Can my Medicare Supplement insurer cancel my policy?

An insurance company can cancel your Medigap policy, but only if you do not pay your Medigap premiums, if you provided inaccurate information, or the insurance company goes bankrupt. 

Typically, your policy is guaranteed renewable. But despite this protection, there are some exceptions to the rule. Medigap plan cancellation can happen for a number of reasons, such as:¹

• You stopped paying the monthly premium.
• You were dishonest on the Medicare Supplement insurance application.
• Your insurance company went bankrupt or became insolvent.

If your insurer goes bankrupt or becomes insolvent, you have a guaranteed issue right that will allow you to enroll in another company’s Medigap policy without medical underwriting. You will not have that same protection if you stop paying your premium or provide inaccurate information to your insurer.

Not paying your Medigap premiums

Most insurance companies let you pay for your policy in monthly or 6-month installments. Regardless of your payment schedule, if you do not make your payments, your insurance company can legally cancel your policy.

It is up to the insurance company to determine how many premium payments you can miss before it terminates your coverage.

Inaccuracies on your Medigap application

The second instance when an insurance company can drop your Medigap policy is if you provide inaccurate information on your application. Sometimes, in an attempt to get a lower premium, Medicare beneficiaries lie on their applications. If the insurance company finds out that you provided incorrect information during the application, it can cancel your policy.

Before submitting an application, you should review all of the information you provide to ensure its accuracy. If any information is inaccurate, regardless of your intentions, you could lose any guaranteed renewal rights and protections.

Health insurance company bankruptcy

Another reason for Medigap plan cancellation is if your insurance company becomes insolvent or goes bankrupt. Insurance companies are businesses like any other and can become unprofitable. If this occurs, an insurance company might cancel all of its Medicare Supplement plans.

Thankfully, if this happens to you, you are protected by a guaranteed issue right. Guaranteed issue rights are protections that ensure you qualify for a Medigap policy without penalties or medical underwriting, even after the open enrollment period ends. If you qualify for a guaranteed issue right because of a company bankruptcy, you will have a right to buy a new Medigap policy without medical underwriting. However, you must change policies within 63 days of the last day of creditable coverage from another Medicare Supplement provider. Unless you live in one of the waiver states, you will be able to switch to one of the following plans: Plan A, B, C, F, K, or L.

Beneficiaries can be pro-active about potential insurance company insolvencies by researching a Medigap insurer’s financial condition before enrolling in a policy. Independent review agencies, such as Weiss Ratings, can estimate the financial risk of an insurance company in the market today.

Other reasons for Medigap cancellation or limitation

Outside of the three main scenarios discussed above, Medicare beneficiaries who enrolled in a Supplement plan before 1992 could face an additional limitation. Beneficiaries who enrolled before this year might not have a guaranteed renewable plan.

An insurance company can refuse to renew the policy as long as it gets state approval beforehand. If this occurs, you will have a guaranteed issue right to buy another Medigap policy. The allowances provided by this right are explained above.

¹ https://www.medicare.gov/supplement-other-insurance/when-can-i-buy-medigap/dropping-or-losing/dropping-losing-medigap.html