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

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You can cancel your health insurance at any time if you have an ACA marketplace plan. Meanwhile, other plans like group health insurance through your employer or Medicare Advantage plans would need to be canceled during specific enrollment periods or if you experience a qualifying life event.

Keep in mind that canceling your health plan early may create a gap in healthcare coverage and you may even face a tax penalty depending on your state. Ideally, you should find a new policy before canceling your current policy to ensure you have coverage year-round.

Key Takeaways

  • Canceling your health insurance typically involves completing a cancellation form that includes your policy number, date of birth and a reason for cancellation.
  • Group health plan coverage can be dropped anytime if the premiums are not paid for on a pre-tax basis.
  • Canceling a Medicare Advantage Plan is typically not allowed until the next enrollment period, January 1 to March 31.
  • Going without health insurance coverage for an extended period can incur a tax penalty in certain states.

When Can I Cancel My Health Insurance Coverage?

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.[1] 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.[2]

If you’re insured through your employer, you may need to meet certain conditions 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.[3] 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.

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.

While the cancellation process can vary based on the type of plan you have, switching or canceling any type of plan is usually possible during a special enrollment period.

For many types of health insurance plans, you will need to enroll, switch or drop a plan during open enrollment. However, these actions are possible outside this time window if you experience a qualifying life event that triggers a special enrollment period. Such events commonly include:

  • Having or adopting a child
  • Moving to a new residence
  • Changes in your income
  • Becoming a U.S. citizen
  • Leaving jail or prison

Free Look Periods for Recently Purchased Plans

The free look period, or sometimes known as a cooling off period, is a time window when policyholders can cancel a recently purchased health plan and receive a full refund. The duration of the free look period can vary from 15 to 30 days depending on the insurer.[4] It is only applicable to new health insurance policies, not renewals.

Below is a look at several health insurance plans and their free look periods.


Free Look Period


If you cancel your subscription before it renews and if you have remaining funds in your United Healthcare account.


15 days

Kaiser Permanente[7]

10 days


30 days

Keep in mind that not every health insurance plan has a free look period. While Medigap plans do have a free look period, Original Medicare plans do not.

Are There Penalties if I Cancel My Health Insurance Early?

Most states no longer require you to have health insurance so you won't face a tax penalty or need to apply for an exemption if you don't have coverage. However, if you live in California, Massachusetts, New Jersey, Rhode Island, Vermont or the District of Columbia, you may still be subject to penalties for not having health insurance.





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

Find out if you’re exempt


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

  • Less than or 150% of FPL: No penalty
  • 150.1%-200%: $276
  • 200.1%-250%: $540
  • 250.1%-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[11]

Starting at $695 for individual adult

Find out if you’re exempt

Rhode Island[12]

Amount calculated using a flat dollar method, percentage of income method or bronze plan method

Find out if you’re exempt


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

Find out if you’re exempt

District of Columbia[14]

2.5% of household income OR $695 per adult + $347.50 per child under age 18, whichever is higher

Find out if you’re exempt

To avoid paying a health insurance penalty, you should 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 list). Otherwise, you run the risk of having zero healthcare coverage when you get injured or sick.

Find Affordable Health Insurance

How To Cancel an ACA Health Insurance Plan (Obamacare)

ACA health coverage, also called Obamacare plans or Marketplace plans, is purchased through your state's healthcare marketplace. Canceling marketplace coverage for everyone on your plan is very simple. The following steps come directly from HealthCare.gov.[15]

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

How To Cancel a Private Health Insurance Plan

A private health insurance plan is sometimes referred to as a non-ACA plan and is purchased directly from an insurance company rather than through the state marketplace. While the canceling processes may differ between carriers, you can generally expect to complete and submit a cancellation form.

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.[16] In some cases, the form will ask for more details, such as the reason for cancellation (e.g., divorce, death, new coverage, etc.)

How To Cancel an Employer-Sponsored Health Insurance Plan

You can drop your group plan coverage anytime if your health insurance premiums aren't paid for on a pre-tax basis.[3] If this is your case, you can only cancel your group health insurance plan if a live event triggers a special enrollment period, such as a change in marital status, dependents, employment or residence or you quit and you want to join your new employer’s group plan.

In addition, some employers may offer a mid-year time window when employees can make changes to their health insurance coverage.

Talk to your HR department to confirm if such an opportunity exists at your workplace.

How To Cancel Medicare

To start, you can only cancel Part A of Medicare if you're paying a premium (Part A is free if you’ve paid enough Medicare taxes over your lifetime).[17] Part B can be canceled whenever you want. In order to cancel either one, you'll need to send in a written request along with your signature.

For specific instructions, you can contact Social Security or follow the instructions in your welcome home packet that you got if you were automatically enrolled in Medicare. Be sure to send your Medicare card back.

How To Cancel a Medicare Advantage Plan

Canceling a Part C plan can be difficult as you're typically locked into your policy for the term of coverage. This means you won't be able to drop coverage until you reach the next enrollment period: January 1 to March 31.[18] If, on the other hand, you have experienced a qualifying life event (more on that later), like moving homes or having a child, you may be eligible to drop coverage.

How To Cancel a Prescription Drug Coverage Plan

To cancel Medicare Part D, you will need to do so during the enrollment period, which is October 15 to December 7 each year.[18]

How To Cancel Medicaid

The best way to cancel Medicaid you will need to contact Medicaid directly. Keep in mind that the cancellation steps can vary even by county so you will need to call your local Medicaid office for the exact instructions.

These cancellation steps will also apply for children enrolled in CHIP (Children's Health Insurance Program).


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

You may be able to get a refund if you cancel your health insurance during the free look period, which is the timeframe a consumer has to change their mind and cancel the policy for a refund. Insurance companies are not always obligated to issue you a prorated refund after the free look period, regardless of whether you had an ACA plan, group health plan, or a private plan.

Can you cancel health insurance at work anytime?

If your premiums are paid on a pre-tax basis, you’re generally only allowed to switch health insurance if you homes, switch jobs, get married or trigger some other special enrollment period.

Can I transfer health insurance from one company to another?

In most cases, you can transfer your health insurance from one company to another. However, the process and requirements for doing so may vary depending on the insurance providers involved and the specific policies in question.

Can I be refused health insurance?

The Affordable Care Act makes it illegal for health insurance companies to refuse coverage due to preexisting conditions.[19]


  1. Healthcare.gov. “How To Change, Update or Cancel Your Marketplace Plan.” Accessed May 3, 2023.
  2. Covered California. “Cancel Your Plan.” Accessed May 3, 2023.
  3. PeopleKeep. “How To Get Out of Your Employer’s Group Health Plan Mid-Year.” Accessed April 26, 2023.
  4. Manipal Cigna. “All About Free Look Period in Health Insurance.” Accessed May 3, 2023.
  5. GetHuman. “How Do I Cancel My Enrollment With United Healthcare?” Accessed April 26, 2023.
  6. Aetna Pioneer. “Handbook (The Details),” Page 3. Accessed April 26, 2023.
  7. Kaiser Permanente. “Kaiser Permanente Individuals and Families Deductible Plan Evidence of Coverage,” Page 1. Accessed April 26, 2023.
  8. Medicare.gov. “Can I Change My Medigap Policy?” Accessed April 26, 2023.
  9. Covered California. “Penalty.” Accessed April 26, 2023.
  10. Commonwealth of Massachusetts. “TIR 22-3: Individual Mandate Penalties for Tax Year 2022.” Accessed April 26, 2023.
  11. Official Site of the State of New Jersey. “NJ Shared Responsibility Requirement.” Accessed April 26, 2023.
  12. Department of Revenue. “Electronic Filing Mandate and New Sales Tax Form.” Accessed April 26, 2023.
  13. Department of Vermont Health Access. “Individual Mandate FAQ.” Accessed April 26, 2023.
  14. Department of Insurance, Securities and Banking. “Do You Know Your Health Insurance Rights?” Accessed April 26, 2023.
  15. HealthCare.gov. “How To Cancel Your Marketplace Plan.” Accessed April 26, 2023.
  16. Pivot Health. “How Do I Terminate My Coverage?” Accessed May 3, 2023.
  17. Medicare.gov. “How To Drop Part A & Part B.” Accessed April 26, 2023.
  18. Medicare.gov. “Joining a Plan.” Accessed April 26, 2023.
  19. Dept. of Health and Human Services. “Can I Get Coverage if I Have a Pre-Existing Condition?” Accessed May 3, 2023.

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