Just like subscription payments keep your streaming services active, premium payments keep your health plan active. But, it’s no secret that losing health care is a bigger deal than losing Netflix. So, what happens if you don't pay your insurance premium?
You won’t necessarily lose coverage right away, thanks to something called a grace period. Insurance companies usually offer you a short period of time to get back on track with payments before canceling your coverage. However, the details of these periods can get tricky.
In this blog, we’ll go over everything you need to know about your health insurance grace period to reduce your risk of losing coverage or help you get it back if you’ve missed a premium payment (or a few).
An insurance grace period is a window of time when your health insurance company will continue to cover you, even if you’re behind on your premium payments. Most insurance providers offer a grace period, but the exact timeframe varies based on your plan type. If you fail to pay your balance in full by the end of your grace period, your insurance company can cancel your coverage.
While their names sound similar, a grace period in insurance is different from a waiting period. The grace period refers to the time you have to catch up on premium payments before an insurance company cancels your plan.
A waiting period can refer to two things:
Fortunately, under the Affordable Care Act, health insurance companies are no longer allowed to instate waiting periods for pre-existing condition coverage. As for the job-based coverage waiting period, companies cannot have a waiting period that exceeds 90 days.
Realizing that your grace period has expired can be frightening. But, between managing healthcare costs and life’s responsibilities, missing payments can easily happen. So, the question is what is an insurance policy's grace period expiration going to result in?
If you fail to pay your missing premiums, in full, by the end of your grace period, your insurance company will likely cancel your policy. So if you are currently managing a health event, you’ll have to pay out of pocket for care.
In most cases, you won’t be eligible to enroll in a new plan until the open enrollment period. Depending on the time of year when your coverage lapses, this could leave you without coverage for many months.
You will not be eligible for automatic re-enrollment in the same plan when the enrollment period comes around. If you would like to enroll for the same plan you previously had, you will need to actively enroll through the health insurance marketplace.
Your missed premium payments might be sent to debt collection. If your insurance provider reports your debt to one of the three major credit bureaus, this debt could impact your credit score.
The insurance company might impose penalties and late fees on your missed premium payments, which you will also need to pay to have these payments eliminated from your debt.
If you received treatment during your grace period, the insurance company might deny your claim for the treatment.
Whether you’re enrolling in a new plan or have missed a payment for your current plan, understanding how a grace period for health insurance is structured can help you prepare for what's next.
Your grace period might be up to 90 days if you:
If you did not receive the premium tax credit (including if you qualified, but didn’t accept it), your grace period will likely be 30 or 31 days. This varies by state, so check your state’s Department of Insurance to confirm the duration of your grace period.
Your grace period will begin the first day of the first month for which you miss your premium. Even if you make a payment during your three-month grace period, that does not change when your grace period ends. Here are two health insurance grace period scenarios that demonstrate how it works:
The only way to get back in good standing with your insurer is to make all payments by the end of the grace period for the monthly premiums you missed.
A missed payment impacts your coverage differently when you enroll in a new plan, versus auto-enroll in the plan you’re already on. Here’s what you need to know:
Put simply: if you’re enrolling in a brand new plan for the upcoming year, the insurer requires the first month’s payment to activate your plan. So don’t miss that, or you could find yourself without coverage.
So you’re past the window for your health insurance grace period. For payments made during the grace period, your carrier might still provide you with some coverage. During the first 30 days of a 90-day grace period, your insurer must continue to pay claims.
However, if you have not paid your outstanding premium payments by the end of the grace period, your insurer can retroactively cancel your coverage, and deny claims made during the final 60 days. Here’s an example:
This is a general rule that is true in most cases. However, select states require insurers to pay for all care throughout the grace period. Check with your local State Department of Insurance to learn more.
If your grace period has expired and you’ve lost coverage, you still have options. You likely won’t be able to receive coverage under the same insurer for the current benefits year, but you can try the following:
Losing your health coverage due to missed premiums does not count as a qualifying life event. So you will not be eligible for a Special Enrollment period as a result of an expired grace period.
Tips for Preventing a Lapse in CoverageWhen you lose coverage due to missed payments, your options are limited. So, keeping up with payments is the best thing to do. Here are some tips to help you stay on track:
Being proactive can ensure you never miss a payment, and don’t experience an unexpected lapse in coverage. Even though you could qualify for a grace period in a health insurance plan, it’s better not to rely on that, because falling behind on payments can lead to late fees and penalties.
Insurance ‘N You is here to help you find a plan with manageable monthly payments and answer all of your coverage questions. Our AI agent can quickly find information about your policy, including the terms of your grace period, to help you plan for the future.
Thanks to our advanced quoting tool, comparing health insurance quotes that align with your health and financial goals is easier than ever. Just provide us with some basic information about what you’re looking for in a plan, and we’ll quickly pull up several compatible options. Find your perfect plan today!
Still have questions about grace periods? We’ve got answers.
No. Not all insurers offer a 30-day grace period. The length of grace periods varies between plan types and states. Check with your insurance carrier to confirm the terms of your grace period.
Being a day late on a payment won’t necessarily trigger a grace period. Every insurance carrier has its unique rules regarding late payments, so check with your policy to learn theirs.
Yes, you can still enroll in a new plan during open enrollment if your previous plan was terminated due to nonpayment. You can even enroll in a new plan with the same insurer — but they will still pursue you for your missed payments.
Individuals who receive the Advanced Premium Tax Credit have a grace period of 90 days.
Yes, your insurance carrier can still collect your missing payments, even after your grace period. In medical billing departments that process a high volume of payments, your payments might be sent to debt collections.
Yes, you can. A remaining balance does not impact your ability to enroll in a new plan. Even if, on an old plan, you experienced an expired grace period, health insurance companies cannot deny you enrollment in a new plan.
If you’re still within the grace period, catch up on all missing payments before your grace period expires. Making only partial payment will still result in plan termination, so it’s important to pay your full balance before the end of the grace period.
