p. What happens if I miss my premium payment by the end of the grace period?
a: If you don’t pay your premiums and you use up the grace period for plans offered in a health insurance marketplace, you will lose your insurance coverage. the grace period is one or three months, depending on whether or not you’re receiving subsidies and whether or not you’ve paid at least one health insurance premium so far this year.
The three-month grace period applies to those receiving federal subsidy assistance in the form of an advanced premium tax credit and who have paid at least one full month’s premium within the benefit year (as described below). below, there is an exception to this rule when coverage automatically renews for the new year; the grace period can continue from the end of one year to the next year, even if premiums have not yet been paid for the new year ).
For those without a subsidy, the grace period is generally one month, although this can vary from state to state as it is regulated at the state level and not federal. this applies to plans purchased on the exchange without a subsidy, as well as plans purchased off the exchange, since neither of those plans qualify for subsidies.
For members not receiving subsidies, if payment is not made by the end of the grace period (usually one month), coverage will be canceled retroactively to the end of the month for which the premium was last paid.
for members who are receiving subsidies (and who have completed their coverage by paying at least one month of premium), if their premiums are more than three months late, coverage will be canceled retroactively at the end of the first month of grace period. therefore, if a subsidized member pays the premium for January but then misses February, March, or April, coverage would end at the end of February.
To keep coverage in force beyond the end of the grace period, you must be fully paid at the end of the grace period. In other words, the grace period does not allow people to be perpetually three months behind in paying their premiums. if you fall behind on your premiums (and are receiving subsidies), you must pay your premiums in full during the three-month grace period to keep your coverage.
If your coverage ends at the end of the first month of the grace period due to non-payment of premiums, it is important to note that you are not eligible for a premium tax credit (subsidy) for that first month of the period. of grace. New York State of Health (the New York State Exchange) explains this with an example in Question 12 of their Form 1095-A FAQs. therefore, the premium tax credit that was paid on your behalf during the first month of the grace period will need to be returned when you file your taxes, even if your coverage did not end until the end of that first month of the grace period ( that is, claims incurred during that month would have been paid by your provider).
the irs also prepared frequently asked questions about the form 1095-a and notes that it is common for people to receive an incorrect form 1095-a if their coverage was retroactively canceled due to non-payment of premiums; in that case, the exchange will issue a corrected 1095-a form. if in doubt, contact the exchange and/or your tax advisor.
Individuals who lose coverage in the Marketplace due to non-payment of premiums will not be able to re-join a Marketplace health plan until there is a new open enrollment period, unless they experience an event that qualify (and most qualifying events have a coverage requirement; most are designed to allow a person to change coverage, rather than go from uninsured to insured). During the time you are uninsured, you will be responsible for paying any medical bills you incur.
Can I re-enroll during open enrollment if my previous plan ended due to non-payment of premiums?
Open enrollment has generally allowed individuals the opportunity to start fresh each year with new coverage, regardless of whether the previous year’s coverage ended during the year due to non-payment. The market stabilization rules that HHS finalized in 2017 made some changes that allow insurers to recover overdue premiums when people try to re-enroll during open enrollment. but hhs has finalized a rollback of those rules starting in 2023.
The 2017 rule is described in more detail here, but essentially, if your coverage was terminated for nonpayment of premium and you later enrolled in a plan offered by that same insurer within 12 months of termination of your old plan, the insurer may require you to pay your overdue premium before writing your new policy, and may refuse to write your new policy if you do not pay the premium due. but again, that rule will no longer apply from 2023.
If your coverage has already been terminated for non-payment of premiums, the most you would owe in overdue premiums is one month of premiums, since your plan termination date would have been the end of the first month of the grace period . if you weren’t receiving a premium subsidy, you wouldn’t have any overdue premiums because your plan would have ended on the last date you paid for coverage (insurers can’t assess overdue premiums for months after the coverage end date).
But if you’re still in the grace period when you re-enroll (meaning your coverage hasn’t ended yet), you could owe up to three months of premiums due if you re-enroll. -register with the same insurer.
Under the 2017 rules, you could enroll in a plan with a different insurer without having to pay your premium due from the previous year, even though another insurer owned by the same parent company that owned your previous insurer could require you to pay the amount due. and in some areas of the country (particularly rural areas) there is only one insurer that offers plans. this makes it impossible to avoid the overdue premium rule if the insurer decides to implement it.
In June 2021, HHS noted that they were reconsidering this rule to determine “whether it may present unnecessary barriers to accessing health coverage.” and the notice of benefits and payment parameters for 2023, issued in May 2022, requires that the rules return to what they were before the market stabilization rule (in other words, insurers will no longer be able to apply premium payments to -premiums due if a person enrolls in the same plan, or another plan issued by that insurer, during open enrollment).
but hhs does warn that insurers can still send overdue premiums to collection agencies. again, this shouldn’t be more than a month’s worth of premiums in any case. A person with a three-month grace period would owe one month of back premiums and would also have to repay the IRS for that month of subsidized premiums. but a person who was not receiving premium subsidies would find that her coverage was canceled until the last day he paid for his coverage, meaning that there is no longer any premium due once the 30-day grace period expires .
what if I’m in the grace period during open enrollment?
Healthcare.gov enrollees who are in the grace period at the end of the year should be aware that the grace period does not reset at the end of the year if the plan automatically renews.
So, for example, if you didn’t pay your November and December premiums, and then your plan automatically renews for January, you can’t just pay the January premium to keep your coverage for the next year. You would have to pay for all three months (November, December, and January) at the end of the three-month grace period that began when you missed your November payment. the full amount must be paid in full by the end of the grace period, or else your coverage will end at the end of November (this is the same system that would be used regardless of what time of year the non-payment occurs). payment of premiums).
However, if you sign up for a different plan for next year (instead of letting your plan automatically renew), your old plan will end at the end of November and your new plan will start on January 1, provided that How do you pay the January premium.
Although a person generally must have made at least one premium payment during the current benefit year to be eligible for a grace period, that is not the case if you are in a plan that has automatically renewed. cms has clarified (here and here) that if a person’s plan automatically renews (either the same plan or a cross plan), it is considered the same plan they already had, meaning it has already been effected and the same grace period is available as it would be at any other time of the year.
So, for example, consider a person who receives a premium tax credit, has paid for their coverage through December and automatically renews for the next year, but then skips their January premium payment. Even if they missed a payment in the current benefit year, they are still eligible for the same three-month grace period that they would have been eligible for if the premium had expired a few months earlier.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinion pieces and educational articles on the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by the media covering health reform and by other health insurance experts.