Grace Periods – Wrongful Cancellation?
Grace periods under ACA/Health Care Reform
If you do get subsidies (APTC advance payments of the premium tax credit), the Insurance Company - (QHP Qualified Health Plan issuer) must provide a grace period of three consecutive months (more detail on 3 month grace period) as long as you've previously paid at least one full month's premium during the benefit year. Health Care.Gov * 45 CFR 156.270 (d
Full payment is required to keep coverage in force
If you do get into a grace period situation, please understand that making partial payments on the debt will not serve to extend the coverage period, that is stretch out the grace period or delay cancellation. After your notified about premiums overdue, you must pay the full amount owed before your grace period ends to avoid losing their coverage. Insurance Company memo
Some payment plans - options are more liberal due to the Coronavirus pandemic.
• Pay Online – Clients can go to anthem.com/ca, log into their account and click on the Pay My Bill Online link
• Pay By Mail – Clients can mail their invoice with payment. They must mail in time for us to get it on or before the last day of the grace period.
• Pay By Phone – Clients can call the number on the back of their member ID card to use our free Auto Pay Phone Service. Or, they can call Member Services at (855) 634-3381 to pay by credit card or check.
Blue Cross – Ways to pay premium
Consequences of cancellation
Once a member is terminated for non-payment, they cannot be reinstated.
In the past, as an agent, we would get late notices, now we don’t or rarely do. So, read up, email us and let’s see what we can do to keep coverage in force for when you need it and avoid tax penalties, bankruptcy or not getting the medical treatment you need – 10 essential benefits.
Clients need to know that cancellation for not paying premiums can have serious consequences. Here’s what happens if they lose their coverage:
• They will still owe unpaid premiums for the first month of their grace period
• They will still owe providers for any health care services they got during the second and third months of the grace period
Cancellation for Non-Pay – won’t be a qualifying event either!!!
If you own a business – a group plan.
Are you having a bad month? Low income this or the next few months? Try Medi-Cal. They use monthly income and annual income, whichever is lower! Medi-Cal will give you coverage that meets all 10 essential benefits, plus CA mandated benefits! If your income goes back up, that gives you a special enrollment period back into Covered CA where we can be your agent, no extra charge, Covered CA pays us to help you or direct with an Insurance Company, get a quote.
Try qualifying for Minimum – Catastrophic coverage?
So that I don’t have to pay extra premiums
I’m not restricted when, if I want to reapply.
Don’t have problems with Advance Premium Subsidies
Just let Covered CA or your Insurance Company know at least 15 days ahead of time. See the menu above for the administrative page – contact information for each Insurance Company. However, take a look at this excerpt of email from Covered CA dated 5.24.2018:
Agents and client can cancel the plan directly in the web site but they need a 15 day window to terminate at the end of the month. If it is less than 15 days of the termination date, they need to call Covered California. Covered CA can terminate it with less than 14 days.
We provide cancellation help for our clients, at no additional charge as we are paid by the Insurance Companies when we are appointed as your broker. However, we must have proof of new coverage. We will not cancel a policy for a client, without proof of new coverage. We don’t need any malpractice allegations.
The main point is not to let coverage lapse for non-payment of premium as the Insurance Company might send a 10 day demand letter and send you to collections. Saying you didn’t use the Insurance won’t work. That isn’t what Insurance is. Risk Pooling. Proving that you have other coverage will probably work.
Resources & Links
DOCTORS, Hospitals & other providers do NOT get reimbursed if a policy gets cancelled, because the insured did not pay their portion of the subsidized premium in the 2 or 3 month of the grace period. 45 CFR 155.430 (b) (2) (ii) (A) & (B) and 156.270 (d) – Federal Regulation 41866
See our page on Balance Billing for information at AB 72 to help resolve the issue of going to a hospital or doctors office that is on the list, but still getting out of network bills.
(d) Grace period for recipients of advance payments of the premium tax credit. A QHP issuer must provide a grace period of three consecutive months if an enrollee receiving advance payments of the premium tax credit has previously paid at least one full month’s premium during the benefit year. During the grace period, the QHP issuer must:
(1) Pay all appropriate claims for services rendered to the enrollee during the first month of the grace period and may pend claims for services rendered to the enrollee in the second and third months of the grace period;
(2) Notify HHS of such non-payment; and,
(3) Notify providers of the possibility for denied claims when an enrollee is in the second and third months of the grace period.
(e) Advance payments of the premium tax credit. For the 3-month grace period described in paragraph (d) of this section, a QHP issuer must:
(1) Continue to collect advance payments of the premium tax credit on behalf of the enrollee from the Department of the Treasury.
(2) Return advance payments of the premium tax credit paid on the behalf of such enrollee for the second and third months of the grace period if the enrollee exhausts the grace period as described in paragraph (g) of this section. 156.270
What if you’re in a coma in the hospital when the premium is due?
Here’s a Long Story –
Her prior coverage had lapsed for non-payment of premium as she states that she has memory loss due to her medical conditions. The Insurance Company** so far has told them that they won’t reinstate and said that they would send a grievance form for them to fill out. I found a standard grievance form and emailed it to my friend.
I don’t know how this will come out, but I looked all over the California Case Law section on FindLaw.com and so far have found nothing in the sister’s favor. The closest cases were on Life and Disability Policies that had a special provision at additional cost that will pay your premiums, if you are disabled for say 6 months or more. Under COBRA and other Insurance Laws, Anti-Discrimination, etc. they all allow cancellation for non-payment of premium.
Here’s a letter from an Attorney on a similar issue.
The only medical plan I can find for her at this point is MR. MIP, which is really great as it covers virtually anyone who for medical reasons can’t get Individual coverage, the down side was that they have a waiting list to get in.
So, the moral of the story is, make sure that you have a method to pay your medical premiums so that the Insurance Company can’t cancel you, when you need it the most!
Unfortunately, if you can’t remember to pay your premiums, you will probably have trouble working too. Check out Disability Coverage , if you have a Retirement Plan or Cash Values in Life Insurance you might be able to access that money. If all else fails the Government has various plans available. Healthy Families to cover your children, Medi-Cal if you’ve become poor, Social Security Disability – SSI which will qualify you for Medicare – after 2 years of disability and the Free Clinic.
- *Name changed for privacy
- **Insurance Company named not mentioned as we may be filing a grievance and as near as I can tell, all companies and HMO’s would cancel for non-pay, regardless of the reason.
- Find Member Portal for Individual Health Companies CA
FAQ’s “Automatic Premium Payments – Benefits and Advantages”
1. My credit card was on file with Anthem Blue Cross Platinum PPO for monthly payments of my premium. I do this with all of my insurance plans: house, health, and car. I have never had a problem.
If you #lose your Advanced Premium Tax Credits (APTC) be careful,
One Can lose ALL Coverage for just missing ONE month Premium!
Excerpt of email blast from one or our carriers:
We are aware that some of our members lost their subsidy and now owe a full month of premium payment(s). Some were able to supply proof needed by the exchange and had their subsidy reinstated, however there is a month or more gap where the government subsidy lapsed, therefore the member is responsible for the full premium during that time. We sympathize and understand that most of our members cannot afford to pay a full month and are therefore skipping that month and trying to pay the following month.
We are receiving a lot of questions asking:
“If the client does not pay the month(s) without subsidy and they pay the following month with subsidy will they be able to use the insurance?”
Unfortunately, the answer is No, they will not. Members must pay their responsible portion of the premium or the policy will lapse. For example:
Month of May Member’s responsibility after applying the subsidy is $22.50 (member sends in $22.50)
Month of June Member’s responsibility is the full Premium after subsidy lost is $550.00 (member did not pay)
Month of July Member’s responsibility after applying the reinstated Subsidy $22.50 (Member sends in $22.50)
In the example noted above, since the member did not pay for the month of June, the $22.50 will be applied to the June premium of $550.00 leaving a balance of $537.50 owed for month of June, and $22.50 still owed for July which will bring it back up to a balance due of $550.00. If the whole balance is not paid, the member will be suspended and will have no coverage until account is brought to current status.
After 90 days the client will be terminated for non-payment, and, unless they have an SEP – Special Enrollment Period, cannot enroll again until open enrollment starting in November and no coverage till January 2016. Molina will not send the member to collections for the owed amount however; they will still owe that until paid in full.
The member always has the right to file an appeal to the Exchange. They would need to submit a letter or an Appeal Request form to:
Health Insurance Marketplace Attn. Appeals
Department of Health & Human Resources
465 Industrial Blvd, London, KY 40750-0061
The following information MUST be in the uppers corner on EVERY page, If not on a page it will NOT be considered as received: First and last name, SSN# and State.
Successful eligibility appeal results will be communicated to the Issuer via a HICS case.
Thank you for your inquiry and hope this information helps in the future. As always if you have any questions please feel free to give us a call.
All our plans are Guaranteed Issue with No Pre X Clause
Quote & Subsidy Calculation
There is No charge for our complementary services
Our Quote Engine Takes all the complexity out of using pencil and paper to figure out the premiums per the Obamacare/ACA rules under CFR §1.36B-3 *
Cancellation for non-payment of premium:
When premiums are not paid, coverage will cancelled due to non-payment following our standard grace period rules (see below). Members will receive a notice when premium is past due. The notice includes the date when the grace period ends and that coverage will terminate unless the member sends the full past due amount before the grace period ends. Reinstatement is not allowed if the policy is cancelled for nonpayment.
The grace period is an additional period of time during which coverage remains in effect and refers to either:
The three month grace period required for individuals receiving Advance Payments of the Premium Tax Credit
For individuals not receiving the APTC it refers to any other applicable grace period (All States except Maine:
31 days; Maine: 30 days).
If the full amount of the premium is not paid by the premium due date, the grace period begins. If the required premium is not paid by the end of the grace period, coverage is terminated. The member is not be eligible to apply for other coverage until the next open enrollment period unless they experience a qualifying event. See below for specific information about the two types of grace periods.
Grace period for members receiving Advanced Premium Tax Credits (APTC)
Members who receive APTC are provided with a three month grace period.
During the first month of the three month grace period, coverage remains in effect.
During the second and third month of the grace period coverage will be suspended and the member(s) will be ineligible for benefits under their health benefit plan unless they pay all premiums due before the end of the grace period. Any outstanding authorizations, approvals for services or certifications for health care services to be provided during or after the second and third month of the grace period are also suspended. We will not provide any benefits or coverage for services, supplies, or prescription drugs obtained while the suspension is in effect even if previously approved, authorized or certified.
The application of the grace period to claims is based on the date of service and not on the date the claim was submitted.
If full premium is not received during the grace period, members:
Will have no coverage for claims incurred after the first month of the three month grace period. They are liable for the full cost of any services they receive after the first month of the three month grace period.
May be required by their health care providers to pay for any health care services they need.
Will be liable to us for the premium payment due for the period through the last day of the first month of the three month grace period.
Will be liable to us for any claims payments made for services incurred after the last day of the first month of the three month grace period.
May be required to repay any premium tax credits the government paid on their behalf during the second and third months of the grace period.
If your client makes timely payment of all premiums due before the end of the grace period, coverage will be reinstated, and claims for covered services received during the grace period will be processed.
Grace period for members not receiving APTC
These members have a grace period of 31 days (in all states except Maine which is 30 days). This means if any premium payment is not paid on or before the date it is due, it may be paid during the 31 (30 in Maine) day grace period. During the grace period, coverage will stay in force. If the full premium payment is not made during the grace period, coverage will be terminated on the last day of the grace period. They will be liable to us for the premium payment due including those for the grace period, as well as for any claims payments made for services incurred after the grace period. Copied from Blue Cross CONFIDENTIAL agent manual Form 03673MUBENMUB 10/25/16 *
Grace Period & Cancellation Procedure
Copies of emails to clarify the rules:
Let’s say your client entered the grace period and owes premiums for two months. Here’s an example of what can happen:
• During the first month in grace period, your client’s health benefits stay in effect. We will honor claims incurred during this period. Your client must still pay any unpaid premiums, copayments, coinsurance and deductible amounts, as set forth by the health plan. • During the second and third months of the grace period, your client’s coverage will be suspended.
No one on the plan will be eligible for benefits, unless the full amount due is paid before the end of the grace period. During this time, we will not pay for any health care services, supplies or prescriptions, even if they were approved before. Now, let’s say your client pays for one of the two overdue months right away. Doing so will not extend the grace period or delay suspension, as the grace period moves into the second month. Your client will be on the hook for any claims during this time while coverage is suspended, unless the account gets paid in full before the grace period ends. Ultimately, if your client doesn’t pay the remaining amount due by the end of the grace period, we will cancel coverage. We also will refund the partial premium payment made in the second month because it doesn’t cover the full premium owed. We will only honor claims incurred in the first month of the grace period.
Premium payment grace period clarification
Regulations require a 90-day grace period for on-exchange members receiving subsidies for their health plan. For off-exchange members not receiving subsidies, the grace period is 30 days. For a member who is on a 90-day grace period and does not pay 100% of their total premium due, the grace period does not start over.
Example: A member owes $600.00 for their premium for March and April. In April, they pay one month’s premium for the month of March. In this scenario, the member is still in their 90-day grace period with 30 days left until they are cancelled. Blue Shield Agent Email 6.7.2016
Here are excerpts various bulletins we’ve received about Grace Periods under Health Care Reform
New Payments (Covered CA) can be made here. Policies cancelled for NO reason or explanation
In either case, the grace period starts on the date we mail members the first warning notice that their premium is overdue. The letter tells them when their grace period ends. It warns that they will lose their coverage unless they send us the full past due amount before the grace period ends. It says we won’t be able to reinstate them afterward, if their policy gets canceled for not paying premiums. We also send them one or more reminder letters repeating this information, depending on how long their grace period is.
Grace Period and Review of Cancellation in Sample EOC Evidence of Coverage – Policy
Health Net Cancellation Procedures
References & Links
45 CFR § 156.270 – Termination of coverage or enrollment for qualified individuals.
The USPS now has a feature called #informed delivery.
Prove you NEVER got the bill?
I’m not an attorney and I can’t find a citation, but if you have this feature in the future it looks like it would be excellent evidence to backup an assertion that the Insurance company never sent a bill or late notice.
Visit the USPS site for more information. informed delivery.usps.com
View the envelope of all your snail mail before it arrives – save emails to prove a letter was never sent to you?
How to prove you never got a bill?
There is no evidentiary proof of a negative act (i.e. failing to receive a document).
The “mailbox rule” provides that depositing a properly addressed letter with prepaid postage with the post office raises a presumption that the letter reached its destination by due course of mail. However, seemingly insurmountable “rebuttable” presumptions like the mailbox rule can in fact be rebutted with the right combination of law, luck, and attention to detail. PAA * WNYLC.com *
Informed Delivery Video’s
FAQ’s & Comments
A payroll deduction individual retirement account (IRA) is an easy way for businesses to give employees an opportunity to save for retirement. The employer sets up the payroll deduction IRA program with a bank, insurance company, or other financial institution, and then the employees choose whether to participate. Employees decide how much they want deducted from their paychecks and deposited into the IRA. They may also have a choice of investments, depending on the IRA provider.
Many people not covered by an employer retirement plan could save through an IRA, but don’t. A payroll deduction IRA at work can simplify the process and encourage employees to get started.
Under Federal law, See Publication 590 A individuals saving in a traditional IRA may be able to receive some tax advantages on the money they contribute, and the earnings on the contributions are tax-deferred. For individuals saving in a Roth IRA, contributions are after-tax and the earnings are tax-free.
Advantages of a payroll deduction IRA:
- Simple for employees to set up an IRA.
- Employees make all of the contributions. There are no employer contributions.
- Many employees find smaller, regular contributions a more manageable way to save.
- Low administrative costs.
- No filings with the government to establish the program or any annual reports.
- You have to register and tell Cal Savers on their website.
- Payroll deduction IRAs with automatic enrollment are considered a qualified plan Cal Savers *
- No minimum number of employees required.
- Program will not be considered an employer retirement plan subject to Federal reporting and fiduciary responsibility requirements as long as the employer keeps its involvement to a minimum.
- May help attract and retain quality employees.
- Learn more - read Payroll Deduction IRA for Small Biz # 4587
Links & Resources
Related, Child Pages & Site Map
***Pretty much none. If you don’t pay, you won’t be able to get coverage till next Open Enrollment as you haven’t mentioned anything that would qualify you for special enrollment. Check out our page on temporary plans to tide you over till then.
My payments [subsidy – APTC Advance Premium Tax Credit] changed this year because my income is less than last year.
***Next time try the complementary agent support and have someone experienced like us help you with these problems and hopefully let you know in January. We only get paid if you appoint us. Did Covered CA or Health Net give you an explanation as detailed as this page, without waiting on hold?
I’ve been told by Covered CA I will probably be reinstated but I will have to back pay for the months I didn’t have coverage (Feb., March, April, May, and maybe June).
***As soon as you prove that your payment was $208, you did have coverage. Can Health Net prove they sent you a cancellation Notice in January?
45 CFR 156.270 (d) Grace period for recipients of advance payments of the premium tax credit. A QHP issuer must provide a grace period of three consecutive months if an enrollee receiving advance payments of the premium tax credit has previously paid at least one full month’s premium during the benefit year.
If I don’t have coverage are there any other problems besides the fee [Mandate Penalty 2.5% of Income] at the end of the year for not having health insurance for those months..
***Are you OK with paying bills out of future earnings or losing your home and assets and bankruptcy if you have a large unexpected medical problem?
Scroll down for more FAQ’s or to ask a question.
Resources & Links
See our page on – was the cancellation legal?