Protection Against Rescission Under ACA

The Affordable Care Act (ACA) protects enrollees from rescission. Rescission is a cancelation or discontinuation of coverage that has a retroactive effect. Plans and issuers generally must not rescind coverage unless there is fraud, or if an individual makes an intentional misrepresentation of a material fact.

Protections Against Rescission

  1. The plan sponsor may not terminate coverage retroactively if the member was covered through plan error and the member paid premiums or contributed to the cost of the plan.
  2. If the member paid premiums or contributed to the cost of the plan, the plan sponsor may only terminate the member’s coverage with a future or prospective date of termination. This limits the liability of the employer to correct administrative errors. 

Timing Details

Group health plans or issuers offering health insurance coverage are required to provide at least 30 days advance written notice to each participant impacted by the rescinded coverage.

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