Late payment of health insurance premiums is quite common and it is normal for many of us to get late for paying the health insurance premiums. The reason behind late payment may vary from person to person, but there are repercussions for late payment of premium and you need to understand the rules and how these rules will apply to your situation and what will be the consequences of late paying the health insurance premium.
If you are having an ACA-compliant health insurance plan through the health insurance exchange, then the handling of past-due health insurance premiums are based upon the following factors:
- Whether it is your first payment towards your health insurance that is required to initiate the health coverage, or whether it is a payment to continue an existing health coverage that is active.
- Whether you are paying your monthly premiums with the help of a subsidy or paying the entire amount by yourself.
If you are making the initial premium payment late then the rules are stricter compared to a monthly premium payment that is made to continue your existing coverage. Similarly, the rules will be stricter for you if you are paying the insurance premium without subsidies. Those who pay the insurance premium with the help of subsidies have an extended grace period.
Consequences of Late Payment of Initial Health Insurance Premium
If you are late paying the first initial premium of your health insurance plan that you have bought through the exchange, then your health coverage would not become effective, and you will remain uninsured. The time you get to make the initial payment for your health insurance premium depends on your health insurer, whether your state has its own exchange or uses HealthCare.gov to enroll in a plan, and the date on which you enrolled in the plan. However, you need to know that there is no grace period and after the deadline is over your plan will not be effective.
If you delay paying the initial premium payment, then in the majority of cases by this time that annual open enrollment period will be over and you will not be able to immediately reapply. You will not get a second chance to apply for health insurance unless you either qualify for a special enrollment period, or for Medicaid and CHIP. If you are eligible for Medicaid and CHIP, then you have the option to enroll throughout the year.
Effect of Late Paying of Monthly Health Insurance Premium
After paying the first premium, your health insurance plan becomes effective as you have passed the initial glitch. Now onward you are required to make a timely monthly premium to keep your health plan active. In case of late payment of your monthly insurance premium, the rules are less stricter, as you will get a grace period to pay the premium late. The working of grace period depends on whether you are paying your premium yourself or with the help of premium subsidies.
In Case of No Premium Subsidy, Grace Period is of 30 Days
If you are not entitled to a premium tax credit on your health insurance, then you have 30 days grace period after that your plan will be canceled. You will need to pay the entire premium by the end of 30 days grace period or you will become uninsured and your coverage will end. Your coverage termination date will be the day on which you last paid your premium, which will be the start of the 30-day grace period. You also need to know that loss of health coverage due to non-payment of the premium will not result in the special enrollment period. You will have to wait until the next annual open enrollment period to re-enroll in a health plan. The 30-days grace period is applicable for all health plans purchased outside the health insurance exchanges because those plans do not come with premium subsidies to reduce the cost of those plans.
If Receiving Premium Subsidy, Grace Period is of 90 Days
If you are receiving a health insurance subsidy that is directly paid to your insurer to reduce your monthly premium costs and you are late in paying for your premium, then you have 90 days grace period to pay your premium, after which your premium gets canceled. However, you will not be able to obtain coverage for the entire 90 days grace period, if you have not paid your health insurance premium. For the initial 30 days after the due date of the premium, you will continue to receive claims for the received healthcare services. If you receive health care after more than 30 days but before 90 days, then your carrier will notify your healthcare provider about your late payment and your claim will be put on hold. If you will pay the premium then your claim will be processed and if you will not pay the premium then your claim will be denied. If you fail to pay the premium within the 90 days grace period, then your plan will cancel your coverage retroactive on the 31st day of the grace period. You will become uninsured from the 31st day and your pending claims for the health care services you received after the date will be denied. Though you will have the coverage during the first month of the grace period but you will need to return the subsidy that was paid on your behalf, if you don’t pay the premium for that month.
Re-Enrolling after Plan Termination
If your health plan was terminated due to non-payment of the premiums and you reapply for a plan from the same health insurance carrier within 12 months, then you will be required to pay your past-due premiums before signing up for a new plan. This rule was implemented so that people cannot fool the system with the manner in which the 90 days grace period was defined. To address this problem, the Department of Health and Human Services allowed insurance companies to recoup due premiums before allowing them to re-enroll.
However in case if you were not getting a premium subsidy when your plan was terminated, then you would not have any due premiums because your plan would have been retroactively terminated on the last day when you paid the premium. But if you were receiving the premium subsidy, then your health insurance carrier is supposed to give you one-month free coverage because the termination date ends up after a month from the date you paid the premium. You will be required to pay the premium of that month only before your carrier allow you to re-enroll in a plan.