Someone I know asked me the following question. He has coverage through the exchange and he is switching plans for 2018. He already signed up for 2018 coverage, so that’s a done deal (he asserts). Question is if he should pay his December premium for his current plan. He figures there’s a 30 day grace period before you lose coverage for non-payment. So he can just not pay for December, and if he needs medical coverage in December which costs more than the monthly premium, then he can turn around and pay it then. And if he doesn’t have any big expenses, then he loses coverage for that month but saves overall on the premium. (He says the penalty for not having coverage is only for 3 months.)
So the questions are 1) is there some flaw in this thinking from a financial standpoint?, and 2) is this morally wrong?
Even if the insurance company won’t cancel him immediately for not paying his premium for December by the 1st of the month, because your acquaintance didn’t contact the insurer to cancel his coverage before that date (and I think that insurers require a 30 day notice to cancel), he’s still going to be covered by that policy throughout December. And, even if he doesn’t use the coverage during December, he’ll still have been covered during the month, and he still will owe the insurance company the December premium.
In short, if he doesn’t pay his December premium, he’s failing to pay a contractual obligation, and he’s incurring an unpaid debt. The insurance company will likely continue to bill him for it, and possibly send it to collections if he continues to not pay it (in addition to cancelling his coverage), and it’ll likely also go into his credit record.
Too late to add: many insurers which offer ACA plans will automatically renew their policyholders for the next year (in the same plan that they had in the previous year, or in a similar plan, if the old plan is no longer being offered). Even if your acquaintance has bought a different plan from a different company for 2018, he should make sure that his current (2017) insurer knows that he does not want a policy from them for 2018.
Yeah my brother got caught up like kenobi 65 says and had to pay his new and old insurance for January last year, because he failed to cancel.