Can I cancel my health insurance, and will there be a penalty or adverse consequence?

Generally, there is no prohibition against insured or plan members canceling their health insurance coverage or their participation in a health service plan.

One major exception to this generality is in the case of Medicare assignments. If a Medicare recipient has chosen to obtain private insurance or HMO coverage involving an assignment of the Medicare benefits to the insurer or plan, the Medicare recipient must apply to the Health Care Financing Administration (HCFA) before changing insurers or plans. Otherwise, there is no financial penalty per se to canceling health insurance coverage.