Guaranteed Renewal Health Insurance:
What You Should Know

When you buy a health insurance plan, it’s yours to keep. No matter what happens to your health, you’ll be able to turn to your plan for coverage.

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In some ways, health insurance is like gambling. The whole idea of insurance is based on risk and return. By selling you a policy, insurance companies are betting you won’t need to file an expensive claim.

Buying and renewing insurance isn’t a simple exchange, like buying a new television. People rely on their insurance policies to protect them. And the public has an interest in setting the rules that insurance companies can play by.

One of the rules that applies to health insurance companies is guaranteed renewability. This rule prevents companies from refusing to renew a policy when someone gets sick.

The Insurance Company, Federal Law, and You

One of the biggest reasons to by health insurance policy is in case something happens. You’ll know that you’ll have access to health care — and protection from huge medical bills — in case of an accident or illness. So you buy a health plan, pay your premiums, and expect it to be there when you need it.

On the other side of the table is the insurance company. They’re in business to make money. Even the non-profit companies — including many health insurance companies — still need to meet their operating budgets. Like anyone with a budget, insurance companies need to cut costs wherever possible.

Between the public need for dependable coverage and the companies’ need to stay in business, a compromise was needed. The Federal government provided it.

In 1996, the U.S. Congress passed the Health Insurance Portability and Accountability Act — known in insurance circles as HIPAA. Like most Federal laws, HIPAA has several parts and tries to accomplish several things. One of the things it mandates is the guaranteed renewability of individual health insurance.

When HIPAA was passed, guaranteed renewability wasn’t a new idea. Many insurance companies had already been offering it. It makes an attractive selling point for a health plan, after all. But the law made sure that all health plans sold to individuals would be renewable.

It’s important to remember that HIPAA doesn’t say anything about what an insurance company can charge for a policy. So even though a company is obligated to renew your policy, they aren’t obligated to offer you the same premium. Your health policy is not guaranteed to be affordable.

On top of the Federal law, each state has its own set of rules about what insurance companies can and can’t do. So when you’re looking for a policy, it’s a good idea to work with a professional.

Use our free service to get connected with professional agents licensed in your area. Fill out the simple online form, tell us what you need, and we’ll match you with agents.