1. 5527 POINTS
    Marlin McKelvyPRO
    President, Consumer Directed Benefit Solutions, Memphis, Tennessee
    No. A health insurance company must provide a policyholder with proper advance notice of any policy cancellation. You should receive a written notification from your insurance carrier of their intent to cancel coverage, an explanation for the cancellation and the date that the policy will be terminated. Cancelling an individual or group health insurance policy is not something an insurance carrier can do arbitrarily and could get them in big trouble with the state insurance department and possibly the Federal government.

    Now, if you engaged in fraud in applying for a health insurance policy the insurance carrier is within their rights to cancel your policy and may even cancel it retroactively to the date of issuance. But they would still have to provide you with notice, an explanation and a chance to appeal the decision. An example that we will probably see more of in the era of ObamaCare where health insurance rates can be significantly different from one side of a state line to another is the situation where a person enrolls for coverage stating that they are a resident of a state like Tennessee (where more health insurance options exist and rates are lower) when they are really a resident of Arkansas (where choices are limited and rates are higher).

    It is also possible that an insurance carrier will cancel an insurance policy product line, withdraw from a marketplace or go out of business, all of which are situations where an insurance carrier cancellation would be initiated by the insurance company. However, they are still required to provide policyholders with timely notice even in these events.
    Answered on October 4, 2014
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