Certificate of creditable coverage: Why you may need it

Last Updated on November 27, 2018 by Dave Farquhar

What is a health insurance certificate of creditable coverage, and why does your new insurance plan want one? The certificate of creditable coverage was a way to prevent people from abusing health insurance. Changes to health care laws after the Affordable Care Act made certificates of creditable coverage less common. But here’s how to get one if your new insurer wants one.

If you’re trying to get health insurance in between jobs, you’re more likely to need the certificate.

Why your provider might want a health insurance certificate of creditable coverage

how to get a health insurance certificate of creditable coverage
A health insurance certificate of creditable coverage proves you haven’t just been buying insurance the years you think you need it. Any insurer will provide a copy of one upon request. Image credit: Pictures of Money/Flickr

Insurance is, by definition, distributed risk. By distributing risk across a large population, you prevent a catastrophe from ruining you. An insurance company’s job is to figure out the likelihood of something happening, along with the cost. Then they can figure out how much money to charge so they can afford to pay for it when that bad thing happens.

The system breaks down when people don’t pay into it. I once knew someone who refused to carry health insurance, except during the years when his wife was pregnant. He bragged about how much money he saved. The problem with this is that if everyone does it, we no longer have an insurance system. We just have a payment system with an extra layer of red tape and cost.

By his logic, I shouldn’t carry auto insurance or homeowner’s insurance. I’ve never made a claim on either. Making me carry both reduces my burden on society if something bad happens. The only difference is the amount of money involved.

A health insurance certificate of creditable coverage proves how long you’ve been carrying insurance. The coverage doesn’t have to be 100% continuous. You do get a short grace period, usually around 60 days, on account that most insurance plans have a short waiting period before they kick in.

How to get a health insurance certificate of creditable coverage

When you leave your job, your old health insurance company may send you a health insurance certificate of creditable coverage in the mail. It’s just an official document that states when you had health insurance. Some insurance companies no longer send them, since the law no longer requires them to. In theory, since the passage of the Affordable Care Act, everyone carries health insurance one way or another.

But some health insurance companies still want a copy of your certificate. If your old insurer didn’t send you one, call the 800 number on the back of your old health insurance card. They’ll know exactly what that is and why you need it, and will be able to mail you a certificate to send to your new insurance provider. If you were at your previous job less than three years, you may need to go back to your past health insurer as well. Some companies require you to provide evidence you were covered three years. Getting all that in advance can save you some headaches later.

It’s been a few years since a health insurance company wanted to see my certificate of creditable coverage, so it’s easy to understand why this might be an alien term for some people.

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