Heath insurance can be very useful because it protects you against the risk of incurring medical expenses. However, there are times when you want to cancel your health insurance plans for whatever reason. And there is no problem with doing this, as long as you are not under a legal obligation to provide it to a family member or other person.
Being a contract between you and your health insurance provider, your health insurance plan will state under what terms you can cancel the policy. You need to understand these terms before going proceeding with your cancellation plan. Cancelling your health insurance plan can be far more complicated than applying for it in the first place. But with the right information at your fingertips, you should find it easy. And the following guidelines will be of help.
How to Cancel Your Health Insurance Plan
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1. Figure out your type of plan
There are two common types of health insurance plans: the short-term plan and the non-cancellable (long-term) plan. Most individual health insurance plans are short-term plans that allow you to cancel your coverage at any time. Such plans are usually set up so you pay your premium every 30, 90, or 180 days. If you cancel your health policy before that time, your health insurance company might not refund a prorated portion of your premium.
You have to always keep this in mind if for any reason you are looking for individual health insurance coverage for a short period. As for the non-cancellable health insurance plan, you will remain covered as long as you continue to pay the monthly premiums.
If your policy is a guaranteed renewable type, your premiums can be raised each time you file claims, but you cannot cancel your coverage even when the policy term ends. Premiums on non-cancellable health insurance plans increase annually but the only way your insurance company can cancel your policy is if it sold you a conditionally renewable policy.
2. Review the pre-existing conditions
Before cancelling your health insurance plan, review cancellation terms of your insurance company and make sure you fully understand what is entailed to successfully cancel your insurance policy. These terms vary from one insurance company to the other, so you need to really read them to avoid mistakes due to assumptions.
3. Put a replacement in place
Many people cancel their health insurance plans with one insurance company because they want to switch over to another insurance company. If this is the same reason why you want your plan cancelled, do not cancel your plan until you are certain your new insurer has approved your application. When changing health plans, always make sure your new coverage starts before dropping your old gap. This will avoid a gap in your coverage.
Your new health insurance might not take effect immediately if you are starting a new job. Many insurance companies will delay the start of your coverage until your new employer submits all the required enrollment forms to them.
4. Cancel your plan
Having taken all the previous steps, you can go ahead to cancel your plan. There are two ways to go about the cancellation process. The first procedure is to call your insurance company on phone and let them know you would like to cancel your health insurance policy.
Make the call yourself, as you will be required to provide some proof of identity, such as your social security number. You will be told how to go about it. Most companies will ask you to write a formal letter requesting the cancellation of your health insurance plan. Write a letter to the insurance company, informing them that you would like to cancel your health insurance plan.
Then send the letter to the insurance company. The cancellation may take effect immediately, or you may have to wait until the end of the current billing period, depending on the insurance company’s policies. If you cancel a new policy within the first 10 days, you may be able to obtain a full refund. But cancellations after that date may be processed at the one month renewal date.
The alternative—and often preferred—method or procedure of cancelling insurance is to stop making premium payments and allow the policy to cancel for non-payment of premium by 30 days after the last premium payment was due. If you pay on an automated month-to-month basis, you can simply stop the automated payment.
The advantage of this method of health insurance cancellation over the first method is that you have enough time to change your mind and reinstate the coverage if necessary by simply making the next premium payment before the plan expires due to non-payment of premium.