We previously discussed the possibility that COVID-19 — the very thing that health insurance is supposed to financially protect us against — resulted in the loss of employment, which in turn could leave someone suddenly without insurance. That makes us financially vulnerable in these uncertain times, and could spell financial doom if COVID strikes. A lot of people are asking when insurance providers can legally kick someone off their insurance. Here’s our answer!
Many people are dropped from their health insurance due to payment snafus. This might be the result of a clerical error on behalf of the provider, or it might be the result of an automated billing system that ended or changed — and you forgot to check. The Affordable Care Act increased the restrictions on insurance providers who want to suddenly cancel coverage for frivolous reasons, but the issue is still complicated. It still causes headaches.
Before the ACA passed, most states had allowed insurers to cancel coverage without warning if they discovered that the insured party was ill or became pregnant. The ACA still allows insurers to cancel coverage if the insured fails to pay up or knowingly provides false information on an application.
Needless to say, these are the two reasons that insurers often give when they drop coverage.
But the cancellation should never be sudden. The ACA requires insurers to provide notification when a policyholder neglects to make payments on time. The policyholder has three months to continue making payments or face total cancellation of the insurance plan. The problem is that some people lose coverage without notification because of a loophole when they make too much to justify a subsidy that was previously provided. In this case, most states mandate a 30-day window before coverage can be dropped — but not all states.
If you believe that an insurance provider dropped coverage illegally and without notifying you under the ACA, then contact an attorney as soon as possible.