Are there dangers in cancelling health insurance?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Feb 24, 2015

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There can be potential serious adverse consequences associated with canceling health insurance. If you cancel health insurance before replacement health insurance coverage is confirmed and already available, there may be a gap in your health insurance coverage. That can be a problem on its own for several reasons.

First, there is no assurance that you will be able to obtain new health insurance. You might be denied coverage due to health conditions that developed prior to applying for the new insurance or plan, or go completely uncovered during the underwriting process. Second, even if you are accepted for subsequent health insurance coverage you could face a situation in which certain medical conditions that developed during the prior health insurance coverage are excluded from coverage under the new insurance as “preexisting conditions.”

If you terminate your health insurance, the Health Insurance Portability and Accountability Act offers you some protection. If you can get another policy, you can avoid exclusion of preexisting conditions as long as the time between cancellation of your previous policy and activation of the current one is less than 63 days. If you are without insurance for 63 days or more, that is considered a “significant break” in coverage, and you’ll be subject to preexisting condition exclusions.

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