Can an Individual Health Insurance Policy Be Canceled?

Since there are different kinds of individual health insurance plans available to consumers, it pays to compare plans and learn how each plan works. Find out if you can cancel the plan once you become eligible for group health insurance. Most individual health insurance plans allow you to cancel the policy month to month, although sometimes exceptions may apply. Often there are additional factors to consider before canceling any medical insurance coverage.

Short-Term Plans

• With most individual health insurance plans you can cancel the coverage at any time. Some short-term health insurance plans are set up so that you pay every 30, 90 or 180 days. If you cancel the policy before that time, the company might not reimburse you a prorated portion of the prepayment. This is a factor to consider, especially if you are between employers and only looking for individual health insurance coverage for a short time.

Noncancellable Plan

• A noncancellable individual health insurance plan is one that will cover you as long as you continue to pay the monthly premiums. A guaranteed renewable policy is a type of noncancellable insurance plan that can raise the cost of your premiums if you file claims, but can't cancel your coverage when the policy term ends. Premiums typically increase annually but the only way the company can cancel your insurance coverage is if it sold you a conditionally renewable policy. In that case, the company can cancel your policy if it cancels all other policies similar to the policy you have.

Pre-Existing Conditions

• Before canceling your individual health insurance coverage find out whether a group health plan will immediately cover any pre-existing conditions. If you can afford the extra coverage, it could be to your advantage to keep your individual plan for a while, especially if you can cancel the policy at any time. Your individual plan can continue to pay for treatments and medical services if the group policy requires a pre-existing condition exclusion period. It might also be a good idea to wait and see if your new job works out so that you don't find yourself without health insurance coverage a few months down the line.

Before Canceling Coverage

• You should not cancel individual health insurance coverage until you are certain the new insurer has approved your application. When changing health plans always make sure your new coverage starts before you drop your old plan. That way you can avoid a gap in coverage. If you are starting a new job, find out exactly when your health insurance benefits go into effect. The start of your coverage may be delayed until your new employer submits all the required enrollment forms to the health insurance carrier.