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Can health insurance companies drop you?

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Pippa, Member

Yes, it's both possible and legal for your health insurance company to drop you under certain circumstances. Being aware of when and why this can happen is important for your financial well being and peace of mind.

The good news is that health insurance companies in the US are regulated by various laws on both state and federal levels. This means that technically they can only drop members who meet (or don't meet) specific criteria.

The bad news, of course, is that sometimes those laws are confusing and their application to real-life situations involves a lot of fine print which not all customers understand. Furthermore, while you can not be dropped for just any reason, you can be dropped at any time the company deems proper.

Specific details of your plan will be outlined in the paperwork provided by your employer and/or your insurance company, so familiarizing yourself with that information is your most important safeguard against being unexpectedly dropped from your plan.

With that said, the reasons for which an insurance company can drop a member fall into a few general categories, and being aware of those is a good first step. In general, then, your health insurance company...

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Christopher Church, Member

You’re correct in wondering whether health insurance companies can drop you because just a couple of years ago, it was common for providers to stop covering customers once they got sick – something the insurers called “rescissions.” They would look for and exploit technical errors on your application in order to make the case that your claims were fraudulent or simply require that you sign forms giving them the right to curtail coverage at their discretion.

Things have changed, however, following the implementation of the Affordable Care Act of 2010, which contains a provision prohibiting health insurance companies from dropping you due to honest application errors. While this provision legally applies to policy years beginning on or after September 23, 2010, the health insurance companies agreed to apply it starting in May 2010, following negative press coverage over the insurance company WellPoint allegedly targeting breast cancer patients for rescission.

With that being said, insurance companies can still drop you if: 1) you intentionally use false information on your application or 2) fail to pay your premiums. If they choose to do so, they must provide you with 30 days' notice, giving you time to either appeal the decision or look...

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