Sometimes, health insurance coverage becomes difficult to pay for, particularly when a household loses income due to job loss or when a policy holder's medical conditions cause a rise in rates. Many policy holders consider dropping health insurance coverage in these circumstances, which can be a confusing and potentially dangerous process. However, there is a right and a wrong way to drop health insurance coverage.

First of all, contrary to what insurance agents say, dropping health insurance coverage isn't always a bad idea provided that it's handled in a reasonable way. While cutting coverage entirely can certainly be harmful, a healthy policy owner can decrease certain types of coverage to keep rates low, which can be very helpful during a period of unemployment or in another temporary circumstance. However, there's something else to consider: while health insurance coverage can be cut very easily, it's usually much harder to add coverage due to insurance company waiting periods. This is why a gap in coverage is so bad. If a policy holder's coverage lapses, it may take six months or longer for all old coverage to return, and in the meantime any illnesses or conditions that fall under the previously-cut coverage categories could be a big financial liability.

Rather than dropping health insurance coverage in certain areas – which can be complex or even impossible, depending on the insurance provider – it's usually better to look into other means of decreasing health insurance costs. Raising a policy's deductibles can be one effective way to do this. While cutting coverage puts a person at financial risk, raising deductibles is seen as a much smaller risk. Policy holders are much more aware of the potential costs of their actions when raising copayments, as there's an easy-to-consider dollar amount attached to physician and pharmaceutical co-pays. Raising a coinsurance rate is somewhat more risky, but it's still worthy of consideration when an individual health insurance policy's rates are too high.

Another option is to simply look for a more affordable policy. Health insurance comparison websites make it easy to find quotes from several insurers, and if a policy holder is considering a drop in health insurance coverage, it's logical to see whether coverage can be transferred to a low-cost insurance provider before taking a serious step and making cuts. Looking at a few quotes should also make it easier to understand the various aspects of a health insurance policy, and if cuts are absolutely essential to maintain coverage, it will be much easier for a policy holder to make that decision after looking at a few professional insurance quotes online.