Maryland Private Payors Banned from Cancelling Individual Policies for Nonpayment for 60 Days

On behalf of the Hogan Administration, Maryland Insurance Commissioner Kathleen A. Birrane has used her emergency powers to prevent health insurance companies from cancelling or refusing to renew individual health benefit plan policies for nonpayment of premiums for the next sixty days.

Individual health benefit plan policies that were scheduled to terminate because of unpaid premiums on or after July 31, 2020, will remain in effect through September 30, 2020.

The Maryland Insurance Administration took this action after learning that carriers were beginning to process cancellations and to send out notices that policies would be terminated for nonpayment.

Because the first COVID-19 special enrollment period for the Maryland Health Benefit Exchange ended on July 15, most individuals losing their health insurance coverage as of July 31 would not be able to immediately replace their individual policy until the next special enrollment or open enrollment period begins.

“We acted to give people breathing space and will allow cancellations to resume in a reasonable period of time after that replacement option becomes available again,” Commissioner Birrane said.

The suspension, detailed in Bulletin 20-30, applies to individual and family health benefit plan policies issued in Maryland through the Maryland Health Connection and some individual and family policies purchased directly from an insurance company. It does not apply to group insurance policies, such as those provided through an employer or an association, and other products that do not meet the legal definition of a health benefit plan.

“If you are insured under an individual/family policy, have not paid your premium and you received a letter warning you that your policy would terminate on or after July 31, your insurance will stay in effect and you are still covered,” Commissioner Birrane said. “Because of this emergency action, the termination will not happen and you will still have that insurance while the suspension is in effect.”

The prohibition only applies to terminations for nonpayment of premiums. Coverage can still be terminated for other reasons. For example, if someone moves out of the service area or a dependent child reaches age 26. Individuals who lose coverage because of such an event may be eligible to enroll in a new policy. If you are in Maryland and experience a loss of coverage for such a reason, you may contact the Maryland Health Connection at 1-855-642-8572 to see if you qualify for enrollment and for payment assistance.

The Maryland Insurance Commissioner is granted emergency powers under Maryland law to protect insurance consumers in the event of a State of Emergency. Governor Hogan issued a State of Emergency proclamation on March 5, 2020, as a response to COVID-19. The Governor renewed the proclamation on May 6, June 3 and July 1.

Commissioner Birrane will determine whether to renew the nonpayment cancellation suspension at the end of the 60-day period. She may also shorten the suspension period if, within the 60-days, special enrollment options that allow for the immediate and seamless replacement of coverage become available and notices of that option are provided in advance of any proposed cancelation.

This article is based on press released dated Wednesday, August 5, 2020 from the Maryland Insurance Administration titled, “The Hogan Administration and the Maryland Insurance Administration take action to prevent nonpayment cancellations of individual health insurance policies”. For the most up to date information, visit the Maryland Insurance Administration’s News Center.