Grace periods differ for health insurance policy holders with government subsidies.

Did you know that heath insurance members have different grace periods for overdue payments on their health insurance depending on whether or not they get a government subsidy to help pay the cost of their monthly premiums?

  • Health Insurance Policyholders who do not get a government premium subsidy have a 31-day grace period for making payments
  • Health Insurance Policyholders who get a government premium subsidy have a three-month grace period

In either case, the grace period starts on the date on which insurance mails 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 on time. It says the insurance carrier won’t be able to reinstate canceled policies afterward.

Full payment is required to keep coverage in place. If you find yourself in a grace period situation, be aware that making partial payments on the debt will not serve to extend the coverage period, stretch out the grace period or delay cancelation. After being notified of unpaid premiums, you must pay the full amount owed. Not doing so during the grace period will result in a loss of coverage.

Here’s an example of how a three-month grace period works. Let’s say the policy holder has entered the grace period and owes premiums for two months. Here’s an example of what will happen:

  • During the first month in grace period, the policyholder’s health insurance benefits stay intact. The insurance carrier will honor claims incurred during this period. The policyholder 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, the policy holder’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, the insurance carrier will not pay for any health care services, supplies, or prescriptions(even those that had been pre-approved).

Now, let’s say the policyholder 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. The policy holder will be responsible for any claims during the suspension period, unless the account gets paid in full before the grace period ends.

Ultimately, if the policyholder doesn’t pay the remaining amount due by the end of the grace period, the insurance carrier will cancel coverage.  They will also refund the partial premium payment made in the second month. The insurance carrier will only honor claims incurred in the first month of the grace period.

Consequences Of Cancelation

Policyholders need to know that cancelation 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
  • They will have to repay any premium tax credits the government paid on their behalf during the second and third months of the grace period
  • They won’t be able to get new coverage for themselves or their dependents until the next open enrollment period, unless a life event triggers a special enrollment period

The different grace period between Covered CA  and the Off-Insurance health plans makes it even more confusing for the consumer as to what the correct payment deadline is. Solid Health Insurance Services strongly recommends that you handle your health insurance like your mortgage payment. It needs to be paid on time.