Will I Be Penalized if I Cancel My Health Insurance Anytime?

Whether you can cancel health insurance anytime without incurring a penalty depends on the type of coverage you have. For example, you can submit a cancellation request for an Affordable Care Act (ACA) Marketplace plan or Original Medicare whenever you want, but you may have to wait for a designated enrollment period to cancel a Medicare Advantage or employer-sponsored plan.

Read on for more details about when and how you can terminate your own health insurance, along with the potential drawbacks you need to consider before going without coverage.

On This Page

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  When Can I Cancel My Health Insurance?

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  How Will Canceling My Health Insurance Impact Me?

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  Are There Penalties if I Cancel My Health Insurance Early?

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  How To Cancel My Health Insurance Policy

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  FAQs

When Can I Cancel My Health Insurance?

Regardless of what type of health insurance you have, you should be able to make changes to your coverage — including canceling your plan — during an annual open enrollment period. You should also be able to cancel your coverage if you qualify for a special enrollment period due to a major life event, like one of the following:^[1]

• Marriage
• Divorce
• Childbirth or adoption
• Job loss or change
• Change in address
• Offer by an employer to help you pay for health care

Depending on the kind of plan you have, you may be able to end your coverage at other times as well. For example, you can cancel a Health Insurance Marketplace plan at any time, whether you only want to remove certain family members from the plan or you want to end coverage for everyone on the plan.^[2] However, you may need to give your insurer advance notice of your intent to cancel your plan in some states — California, for instance, requires 14 days’ notice.^[3]

Free Look Periods for Recently Purchased Plans

Some insurers offer free look periods, meaning you can freely cancel your health plan for a set amount of time after buying it. If you end your coverage during the free look period, your premium payments will be refunded, and your policy will be retroactively voided from its original start date. For example, Kaiser Permanente offers a 10-day free look period, while there is a 30-day free look period for Medicare Supplement Insurance — also known as Medigap.^[4][5]

How Will Canceling My Health Insurance Impact Me?

If you cancel your current health insurance before enrolling in another plan, you’ll have to pay your own medical expenses out of pocket if you experience an unexpected illness or injury. In addition, it may be difficult to find another health plan that offers adequate coverage if open enrollment is not ongoing and you aren’t eligible for a special enrollment period — putting you at risk of going uninsured or underinsured for an extended period of time.

While some private health insurance companies offer non-Marketplace plans outside of open enrollment, these plans usually don’t meet the ACA’s minimum coverage standards.^[6]

Are There Penalties if I Cancel My Health Insurance Early?

There isn’t a financial penalty specifically for canceling your health insurance early, but some states impose a tax penalty on residents who forgo health insurance altogether. See the following table for an overview of what you could have to pay if you remain uncovered after canceling your health insurance prematurely.

How To Cancel My Health Insurance Policy

Below, you’ll learn about the steps you need to take to cancel various types of health insurance plans.

How To Cancel Obamacare

Marketplace health insurance — commonly known as Obamacare — may be canceled online or over the phone, depending on the circumstances. If you only want to remove coverage for the person who created the HealthCare.gov account associated with your plan, you need to call 1-800-318-2596 for support. Otherwise, you can log in to your Marketplace account to remove coverage for certain plan members or cancel the entire plan.^[12]

When you cancel coverage for everyone on your Marketplace plan, you can choose the date you want your coverage to end so that it can align with the beginning of a new health plan.^[12]

Keep in mind that, if you purchased your health plan directly from your insurance company rather than through the Marketplace, you may need to call your insurer or the agent or broker who helped you apply to terminate your coverage. Before your cancellation request goes through, your insurance carrier may request certain documents, such as a confirmation letter.^[13]

How To Cancel an Employer-Sponsored Health Plan

Before you try to cancel your employer-sponsored group health insurance, you should first check whether you are allowed to do so. If you pay your premiums on a pre-tax basis through payroll deductions, you can only cancel your work-based plan if you are eligible for open or special enrollment on the Marketplace or if you experience a qualifying life event, like a reduction in your work hours or a change to your employee benefits package.^[14]

Conversely, if you don’t pay your health insurance premiums with pre-tax dollars, then there are no restrictions on when you can cancel your health insurance plan.^[14] For further guidance on how to cancel your job-based health plan, you should reach out to your employer’s human resources (HR) department.

How To Cancel Medicare or Medicaid

You can drop Medicare Part B and — if you have to pay for it — Medicare Part A by following the instructions in your Medicare welcome packet and returning your Medicare card. Alternatively, you can submit a written cancellation request with your signature to the Social Security Administration. Your coverage will be canceled at the end of the month after you submit your request, and you’ll have to continue paying your premiums until then.^[15]

If you have Medicare Part C, you can only drop your coverage during Medicare open enrollment from Oct. 15 to Dec. 7, Medicare Advantage open enrollment from Jan. 1 to March 31 or a special enrollment period. Similarly, you may only be able to drop a Part D prescription drug plan during Medicare open enrollment or a special enrollment period.^[16]

Finally, you should note that each state independently operates Medicaid and the Children’s Health Insurance Program (CHIP) for its own residents, so you’ll need to contact your local Medicaid or CHIP agency for specific instructions on how to cancel your coverage. That said, you may be allowed to have both Medicaid and another type of health care coverage, so you may not need to worry about canceling Medicaid if you currently receive it for free.^[17]