What Happens When You Fail to Pay for Health Plans?

With the rising cost of health care and the loss of steady employment in this country, many individuals and families are finding to difficult to keep themselves insured for health care. But, if you have ever been injured or sick, you understand the importance of health insurance coverage. Health insurance is generally available through groups or individuals, but what happens when you fail to pay for health plans?

A premium is the regular fee that you pay for health insurance coverage. Premiums are generally cheaper for group coverage. When you receive group insurance at work, a percentage of the premium is usually paid through your employer.

• Individual insurance is a good option if you work for a small company that does not offer health insurance or you are self-employed. Buying individual insurance allows you to choose the insurance plan that fits your personal needs. You may keep premiums down by accepting a higher deductible.


• If you have just recently been laid off, then the federal law known as COBRA, or “continuation coverage,” protects your health care rights. In most situations, you will be allowed to keep your benefits for up to 18 months after termination, sometimes 36. COBRA is meant to be a temporary bridge between being accepted into another group policy, such as another employer or buying individual health coverage.


• With COBRA, you will be responsible for paying the premiums that your previous employer paid, plus an administrative fee. The premium costs can get quite steep, and can easily reach up to $1,200 for a family.


• Understand the high cost of premiums coupled with the necessity of health care; it can sometimes be difficult to make each payment however paying for health care out of pocket will be more costly. What do health insurance companies do when your payments are delinquent? Most health insurance companies make it very clear how they stand on delinquent payments. If you refuse to pay your premiums when due, most companies will cancel your policy.


• You will be notified of your cancellation and the contract will be deemed cancelled from the premium due date. However, if the premium is paid within 30 days after its due date, most companies will reinstate your insurance coverage and pay any claims, which occurred during the period of cancellation. However, if the outstanding premium is paid after this 30-day limit, you must complete an individual health declaration form before your policy can be re-instated.

The prospect of losing health care coverage can be a very terrifying ordeal, especially if you are in the midst of treatment or gravely ill. New state laws are being passed to give consumers more protection against cancellation due to nonpayment. However, it is still very important for you keep on top of your financial obligations to avoid such outcomes.