Can a Health Insurance Company Cancel Your Policy in Montana?

Health insurance can protect you against unexpected medical costs. But many people worry about coverage and the possibility of cancellation.

But can a health insurance company cancel your policy in Montana? Fortunately, protections are in place to safeguard you, but certain situations can still lead to policy cancellation. Here is what you need to know about health insurance cancellation in Montana.

Protections Under the Affordable Care Act (ACA)

Like the rest of the United States, Montana residents are protected under the Affordable Care Act (ACA). This consumer protection ensures that insurers cannot cancel your health insurance just because you get sick or make a claim.

Under the ACA, this is known as a prohibition on “rescission.” It applies to most health plans. If you live in Montana and have health insurance through the Health Insurance Marketplace or other non-grandfathered plans, there is no worry about losing coverage because you need medical treatment.

However, while the ACA prevents arbitrary cancellations, there are still some circumstances under which a health insurance company can cancel your policy.

Reasons Health Insurance Companies Can Cancel Your Policy

The ACA offers consumers some form of protection, but that doesn’t mean the insurance company is entirely prohibited from making cancellations. Some of these reasons can include:

Nonpayment of Premiums

One of the most common reasons for health insurance cancellation is failing to pay your premiums. Most of the time, insurers have a grace period to catch up on missed payments, which is usually 30 to 90 days. If you miss a payment, your insurer will notify you and give you a chance to make up for it. However, your policy may be canceled if the payment is not made during the grace period.

Fraud or Misrepresentation

When you fill out an application, you must be truthful. If you intentionally provide false information, your insurer can cancel your policy. Many times, this happens when you omit medical conditions or provide incorrect details about your income to qualify for a subsidy.

While mistakes happen, you always need to provide accurate information. Keep in mind that a simple mistake will not lead to cancellation per the U.S. Department of Health & Human Services. But insurance companies have a legal right to rescind policies if they discover fraud.

Changes in Eligibility

Your eligibility depends on your situation. For example, if you have a marketplace plan and your income changes, or if you no longer meet the criteria for Medicaid, your insurance could be canceled. When you no longer qualify based on your income or household changes, you might lose your coverage.  Also, your coverage may end if you’re on an employer-sponsored health plan and leave your job.

Policy Expiration

Some health insurance plans are short-term or limited duration. With that, they will automatically expire after a set time. These types of plans do not provide long-term coverage.

Regulatory Changes or Market Withdrawal

In some cases, insurance companies may leave a certain market or stop offering certain plans. This can happen for various reasons, such as changes in state regulations or financial concerns.

Montana has a small insurance market compared to more populated states, so if an insurer decides to exit, it may affect your coverage. If this happens, your insurer should provide notice and help you transition to another plan.

Can Your Policy Be Canceled Retroactively?

For some policyholders, they might face a retroactive cancellation. Is this legal? In these cases, your insurer could cancel your policy back to the date it was first issued. As a result, that can void all your coverage. While the ACA prevents retroactive cancellation, fraud or intentional misrepresentation issues can lead to these scenarios.

Notice Requirements for Cancellation

Insurance companies must give notice if an insurance policy is to be canceled. This period depends on the reason for cancellation. For example: 

• Nonpayment of premiums: Your insurer must notify you and give you a grace period to pay your premiums before canceling your policy.
• Fraud or misrepresentation: If your insurer discovers fraud, they must provide notice before rescinding your coverage.
• Eligibility changes or market withdrawal: Insurers must notify you well in advance if they plan to end your coverage. This is usually 30 to 60 days before cancellation.

These rules give you a chance to fix any issues before your policy is canceled.

Your Policy Does Have Some Protections

While your health insurance in Montana cannot be canceled arbitrarily, there are specific reasons an insurance company might cancel your policy.

If you believe your insurer unjustly canceled your policy, they may have engaged in bad faith practices. You have the right to take legal action and hold them to their promises. Western Justice Associates, PLLC, are here to help you with these cases.