Health insurance companies can cancel coverage under certain circumstances

All people are required to have health care coverage under the Affordable Care Act. Why is it then the insurance companies can cancel a plan? Learn under what circumstances a health insurance plan can be cancelled.

Health insurance coverage is now a requirement for all people in the United States. However, even if you already have coverage, the insurance company may decide it will no longer offer your plan, leaving you without coverage. Why is it that a health insurance company can discontinue coverage when you are required to have coverage?

If you purchased a plan before January 1, 2014, your plan may not fall under the new guidelines. According to the Health Insurance Marketplace, these plans do not have to be adjusted until October 1, 2016. The federal government agreed not to take action against these plans. What happens to these plans in the meantime depends on your state and the insurance company. With these plans, it is best to contact your insurance company to verify that you can renew the plan. It is important to also verify what the premium will be for the upcoming year. Premiums can change from year to year.

Some people may be carrying plans that are “grandfathered” in as an acceptable plan. These plans were bought before the healthcare law was passed in March 2010. These plans have not changed their benefits or cost although they are not likely to have the preventive care that is now required in plans. If you are enrolled in this type of a plan, the insurance company is to send a yearly notice of the grandfathered status. These plans are allowed to continue as long as they do not significantly change in coverage or cost. If they lose the grandfathered status, they must restructure the plan to include the new benefit structure.

Under the Health Insurance Portability and Accountability Act (HIPAA), a plan is to be guaranteed renewable at the end of its 12-month period, but the insurance company is able to increase the premium cost, cost share portion of the plan, and change the benefits it offers. A health insurance company can stop offering a plan if it provides a 90-day notice in writing to the covered person. The company must also do the following. Offer the individual the option to buy another plan, treat all individuals the same and follow any additional state requirements. If an individual believes they have been discriminated against based upon their health conditions, they can file a complaint against the company through the state’s Department of Insurance.  

For more information on the Affordable Care Act and buying health insurance, visit MIMoneyHealth.org or to the Michigan State University Extension website.

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