Late Paying Obamacare Health Insurance Premiums?

You’re not the first person to be late paying your health insurance premium, and you won't be the last. However, since there are repercussions for being late, you need to understand what to expect if your premium is late.

This article will explain what the rules are, how they apply to your situation, and what happens if you’re late paying your ​Obamacare health insurance premium.

When you get your health insurance through an Affordable Care Act health insurance exchange, the handling of past-due health insurance premiums will depend on two primary factors:

• Whether this is your first premium payment to initiate new coverage, or a payment to continue coverage that’s already in force.
• Whether or not you’re getting a subsidy to help pay your monthly premiums.

The rules are stricter for initial premium payments than for a monthly premium payment continuing your existing coverage. And the rules are stricter for those without subsidies, while those getting help paying their health insurance have a longer grace period.

Late Paying Your Initial Obamacare Health Insurance Premium

If you’re late paying your initial health insurance premium for a health insurance policy you’re buying through the exchange, your health insurance coverage won’t take effect. You’ll be uninsured. The amount of time you have to make this payment will vary depending on the insurer, whether your state has its own exchange or uses HealthCare.gov, and the date you enrolled in your plan. But there is no grace period—once the payment deadline passes, the plan will not take effect.

If you enrolled during the annual open enrollment period, you may have another opportunity to sign up, depending on when you initially enrolled and what your payment deadline was. In most states, open enrollment now continues until at least mid-January.

Let's say you sign up in November for a plan that will take effect January 1, but then you miss the payment deadline and your plan doesn't take effect. In most states, you have until January 15 to re-enroll, with coverage effective February 1 (details vary by state). But if you were signing up near the end of open enrollment and the enrollment window has ended by the time you realize you've missed your payment deadline, you'll generally have to wait a while to enroll again.

Unless you qualify for a special enrollment period or for Medicaid/CHIP, you won’t have another chance to sign up for health insurance until next year’s open enrollment. If you qualify for Medicaid or CHIP, you may enroll throughout the year. But Native Americans can also enroll in health coverage year-round, and there is also a year-round enrollment opportunity for people who are eligible for premium subsidies and whose household income doesn't exceed 150% of the poverty level.

Late Paying Your Monthly Obamacare Health Insurance Premium

If you’ve already paid your first month’s premium and your health insurance has taken effect, you’ve passed the first hurdle. Now, you need to make monthly health insurance premium payments to keep that insurance policy active.

If you’re late paying your monthly health insurance premium, the rules are a little less strict than for the initial premium payment, because there’s a grace period. How the grace period works depends on whether you’re getting help paying for health insurance or not.

No Premium Subsidy: Grace Period Usually 30 Days

If you’re not getting a premium tax credit health insurance subsidy, your health plan will generally cancel your coverage after your payment is 30 days late. You’ll have to pay the entire premium by the end of the 30-day grace period or you’ll be uninsured, with your coverage termination back-dated to the last day your premiums were paid-up (ie, to the start of the 30-day grace period).

Losing your health insurance because you didn’t make the premium payment doesn’t qualify you for a loss-of-coverage special enrollment period to pick a new plan. So unless you qualify for a special enrollment period triggered by something else, you'll have to wait until the next annual open enrollment period to re-enroll.

And in most cases, eligibility to purchase coverage during a special enrollment period is now limited to people who already had health insurance coverage prior to the special enrollment period; opportunities to enroll during a special enrollment period after being uninsured are limited.

The one-month grace period also typically applies to all plans purchased outside the health insurance exchanges, since premium subsidies are never available to offset the cost of those plans (the policies themselves are ACA-compliant, however, as long as they're individual major medical plans, as opposed to excepted benefits).

Receiving Premium Subsidy: 90-Day Grace Period

If you are getting a premium tax credit health insurance subsidy (paid directly to your health insurer to offset your monthly premium costs) and you’re late paying for your health insurance, you have a 90-day grace period before your health insurance will be canceled. However, just because your health insurance wasn’t canceled during those 90 days doesn’t mean your health plan will actually pay for your medical care if you’re late paying your Obamacare premium.

For the first 30 days after your premium is due, your health plan will continue to pay health insurance claims for the health care services you get. If you get care after you’re more than 30 days late paying your premium but before you’re 90 days late, your insurer will notify your healthcare provider that you’re late paying your premium and those claims will be put on hold. Your health plan will wait to see whether you pay your premium or not before processing the claim.

If you get your premium payments back up to date, the insurer will process those claims and pay them as usual. If you don’t get your premiums fully up to date within the 90-day grace period, your health plan will cancel your coverage retroactive to the day you became 31 days late paying your health insurance premium. You’ll be uninsured as of that date, and the pending claims for services you got after that date will be denied.

And although you will have had coverage during the first month of your grace period, you'll have to pay back the premium subsidy that was paid on your behalf for that first month, if you didn't end up paying your portion of the premium for that month (overpaid premium subsidies are reconciled on Form 8962 when you file your tax return).

From 2021 through 2025, premium subsidies are more widely available, thanks to the American Rescue Plan and the Inflation Reduction Act. The income cap for subsidy eligibility has been eliminated for those five years, which means more people are receiving subsidies and thus eligible for the 90-day grace period.

Re-Enrolling After Plan Terminated for Non-Payment

In the early years of ACA implementation, there were concerns that people might game the system with the way the 90-day grace period was set up. To address some of this, the Department of Health and Human Services finalized a market stabilization rule in 2017 that included, among other things, the option for insurance companies to recoup past-due premiums before allowing an applicant to re-enroll.

If your coverage was terminated for non-payment of premiums and you then reapplied for a plan from the same insurer within 12 months, the insurer could require you to pay your past-due premiums before letting you sign up for a new plan.

If you weren't getting a premium subsidy when your plan was terminated, you wouldn't have any past-due premiums, because your plan would have been retroactively terminated back to the last day you were paid up. But if you were getting a premium subsidy, the insurer had to essentially give you one month of free coverage, because the termination date ends up being a month after the last date that your premiums were paid up. It was the premium for that month that they could require you to pay before allowing you to re-enroll, if the insurer chose to implement this rule.

But as of the 2023 plan year, the Department of Health and Human Services (HHS) has changed the rules and is no longer allowing health insurance companies to do that. If a person applies for coverage during open enrollment and submits their initial premium, the insurer is no longer allowed to apply that money to a past-due payment. Instead, they must allow the person to enroll and must use the payment to effectuate the new policy.

Summary

A health plan will generally be terminated for non-payment of premiums, but there are different rules depending on the circumstances. In general, there is no grace period for the initial premium payment, but there is a grace period for future premiums. And the grace period differs depending on whether the person is receiving a premium tax credit (subsidy) or not: It's generally 30 days if there's no subsidy, and 90 days if there is a subsidy.

Under a rule change for 2023, health insurers can no longer refuse to effectuate coverage for someone who applies for a new plan while still owing a past-due premium for a policy that lapsed within the past 12 months.

A Word From Verywell

If your health plan is in danger of lapsing due to past-due premiums, make sure you understand the rules that apply to your plan. You can call the customer service number on your ID card and ask them to explain exactly what the deadline is and how much you need to pay in order to keep your plan active. And if you've had an income change that is making it hard for you to keep up with your payments, make sure you reach out to the exchange to see if there's anything they can do. You might find that you're eligible for a larger subsidy based on your new income. Or you might find that you're eligible to switch to a different plan — that better fits your budget — due to a change in your subsidy eligibility.