Can Health Insurance Companies Drop You?

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by Jeffrey A.
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Believe it or not, health insurance companies can and will drop from your insurance plans under the right circumstances. However, it doesn’t automatically mean it will happen to you. For anyone, this can be a frightening experience, yet before resolving the situation one has to know how and why they can be dropped.

Why Can Health Insurance Companies Drop Me?

A health insurance company can drop for failure to meet with specific policy criteria the company stated upon approval of your insurance plan. Before being removed from your plan, however, companies are legally obligated to give the individual a 30-day written notice of removal. 

By being able to recognize the policy infractions that could jeopardize your future, you can position yourself to avoid them in the future. With this in mind, the reasons to be removed can range from a criminal record to a lack of payments. The main infractions that will result in the termination of your policy are listed below.

Home Disrepair/Lack of Renovation

Usually, health insurance companies will suggest or require the policyholder to conduct particular home repairs or renovations. Companies issue these statements in order to avoid any liability issues that can result in harm or injury as a result of a lack of maintenance. In addition, after a claim has been made, as a precautionary measure, your health insurance will continue to make suggestions on how to improve your home facilities to avoid further losses. 


One of the most common methods of policyholders losing their health insurance is a direct consequence of committing insurance fraud. Fraud can occur through filing many false insurance claims so that the individual can directly profit. Consequently, if any misuse occurs under your insurance company, the company is legally bound to remove you from the contract.

Insurance Non-Payment

Simply put, if you start failing to make your insurance claims on a monthly basis, then you are at risk of losing your plan. Non-payments can occur for a multitude of reasons. Whether it be financial troubles, forgetting to make your payments, or ignoring payment notifications, insurance companies will drop you the moment you fail to meet the terms and policies of their agreement. 

Moral Hazard/Criminal Record

Another reason for an insurance company choosing to terminate you from your plan is based on the concept of moral hazard. Moral hazard is described as an incentive for one party to take unwarranted, unnecessary risks because they know the other party, in this case, the insurance company, will pay for any of the damages. By lying to the company and engaging in reckless behavior that results in increased premiums continuously, then you tread towards a position where the company will drop you. In addition, an individual that has gained a criminal record through repeated illegal acts is also at risk of losing their insurance policy.

Loss of Employment

Perhaps the most frequent and well-known method of losing your health insurance comes as a consequence of losing your job. When acquiring a job as a full-time employee in a particular company, the employee is eligible to receive the company’s health benefits. However, like most jobs, the moment you lose your job for whatever reason, then you lose any and all health benefits you might’ve had. Fortunately, this type of situation can be mediated through several options.

What Are The Types of Cancellation Policies?

Before giving up on your insurance policy as soon as you get the cancellation notification from your insurer, the first thing to remember is that there are two types of cancellation policies. The first one being a nonrenewal, and the other being a cancellation. What does each one mean exactly?

A nonrenewal policy is an action that can be taken by an insurance company because of their own right to choose whether they will continue or discontinue offering you a plan. This can happen for numerous reasons, and it is often attributed to internal policy changes such as risk-assessment modifications, or alteration of insurance offerings. With a nonrenewal policy, however, you will receive a notification ahead of time before the insurance renewal period if your plan is declined for renewal. 

On the other hand, you can have an outright cancellation. Much like a nonrenewal, you will be informed of your insurance being canceled ahead of time. The similarities end here, however, since cancellation can happen at any moment during your insurance period. Cancellation (or termination) from an insurance plan is an immediate effect of the policyholder failing to meet with the company’s policies. 

What to Do If You Have Been Dropped?

Don’t panic if you’ve been recently dropped from your insurance plan. There are ways of mediating the situation in order to restore your insurance plan one way or another.  For example, when it comes to the cancellation plan, sometimes it can be as simple as calling your company’s representative in order to resolve the situation. Some of the solutions to the problem can include shopping for another plan in the market, negotiation with the company, and seeking professional advice (among other things). Below are some specific strategies which could help you navigate these tough situations.  

Renegotiation With Company

Sometimes a straightforward call is all it takes to put you on track. Before calling, though, it is crucial that you review all of your information and make sure that it’s exact and accurate. You’ll want to ensure that all of your data is correct in order to present a strong case with your insurer. 

Whatever the reason for your removal, you should have some ability to negotiate with the company. Perhaps you could work on renovating your household to remove future risk for the insurer, or work out a payment plan for a delinquent balance. 

Shop In The Marketplace

Perhaps you weren’t satisfied with your previous insurance plan or deemed it too much of a hassle to revert the loss of your plan, so now you don’t know what to do. Fortunately for you, however, you could always search for a new, affordable plan that’s right for you in the Health Insurance Marketplace

Insurance Professional

A potential option for anyone seeking to understand their situation might be to consult an insurance professional. With sound, informative advice, your advisor can help negotiate a deal with your insurance holder or aid you in searching for a new health plan based upon the circumstances affecting you.

Reduce Risk, Improve Liability

Maybe you lost your insurance for failing to respond to your insurers’ suggestions or requirements, and thus you were deemed a financial liability for the company. Nonetheless, you can opt towards improving the circumstances and environment that led to your current predicament. This could range from moving from an unsafe neighborhood to a better one, repairing circuits in your home to avoid a fire, or simply paying more for house renovation.

More Transparency

With a questionable, irregular record, a company would think twice before reinstating insurance for an individual. Although, it doesn’t have to be this way. The key solution for this type of situation is transparency. Start off by providing concise, detailed reports to your insurance company alongside making timely premium payments. By slowly but surely building rapport with an insurer, you’re more than likely on your way to restoring your plan. 

This Isn’t The End 

All in all, just because you lost your health insurance doesn’t mean nothing could be done. Luckily for you, there are plenty of options to get you out of your predicament. We hope that you’re able to successfully implement these tips so you can keep or find the health insurance plan that is right for you.


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