Times are hard. Many families have to pick which bills they will pay each month. Unfortunately, health insurance premiums are not exempt from this decision. Most health insurance providers have a “grace period,” usually lasting a month to three months. During this grace period you can make late payments, and the buyer can maintain coverage. However, what if you’ve already missed a payment? What can happen to your coverage, and what will happen next? This week, read on to learn what happens if you don’t pay your premium.
The simplest answer is that if you don’t pay your premium and your grace period expires for a plan offered in a health insurance marketplace, your coverage will end. When your coverage ends, you will lose your benefits. However, some factors can change how long your grace period is. For example, the company might consider whether or not you’ve paid at least one premium in the year. Outside factors also come into play, such as whether or not someone else subsidizes your insurance.
A three-month grace period usually applies to individuals with federal subsidies and those who paid a full month’s premium previously. Those who don’t meet these criteria have a grace period of one month. This also applies to plans purchased outside of the health insurance marketplace, as those are not eligible for subsidies.
Enrollees who do not receive subsidies may even have their coverage terminated retroactively to the end of the month where the premium was last paid. If that happens, it means you may lose benefits for a recent medical bill.
Those who receive subsidies will lose coverage if their premiums go beyond three months overdue. At that point, coverage will retroactively terminate to the end of the first month of the grace period. Suppose June is the first month of payments that you miss. Then, you receive medical care at some point in July. At the end of August, if you don’t pay, your July appointment will come out of your pocket.
For your coverage to remain in place at the end of your grace period, you will have to be fully paid up at the end of the grace period. This means that if you miss three months of payment, you must provide three months of payment before the end of the grace period. Additionally, if your coverage is terminated back to the end of your first month, your subsidy is also lost for the first month of that grace period. This means you will have to pay back the subsidy when you do your taxes.
What Comes Next?
If you lose your coverage in the marketplace because of a failure to pay premiums, you will not be able to rejoin a marketplace health plan until a new open enrollment begins. Certain qualifying events may allow you to anyway, but most of these events have a prior coverage prerequisite and are meant to allow a person to switch plans rather than gain insurance from a place of not being insured. In addition, when you are uninsured, even if that winds up being in your grace period, you will be responsible for medical bills that you incur.