Can You Cancel a Marketplace Health Plan?

Health insurance obtained through the Affordable Care Act (ACA) Marketplace provides coverage options for individuals and families. It is possible to cancel your Marketplace health plan, a flexibility designed to accommodate changing life circumstances. Understanding the process and potential implications of such a decision is important for maintaining continuous health coverage.

Understanding Cancellation Eligibility

Consumers can cancel their Marketplace health plan at any time, though the timing of this action can have various implications. A common reason to end a Marketplace plan is when new health coverage becomes available through other sources. This includes obtaining new employment that offers employer-sponsored health benefits, or becoming eligible for public programs like Medicare or Medicaid.

While individuals can cancel their plans outside of specific enrollment periods, Open Enrollment and Special Enrollment Periods (SEPs) are typically associated with making changes to coverage. SEPs are triggered by qualifying life events, such as a change in household size, income, or gaining access to other health coverage. Even without a qualifying event, a Marketplace plan can be canceled, but securing new coverage is important to avoid gaps.

Steps to Cancel Your Plan

Canceling a Marketplace health plan typically involves logging into your HealthCare.gov account or the equivalent state-specific Marketplace portal. Once logged in, navigate to the section that displays your current health plan details.

Within this section, you will find an option to end or terminate coverage. You will then be prompted to select an effective date for the cancellation. It is important to choose this date carefully, considering when any new coverage will begin. After confirming your selection, the system will provide a confirmation page or send a notification. Retain a record of this confirmation, as it serves as proof of your cancellation request.

Post-Cancellation Considerations

After canceling your Marketplace health plan, several factors warrant attention to ensure a smooth transition. The effective date of your cancellation is typically the last day of the month in which you request the termination, though you can often select a future date for the coverage to end. For immediate termination, especially if new coverage has already begun, contacting the Marketplace Call Center may be necessary. It is important to avoid any period without health insurance coverage, as unexpected medical costs can be substantial.

While the federal individual mandate penalty is currently zero, being uninsured still carries significant financial risks. Canceling a Marketplace plan also impacts any advance premium tax credits (subsidies) you may have received to lower your monthly premiums. If your income or household information changes or you end coverage, the tax credit amount you were eligible for may differ from what you received. This discrepancy will be reconciled when you file your federal income tax return using IRS Form 8962. This may result in owing money back or receiving a larger refund.