not paying your premiums is still a very real possibility. If you don’t pay your first premium of the year, your coverage won’t even begin. During the year, failure to pay your monthly fee can result in the plan’s termination. A grace period provides some leniency, but eventually, you will lose coverage unless you catch up on your payments. The termination will be retroactive to the date of your missed payment.
After losing major medical coverage due to non-payment, you can’t reapply until an open enrollment period. The standard open enrollment period begins in November of each year and runs for about six weeks. Unless you qualify for a special enrollment period due to a major life change, late fall is your only opportunity to purchase an individual health plan during the year. This is a distinct difference between ACA-compliant insurance and short term insurance, with which you may be able to get an insurer to approve you at any time.
Terminating Coverage Voluntarily
You aren’t typically locked into a short term health plan. The insurer has the right to cancel your plan, but so do you. A change in circumstances may prompt you to drop your temporary health insurance sooner than you’d originally planned. In that case, you usually have the right to notify your insurer that you want to cancel your plan early. You may be eligible to receive a prorated refund for the remaining days depending on how you set up payments.
One exception involves plans that you have held for fewer than 30 days. This is the minimum time frame for most temporary health insurance plans, so if you cancel on day 25, you won’t receive a refund for days 26 to 30. Some insurance companies do offer a 10-day trial period. If you cancel an unused policy within the trial period, the company may send you a full refund for your premiums.
Providing accurate information on your application and paying your premiums on time are the best ways to ensure that you can keep your short term health insurance policy for its full length or until you choose to cancel it. If you don’t keep your end of the bargain, the insurance company can withdraw your coverage at any time, leaving you susceptible to high medical bills.