I Lost My Health Insurance Because I Didn't Pay My Premiums. What Now?

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Losing your health insurance when you're having money problems is like adding insult to injury. Image ©Cultura-RM Walter Zerla/Getty Images

If your Obamacare health insurance plan was canceled because you were too late paying your health insurance premiums, you need to understand what happens to your unpaid medical bills, your options for getting health insurance coverage now, and if you'll have to pay the penalty for being uninsured.

What Happens With Your Unpaid Medical Bills After Your Health Insurance Is Canceled

If you were getting a  premium tax credit health insurance subsidy to help you pay for the health insurance you bought through an Affordable Care Act health insurance exchange, there is a chance that you may have some medical bills bounce back to you unpaid by your former health plan.

This happens if you received health care services while you were between 31 and 90 days late paying your health insurance premium.

Once you’re more than 30 days late paying your health insurance premium, your health plan will place incoming claims on “pending” status. Rather than processing and paying these claims, they’re put on hold while the insurance company waits to see if you catch up on your premium payments. If you don’t catch up, your health insurance will be canceled once you’re more than 90 days late. The cancellation will be retroactive to the time you became 31 days late.

Claims for healthcare you got while you were between 31 and 90 days late paying your premiums will be denied and the health care provider will expect you to pay them. Since the cancellation of your health insurance was retroactive to the date you became 31 days late, you’ll no longer be eligible for the discount your former health plan negotiated with your in-network provider.

In effect, you were uninsured when you got that care. Your bill could be significantly higher without the network discount.

If you think this may happen to you, the worst thing you can do is nothing. Be proactive. Go to your health care provider before your health insurance is terminated on day 91 and negotiate a deal.

Many providers send overdue accounts to collection agencies, so failure to act could impact your credit score and make it harder to get credit in the future.

When you approach your provider about the unpaid bill, be honest about your situation. Many health care providers will negotiate payment plans because they’d rather be paid slowly than not be paid at all. Negotiating a payment plan may keep your bill out of the hands of a collection agency. If you received care from a large organization such as a hospital, ask about the availability of a self-pay discount or charity care.

The Penalty for Being Uninsured

If you remain uninsured for more than 3 consecutive months, you may owe a tax penalty when you file your income taxes next year. The penalty is based on your income and is computed on a monthly basis; you’ll be penalized for the months you didn’t have health insurance coverage for at least one day.

    In some circumstances, you can get an exemption from the mandate to have health insurance. In this case, you would avoid having to pay the penalty even if you remained uninsured.

    Options for Health Insurance Coverage After Your Health Plan Has Been Canceled

    Losing your health insurance because you didn’t pay your premiums doesn’t qualify you for a special enrollment period on the health insurance exchange. You won’t be able to sign up for an Obamacare plan again until the next annual open enrollment period. Here are some other options for health insurance coverage in the meantime.

    • Medicaid. The Medicaid program has strict income limits to qualify but allows enrollments all year long to those who qualify.
    • Job-based health insurance (initial enrollment period). If you get a job that provides health insurance, you’re allowed to enroll during the initial enrollment period set up shortly after you start your employment. Likewise, if your spouse gets a job that provides spousal or family health insurance, you’ll have the opportunity to sign up for coverage under his or her new job-based health insurance shortly after the start of employment. If you’re under 25 and one of your parents starts a new job that provides family health insurance benefits, you’ll be able to get coverage until you turn 26 under your parent’s new job-based plan.
    • Job-based coverage (special enrollment period). If you have a change in family status or other qualifying event, you may be eligible for a special enrollment period with your own or your spouse’s existing job-based health insurance plan even if you turned that health insurance down in the past. However, losing your Obamacare insurance because you didn’t pay the premium will not qualify you for a special enrollment period. Things like getting married or divorced, having a baby, or adopting a child will likely qualify you. Ask at your employee benefits office to get a comprehensive list of all qualifying events.
    • Medicare. If you’re almost 65, Medicare may come to your rescue. If you, your spouse, or a former spouse has paid into the Medicare system through payroll or self-employment taxes for enough years to qualify, you’ll be eligible for Medicare when you turn 65 years old.
    • Short-term health insurance. Anyone can buy short-term health insurance directly from a health insurance company or through an insurance agent. There is no open enrollment period; you may buy at any time. However, short term health insurance won’t help you avoid the penalty for being uninsured. Also, short-term health insurers are allowed to use underwriting and may take pre-existing conditions, your age, your credit score and other factors into consideration when setting their premium rates. What To Beware of With Short-Term Health Insurance.
    • Special enrollment on your health insurance exchange. While losing your Obamacare plan because you didn’t pay your premiums won’t trigger a special enrollment period on your health insurance exchange, other life changes may. If you’ve had a significant life change such as a change in family size, moving, or a dramatic change in your income level, check with your health insurance exchange to see if you’re qualified for a special enrollment period. Special enrollment periods are time-limited, so don’t wait.
    • Next year’s open enrollment period. Each autumn, Affordable Care Act health insurance exchanges have an open enrollment period. You can’t be turned down because you failed to pay your health insurance premiums in the past. You won’t have to pay back the premiums you were in arrears on, even if you enroll with the exact same health plan again.

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