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Health Insurance Payment Question (Pay or Not?)

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My uncle reaches Medicare age and will receive low-cost health insurance starting Sep. 1. He has a current expensive Obamacare insurance and the last payment will be for August. He has received the invoice for August but hasn't paid yet. He is wondering if he could stop paying for August and wait for Medicare to start on Sep. 1. The catch is he will have no insurance for August. He doesn't need any medical care in that month, but in case he needs some emergency care, can he just pay at that time (he has 30 days grace period for late payment) and be automatically insured during his last month (August)? (The odds are he won't need any care and can skip a month and save some high premium.)

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Should I put it on black or red?

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He either cancels his insurance or he doesn't.

If he doesn't cancel his insurance and doesn't pay his bill then that doesn't mean the gets free insurance for a month. He's still under contract and owes them the payment.
If he doesn't use the insurance in August and doesn't pay his bill then cancels in Sept, that doesn't mean he doesn't owe them the August bill. They'll still want their money.

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If he can cancel his insurance before August, he might see if he can get a 1 month long short term insurance plan to cover August. Might be cheap versus a regular policy yet still cover him for any major bills.

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It is a bit more involved. To cancel your ACA (Obamacare) plan you must call them and let them know you want to cancel (request cancellation). They then communicate with your health insurance company and inform them of the cancellation. In this case, you are not dealing exclusively or directly with your health insurance provider. So you must communicate with both of them. Once your cancellation is confirmed any invoice(s) you may have will become automatically void (no need to pay and won't go to collection).

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If he is able to cancel and start Medicare in September, is the only potential exposure medical costs actually incurred in August? For instance, if he gets sick and is hospitalized from August 31-Sept 15 he would only have to pay out of pocket for 1 day in the hospital (plus whatever else they did specifically on August 31)?

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If you don't pay and don't cancel you will have to pay the Obamacare payment even if you are double insured at the time.

Make sure you call TODAY or you will owe into Sept.

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He's in a good spot. If he doesn't pay the premium the insurance will be cancelled. However, there's also a grace period, I think up to 60 days. So, if he does need the insurance that one month he can always pay retroactively for it. Also, you can go as long as 3 months a year without insurance and without an Obamacare tax penalty.

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ultrancw said:   He's in a good spot. If he doesn't pay the premium the insurance will be cancelled. However, there's also a grace period, I think up to 60 days. So, if he does need the insurance that one month he can always pay retroactively for it. Also, you can go as long as 3 months a year without insurance and without an Obamacare tax penalty.
That is what I thought. If uncle gets sick and needs care he can pay the premium right away and be covered. If not he could let August lapse without a payment. Of course, he cancels any coverage after August 31. My question was if he let August lapse and makes no payment could the insurance company still come after him for payment if he does not officially cancel coverage in August and stays in that sweet spot?

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It seems like a foolish gamble if you ask me. If he has a heart attack and is in the hospital and can't pay the premium he may find himself in denial of service from the insurance company. He is not 22 anymore. I wouldn't take that risk for one month of premium payment.

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Yes, the risk is if he collapses and is taken to an ER and at that point the invoice is unpaid (even within the grace period) he is not covered and could be denied service from the insurance company. Matters could get complicated even if he pays after the event as to what part of the service could be covered since it takes a few days the payment is processed and bringing the account current meaning he has paid off his past due balance (premium).

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I'm still not seeing how this is really supposed to work.

How do you think the insurance is going to end up free just because he didn't pay his bill?

He either cancels it or he doesn't cancel it. If he doesn't cancel it then he still owes them August payment. If he doesn't pay them for August then they'll send it to collections.

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jerosen said:   I'm still not seeing how this is really supposed to work.

How do you think the insurance is going to end up free just because he didn't pay his bill?

He either cancels it or he doesn't cancel it. If he doesn't cancel it then he still owes them August payment. If he doesn't pay them for August then they'll send it to collections.

  If he doesnt pay his bill, the policy will be cancelled August 1st (since he's already paid through July 31).   But after the August 1 due date, there's a 30 day grace period to pay.  On August 30, either the policy will be cancelled effective Aug 1 (and any claims submitted for August will be denied), or he pays the bill and has coverage in effect for August.  Health Insurance doesnt use debt collectors, since they can simply rescind your coverage for the periods that remain unpaid.

It's the same as with COBRA coverage when you leave your job, where it's much more well known and utilized - you have 60 days to elect COBRA coverage then another 30 days to pay the first month's bill (or something like that), meaning if you follow the rules you have a 3-month "option" for coverage if you do end up needing it.

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Glitch99 said:   
jerosen said:   I'm still not seeing how this is really supposed to work.

How do you think the insurance is going to end up free just because he didn't pay his bill?

He either cancels it or he doesn't cancel it. If he doesn't cancel it then he still owes them August payment. If he doesn't pay them for August then they'll send it to collections.

  If he doesnt pay his bill, the policy will be cancelled August 1st (since he's already paid through July 31).   But after the August 1 due date, there's a 30 day grace period to pay.  On August 30, either the policy will be cancelled effective Aug 1 (and any claims submitted for August will be denied), or he pays the bill and has coverage in effect for August.  Health Insurance doesnt use debt collectors, since they can simply rescind your coverage for the periods that remain unpaid.

It's the same as with COBRA coverage when you leave your job, where it's much more well known and utilized - you have 60 days to elect COBRA coverage then another 30 days to pay the first month's bill (or something like that), meaning if you follow the rules you have a 3-month "option" for coverage if you do end up needing it.

So again my question is what happens if he does not pay his premium on August 1 and on August 17 he is taken to ER/hospital for some reason unexpectedly. He then pays his August premium bill (have 30 days grace period) on August 20. Now will he be covered for the whole month of August including August 17 and covered for all the medical/hospitalization bills for any time during the month of August (including August 17 bill)?

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SinbadS said:   
Glitch99 said:   
jerosen said:   I'm still not seeing how this is really supposed to work.

How do you think the insurance is going to end up free just because he didn't pay his bill?

He either cancels it or he doesn't cancel it. If he doesn't cancel it then he still owes them August payment. If he doesn't pay them for August then they'll send it to collections.

  If he doesnt pay his bill, the policy will be cancelled August 1st (since he's already paid through July 31).   But after the August 1 due date, there's a 30 day grace period to pay.  On August 30, either the policy will be cancelled effective Aug 1 (and any claims submitted for August will be denied), or he pays the bill and has coverage in effect for August.  Health Insurance doesnt use debt collectors, since they can simply rescind your coverage for the periods that remain unpaid.

It's the same as with COBRA coverage when you leave your job, where it's much more well known and utilized - you have 60 days to elect COBRA coverage then another 30 days to pay the first month's bill (or something like that), meaning if you follow the rules you have a 3-month "option" for coverage if you do end up needing it.

So again my question is what happens if he does not pay his premium on August 1 and on August 17 he is taken to ER/hospital for some reason unexpectedly. He then pays his August premium bill (have 30 days grace period) on August 20. Now will he be covered for the whole month of August including August 17 and covered for all the medical/hospitalization bills for any time during the month of August (including August 17 bill)?

  No one is going to assure you of that, because no one has read the fine print of your specific policy.  But in general, and based on the details you have provided, it shouldn't be an issue.

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https://www.healthcare.gov/apply-and-enroll/health-insurance-grace-period/

Seems the specific rules depend on if you get a subsidy or not and state rules.

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I've always wondered if the three-month grace period represents basically free money to game it. Why pay October - December unless you have a claim? Of course, I'm only paying $100/month so it seems a little petty.

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jerosen said:   https://www.healthcare.gov/apply-and-enroll/health-insurance-grace-period/

Seems the specific rules depend on if you get a subsidy or not and state rules.

This was very helpful but the state we are is CA and the Health Insurance Marketplace here is called CoveredCA. Not sure if the same rules apply, but I know the grace period in his case is only 30 days.

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http://www.cmanet.org/resource-library/detail/?item=covered-cali... 
https://www.rcmanet.org/Portals/17/02Resources/Healthcare%20Reform/covered-ca-grace-faq.pdf

Federal law allows Covered California enrollees who receive financial subsidies to keep their health insurance for three months, even if they have stopped paying their premiums. This is known as the “grace period.”The first month of this grace period will be treated normally, and plans must pay for services rendered. In months two and three, however, the health plan may suspend payment for any services provided to these enrollees – and deny the claims if the enrollee’s coverage is terminated for non-payment of premiums at the end of the third month.In California, health plans will be required to suspend a subsidized enrollee’s coverage if the enrollee has not paid his or her premiums for more than a month. The health plans also will generally be required to notify the enrollee’s physician that the enrollee has entered month two of the grace period.This document contains answers to frequently asked questions about the Covered California grace period. (See 2nd link PDF file.)

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I'm a fan of the ACA, but giving the healthy insured a 90 day free roll sounds like a terrible idea for insurers.

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I should also add this:

In 2014, CMA was successful in advocating that plans be required to clearly communicate to practices through their real-time eligibility and verification systems if an enrollee’s coverage is suspended during the second and third months of the grace period. Further, the regulation requires plans to reflect “suspended” coverage on day one of the second month of the grace period, and requires plans to use one of three eligibility status indicators to reflect suspended coverage – “coverage pending,” “coverage suspended” or “inactive pending investigation” (CCR §1300.65.2(b)(C)).
If a plan fails to reflect suspended coverage using one of the above indicators on day one of the second month of the grace period, and a physician provides services to a subsidized enrollee, the plan is financially responsible for the claims incurred (CCR §1300.65.2(d)(5)). However, practices must be able to prove that the plan did not comply with the regulation.
For this reason, it is extremely important that practices verify eligibility on all exchange patients, ideally on the date of service, or as near the time of service as possible, and that the practices retain a printout of the eligibility verification and includes it as part of the patient’s chart. If a patient's eligibility verification comes back indicating his or her coverage is suspended, the practice can treat the situation as it would any other patient who has had a lapse in coverage. For non-emergency services, patients may be given the option to either pay cash at the time of service or reschedule to a later date.
Further, California regulations require the plan to notify any provider with an outstanding prior authorization if the patient is in months two or three of the grace period (28 CCR §1300.65.2 (d)(2)).
If the plan fails to comply with the notice requirement and the services are provided in good faith, pursuant to the authorization, the plan is responsible for paying the authorized claim(s) (28 CCR §1300.65.2 (d)(5)).

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