What Happens if a Health Insurance Premium Due is Not Paid Before the Grace Period Ends?

Paying your monthly health insurance premiums on time is essential to keep your coverage active. But what if you miss a payment? Most health plans provide a grace period where you can catch up before your policy is terminated. However, failing to pay before the grace period expires can lead to loss of coverage.

Understanding the Grace Period

Health insurers allow a grace period if you fall behind on premiums. This gives you a set window of time to make back payments and avoid having your policy cancelled.

There are two main grace period lengths:

• 90 days – For marketplace plans receiving advance premium tax credits (subsidies).

• 30 days – For unsubsidized marketplace plans and individual plans bought outside the marketplaces.

The 90-day grace period applies to subsidized marketplace enrollees who have paid at least one month’s premium within their current plan year.

If you never made an initial payment, or had a gap in coverage, you may only get 30 days. State laws also impact the grace period for off-marketplace plans.

During the grace period, your plan remains in effect. However, consequences begin if you fail to catch up on overdue premiums by the deadline.

What Happens If You Don’t Pay Within the Grace Period?

If you don’t pay all outstanding premiums owed by the end of the grace period, your insurer can terminate your coverage retroactively. Here is what to expect:

Marketplace Plans with Subsidies

• Coverage ends retroactively – Your plan will terminate back to the end of the first month you missed. For example, if you stopped paying in January, your coverage ends retroactively as of January 31.

• You pay for care received – After the first 30 days, your insurer stops paying claims. You become responsible for any care you got in months 2 and 3.

• Tax credit repayment – You must repay the IRS for premium subsidies paid during the first grace period month.

• No special enrollment period – Losing coverage for non-payment does not trigger a special enrollment. You cannot re-enroll until next open enrollment.

• Limited enrollment restrictions – Insurers can no longer limit your plan options at renewal due to past-due premiums.

Unsubsidized Marketplace and Off-Marketplace Plans

• Coverage ends on last paid date – The plan terminates back to the last date you paid premiums, rather than the end of the grace period month.

• No tax credit impact – You won’t need to repay any subsidies, since unsubsidized plans don’t get premium tax credits.

• Pre-existing condition protections – Despite the gap in coverage, you still cannot be denied a new plan due to pre-existing conditions.

• Past-due premiums – Insurers can send any unpaid premiums from the terminated plan year to collections. This is rare, but allowed.

In both cases, it’s crucial to pay all outstanding premiums before exhausting the grace period. Otherwise, you’ll face coverage termination, healthcare costs, and administrative headaches.

Avoiding Grace Period Issues

To prevent landing in the grace period, stay on top of your monthly premium bills:

• Enroll in autopay – Set up automatic payments from your bank account to pay premiums on time each month.

• Look for reminders – Many insurers send notices when a payment is coming due or past due.

• Mark your calendar – Manually record premium due dates so you remember to pay.

• Review eligibility – Report income changes right away to ensure you get proper subsidy amounts and don’t fall behind.

• Communicate with your insurer – If struggling to pay, ask about options like changing your billing date, payment plans, or temporary holds to avoid the grace period.

Paying Past-Due Premiums

If you do fall behind, focus on catching up ASAP to save your coverage.

• Pay the full amount owed – Partial payments will not reinstate your plan; you must pay for all delinquent months before the grace period ends.

• Use available financial assistance – Non-profit organizations or local health programs may offer premium payment assistance if you’re struggling financially.

• Shift money from lower priorities – Think critically about your budget and where you can trim expenses to direct more money toward urgent premium payments.

• Explain your situation – Reach out to the insurer to see if they can provide any grace period extensions or payment arrangements.

With effort and focus, you may be able to pull current on premiums and continue your valuable health insurance coverage. But take immediate action as soon as you miss a payment, and stay in close contact with your insurer to avoid an unwanted policy termination.

Key Takeaways

• Health plans allow a grace period to catch up on overdue premiums before terminating coverage.

• Subsidized marketplace plans get a 90-day grace period; unsubsidized marketplace and off-marketplace plans typically get 30 days.

• Failing to pay all outstanding premiums by the grace period end date can lead to retroactive policy cancellation.

• Once cancelled for non-payment, you cannot re-enroll until the next open enrollment period.

• To keep coverage active, pay off the full delinquent premium balance before you hit the end of the grace period.

Don’t let a premium slip-up put your health insurance at risk. Monitor billing carefully, enroll in autopay, seek financial assistance if needed, and take quick action at the first sign of a late payment. Maintaining continuous coverage provides vital protection against large medical bills.