A disturbing trend has begun to occur for those individuals who enrolled in coverage Off Exchange directly with the insurance carriers – A spike in the rise of cancellations for non-payment of premiums.
There are three reason for cancellations: (i) intentional nonpayment of premiums because of financial hardship; (ii) the inability of the carriers to debit the credit card or bank account established to pay the premiums; (iii) failure to send in an actual check in a timely manner to the insurance company.
It’s important for those with Off Exchange plans, the majority of those in California enrolled in individual plans (those without a Federal subsidy or Medi-Cal), to understand the grace periods offered by the carriers for late payments.
- Insured’s who DO NOT get a Federal subsidy of their premium have a 31 day grace period for making payments.
I have had a number of calls from both clients and others regarding the cancellation of their policies. The majority have been told by the insurance carrier they may not reinstate their policy, and will be uninsured until January 1, 2016.
Therefore, it is important to understand that monthly premium payments are due the first of each month. If the premium payment is not received by approximately the 7th of the month a late payment notice will be mailed to the member.
The grace period for payment begins the postmarked date the carrier mails the first warning notice that the member’s premium is overdue. It is not when member receives the letter, which can be anywhere from two days to a week after the actual letter’s postmark.
The letter will tell when the grace period ends, and warns that the member will lose coverage unless the full past due amount is paid before the 31 day grace period ends. After the grace period ends, the carrier has the right to cancel the policy, even if the member has sent in their premium payment.
An example of the process:
- Payment is due on first of the month, but if a payment is not received by the end of seven days, a late payment letter will be generated and mailed to the member.
- The member will receive the letter approximately the second week of the month. The 31 day period begins on the day the letter is mailed (postmarked).
- If the member pays the premium by the last day of the month, no action will be taken by the carrier.
- The member may reinstate if full payment is made within the 31 day grace period. However, if payment is not received by the last day of the grace period the policy will be cancelled, and cannot be reinstated.
- If the policy is cancelled the member will need to wait until the next Open Enrollment period, which begins in November for a January 1st effective date.
If you receive a late notice, react immediately by contacting your insurance broker or the carrier directly. Do not wait until you discover your policy has been cancelled, by then it will be too late.
There are options available if your policy is cancelled to provide you with short term coverage to bridge you to January 2016. However, short term coverage is month to month for up to six months, and is basically catastrophic coverage for inpatient or ER/Urgent care medical services.
If you have questions, please call me at (626) 797-4618 or email firstname.lastname@example.org