Am I Able to Cancel My Health Insurance Anytime?

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Most individual and family plans purchased through the Affordable Care Act (ACA) marketplace can be canceled at any time and without penalty. Employer group health plans may only allow employees to cancel early if premium contributions are not deducted pre-tax. If you paid for your health insurance plan in-full and canceled it mid-policy, you may be entitled to a prorated refund.

The cancellation process can vary based on the type of health plan you purchase. For example, most ACA plans can be canceled through the online member portal, canceling a group health plan may require you to provide notice, and a private insurer may require you to submit your cancellation request via email.

Keep in mind that canceling your health plan early may create a gap in healthcare coverage and you will not be covered during this time. Depending on your state, you may even face a tax penalty for this coverage gap. Ideally, you should find a new policy before canceling your current policy to ensure you have coverage year-round.

When Can I Cancel My Health Insurance?

The cancellation terms on a health insurance plan can vary based on whether you have an ACA marketplace plan, a plan through your employer or a private insurance plan.

Plans purchased through your state’s ACA marketplace can be canceled at any time but you may need to provide notice. For example, if you purchase a health plan through Covered California, you must provide at least a 14-day notice before your plan is canceled — same-day cancellations may be unavailable.

If you’re insured through your employer, you may need to meet certain requirements before you can cancel your policy early. For example, an employee may only cancel their policy if the company is not deducting premium contributions pre-tax. It may also be possible to cancel the health plan mid-policy if you experience a qualifying event, such as having a child or finding a new job (more on this later). Keep in mind that some plans may require you to provide notice before your policy is canceled, so same-day terminations may not always be possible.

If you’re canceling a private insurance plan, you will need to contact your insurer directly to see if you can cancel your policy early and if penalties apply. Private plans are sold outside the ACA marketplace and these insurers may enforce requirements outside ACA guidelines. You can find your provider’s number on your health insurance card, your policy and your bills. Your insurance agent will let you know if there is an early cancellation fee and what steps are necessary before canceling.

Are There Penalties if I Cancel Health Insurance Early?

Your insurer may impose an early termination fee, but the mandate for having health insurance was removed in most states. Consumers will no longer pay a tax penalty or apply for an exemption if they have no healthcare coverage. However, penalties for not having health insurance may still apply if you live in California, Massachusetts, New Jersey, Rhode Island, Vermont or the District of Columbia.

Location

Penalty

Exemption

California

Starting at $850 per adult; $425 per dependent child under 18

Find out if you’re exempt

Massachusetts

Based on how much you make above the federal poverty level (FPL):

  • Less than or 150% of FPL: No penalty
  • 150.1%-300%: $276
  • 200.1%-250%: $540
  • 250.%-300%: $804
  • 300%+: $1,908

Married couples will pay the sum of the individual penalties per spouse.

Find out if you’re exempt

New Jersey

Starting at $695 per adult; $347.50 per dependent child under 18

Find out if you’re exempt

Rhode Island

Starting at $695 per adult; $347.50 per dependent child under 18

Find out if you’re exempt

Vermont

There is no cash penalty for not having health insurance, but you must be covered.

Find out if you’re exempt

District of Columbia

$700 for each adult; $350 per dependent child under 18

Find out if you’re exempt

If you’re canceling a private insurance plan, you will need to contact your insurer directly to see if you can cancel your policy early and if penalties apply.

One risk of canceling your health insurance policy early is creating a coverage lapse. You may not be able to purchase a new health plan through the ACA marketplace outside of open enrollment, which usually runs from November 1 to December 15, unless you experience a qualifying event, such as:

  • Moving to a new residence
  • Getting married
  • Getting divorced
  • Retiring or resigning from your job
  • Becoming or gaining a dependant
  • Loss of health coverage (e.g., job loss, aged out of parents’ health plan, no longer eligible for Medicaid or CHIP)
  • Having or adopting a baby
  • Changes in your income
  • Becoming a U.S. citizen
  • Leaving jail
  • Enrolling in another group health plan
  • Income falling below the federal poverty level

You are not covered for medical expenses if you experience an injury during a coverage gap. Unless you’re comfortable with this risk, you should wait until you buy a new health insurance plan before canceling your current plan.

Your insurer may impose an early termination fee, but the mandate for having health insurance was removed in most states.

Find Affordable Health Insurance

How Do I Cancel My Health Insurance?

Follow these three steps to cancel your health insurance policy.

1. Research the Cancellation Process and Complete the Steps

Your insurer may have a cancellation process that involves confirming your coverage end dates so that you don’t have a coverage gap.

For plans purchased through the ACA marketplace, you can cancel your policy by logging into the online portal and completing the following steps:

  1. Click “Start a new application or update an existing one.”
  2. Click on your name in the top right of the screen, and select “My applications & coverage.”
  3. Select your application under “Your existing applications.”
  4. On the left, select “My Plans & Programs.”
  5. Select the “End (Terminate) All Coverage” at the bottom.
  6. Choose the date you want to end your coverage.
  7. Check the attestation box.
  8. Click the red “Terminate Coverage” button.

Keep in mind that same-day cancellations are not always possible. For example, Covered California health plans need at least a 14-day notice before your plan is canceled. Always note your cancellation confirmation numbers.

When canceling a health plan through your employer, you should first confirm if your policy is eligible for early cancellation. If the employer was deducting premium contributions pre-tax, you generally cannot cancel the policy early. Your company’s HR or benefits department will confirm this and advise you on the cancellation steps. For example, you may need to provide notice before you cancel your policy — typically 30 days but this can vary by your company and insurance provider.

Keep in mind that your insurance company may not accept any claims during the notice period. Therefore, we recommend having a new policy in place before canceling your existing policy or you risk going without coverage temporarily.

If you have a private health insurance plan purchased outside the ACA marketplace, you should confirm your company’s cancellation process because these plans may operate outside ACA guidelines. For example, members canceling a short-term health insurance plan through Pivot Health would require emailing client services with their plan ID number and their coverage end date.

2. Purchase Your New Policy Before Canceling Your Old One

Avoid canceling an existing policy until you have a new policy in place with a viable effective coverage date. While some health insurance plans can be canceled at any time, you can’t always enroll whenever you want. You may need to wait until open enrollment unless you qualify for a special enrollment period (see earlier table). Otherwise, you run the risk of having zero healthcare coverage until you buy a new plan and possibly paying a tax penalty depending on your state.

If you purchase a health plan through the ACA marketplace by December 15, your coverage should start on January 1. Be sure your current policy’s cancellation date does not create a lapse in health insurance coverage.

3. Ask for a Refund for the Unused Premiums

If you paid your health insurance premium in one lump-sum payment and want to cancel your policy early, ask your insurer if they can reimburse you for the unused premiums paid toward the remaining months. Not all insurance companies are obligated to issue you a prorated refund, regardless of whether you had an ACA plan, group health plan, or a private plan outside the ACA marketplace.

Confirm your private health insurance company’s cancellation process because these plans may operate outside ACA guidelines.

How Do I Cancel Obamacare?

If you no longer need Obamacare coverage, a plan purchased through the ACA marketplace, you can cancel your plan at any time by logging into Healthcare.gov and selecting the “terminate coverage” option. If you want to keep the plan but cancel coverage for certain individuals, you should contact the Marketplace Call Center directly to request the change. You can schedule to cancel your policy that same day or in the future.

Your coverage will end if you stop paying your health insurance premiums, as well. However, if your premium was lowered because you qualified for the advanced premium tax credit, you may need to repay the credit applied first.

Avoid canceling an existing policy until you have a new policy in place.

FAQs

Can you get a refund if you cancel your health insurance?

It is possible to be refunded for the remaining months on your health insurance policy if you paid your insurance premiums in advance. However, this refund is not always guaranteed.

Can I transfer health insurance from one company to another?

Yes, the Health Insurance Portability and Accountability Act (HIPAA) allows individuals to transfer health insurance from one company to another outside open enrollment if they experience a qualifying event. Qualifying events may include getting married, adopting a child, moving to a new residence or resigning from a job.

Can I be refused health insurance?

During open enrollment, an insurance company cannot deny you, charge you more or refuse to cover essential benefits if you have a pre-existing condition.

Key Takeaways

  • Outside of open enrollment, you can only change plans if you experience a qualifying event, such as changing your marital status, moving to a new address or having a child.
  • You can terminate your health insurance anytime, and it can be as simple as calling your insurer — however, policies can have different cancellation policies.
  • Members who have paid their insurance premiums in advance may qualify for a prorated refund from their insurer.

Find a new health insurance at an affordable price. SmartFinancial can help you shop around for a new policy that fits your healthcare needs and budget. Just enter your zip code below and answer a few brief questions or call 855.214.2291 to receive free health insurance quotes in your area.

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