Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
Under the Affordable Care Act, when may a health insurer rescind an individual policy after it has been issued?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Rescission cancels a policy retroactively, as if it never existed, and is a far stronger remedy than cancellation. The ACA bars rescission of individual coverage except for fraud or an intentional misrepresentation of a material fact on the application. Innocent misstatements, oversights, or later medical problems do not justify rescission, because the law is designed to protect insureds from losing coverage retroactively at the moment they need it most.
Why the other options are wrong
- A) The two-year window is the contestability period used in life insurance; health rescission is restricted to fraud or intentional material misrepresentation.
- C) Nonpayment is handled by cancellation or termination provisions, not by retroactive rescission of the entire policy.
- D) The development of a costly condition can never support rescission; that would defeat the purpose of health coverage.
Memory hook
Rescission = erase the policy retroactively. Only fraud or intentional lie on the application triggers it.