Merritt Personal Lines Manual: Termination or Cancellation of a Policy
Your insurance company can terminate your health insurance coverage if you fail to pay a premium before the end of a grace period. It won't affect any claims that you incurred before your coverage ended, but it will terminate your coverage on the original due date of your premium. Any claims that you make during the grace period will not be covered.
For example, you failed to pay your premium due February 15. On March 15, your coverage terminated for nonpayment of premium. You were hospitalized in January, submitted a timely notice of claim and furnished proof of loss on April 1 (within the 90 requirement). The claim for the hospital expenses is covered.
In some policies, your insurance may be continued only until you reach age 65 or become eligible for Medicare - whichever occurs first.
Coverage will end during the month of the event on the day that coincides with the policy date. For instance, your 65th birthday occurs on August 20 and you become eligible for Medicare on September 10. Even though your policy date is January 15, your coverage ends on August 15 (the day that matches the policy date during the month of your birthday.
If you have children, their coverage usually ends when they reach age 25 (though some policies will use other ages), get married or are no longer dependent on you for coverage.
Coverage for a child will not end if you have a child that is mentally or physically handicapped, remains dependent on you and is not eligible for Medicare. But you will have to show proof of incapacity and dependency within 31 days of the child's 25th birthday in order to receive coverage. The insurance company may require you to submit additional proof, but not more than once each year after the child reaches the age 27.
Whenever a policy is terminated due to the above factors, coverage usually will continue for any period in which a premium has been accepted and claims for expenses incurred prior to termination will still be covered.
As mentioned earlier, your insurance company will usually extend your coverage if you are being treated for a continuous injury or sickness if the policy is not renewed or if coverage terminates for a reason other than nonpayment of premium. Coverage is typically extended up to 90 days.
Another option when coverage terminates due to age or eligibility for Medicare, is to convert to another policy.
You have to apply for a converted policy and your insurance company will only issue this type of policy after it receives a written application and payment of the first premium at least 31 days before coverage terminates.
