How To Avoid Problems With Your Health Insurance


I know that what I am about to say will make me sound like an insurance company stodge.  However, I want this blog to focus on facts.  I’ll leave the lies and misinformation to the politicians from both parties.

It is fashionable to blame the big, rich health insurance companies when a claim is denied.  Many politicians have obtained and kept power because they were successfully able to divert people’s attention from the truth to misinformation.

Health insurance policies are contracts.  They put in writing the responsibilities of both you and your health insurance company.  In most cases, when a health insurance claim is denied by your health insurance company, you will be able to refer to your policy to find out why.

No other industry is bigger proof of the old saying, “You get what you pay for.” The majority of denied claims are denied because people tend to believe that all health insurance is the same.  That is a false assumption.  Health insurance policies differ from one insurance company to the next.  The same insurance company may even offer several different plans.  Most of them do.

The only way to know that a visit or treatment is going to be covered is to review your policy when you get it.  Although you are free to have your lawyer look it over, health insurance policies are not supposed to be so complex that a lawyer is required.  If you know that to look for, you should be able to review your policy without having to spend the time and money to secure an attorney.

Every insurance policy is a “contract of adhesion.”  That means that your insurance company will prepare the contract and send it to you.  Every state offers you a “Free Look” period.  In my home state of Texas, that “Free Look” period is 10 days for Major Medical health insurance.

If you used a health insurance agent, you were probably told that the “Free Look” period was in case you changed your mind, if it was even mentioned.  That is partially correct.  If you change your mind during the “Free Look” period, all you will need to do is notify your insurance company that you do not want the insurance.  They will refund any money that you paid with your application.

(Be advised that this advice is for health insurance and not Property and Casualty insurance.  That type of insurance is regulated by a different set of laws.)

What is often not said is that during this time you are expected to review your health insurance contract.  The reason for the “Free Look” is so that you have the chance to correct any mistakes or identify any “holes” in coverage.  Once your “Free Look” time has expired, if you have not contacted your insurance company to make changes, you have legally “adhered” to the terms of the contract.

In regular language, that means that you have approved the contract.  In a court of law, the insurance company is free to say that you knew what risks the insurance company would pay and what risks you retained the liability for.

There are many forms of health insurance.  Accident Supplement, Disability Income, Critical Illness and Long Term Care Insurance are all forms of health insurance.  In this post, I want to share with you how to review your Major Medical policy.  It is the most common and comprehensive form of health insurance in America.

TITLE AND DATA PAGES

These pages will summarize your policy.  On these couple of pages you will find the basic information about your contract.  It will list…

  • Who is covered
  • Your maximum benefit
  • The deductibles for both in and out of network care
  • The co-pays for both in and out of network care

DEFINITIONS

After all the years of talking you have done, it is easy to assume that you know the meanings of words.  That may be true, however, what a word means in a regular conversation may be different from its meaning in a health insurance contract.  This section of your policy will dictate what a word’s actual meaning is.  Read through it to make certain that your understanding of the words that are used in your policy are the same as the insurance company’s understanding.

PROVISIONS

These are the responsibilities that remain with you.  This section explains not only what medical expenses you will pay out of your pocket.  It will also explain other responsibilities you may have.

If you get medical treatment from a provider that is not in your plan’s network, your financial liability will be significantly greater.

BENEFITS

These are the responsibilities of the insurance company.  This section details what medical expenses they will pay.  If you have a normal Major Medical plan, it will tell you what percentage of your medical bills the insurance company will pay.

If you have a Scheduled Health Insurance plan, the policy will tell you how much  your insurance company will pay for each medical procedure.  It is will be your responsibility to pay any portion of the bill that exceeds what the insurance company pays.

EXCLUSIONS AND LIMITATIONS

As implied, these are the conditions under which the insurance company will not pay anything.  The PPACA only addressed the issue of Lifetime Limits.  Annual limits still exist.

In addition to those limits, each insurance company will state what they will not pay for.  Some of those exclusions are circumstances that you can control.

For example, many health insurance policies exclude coverage when treatment is provided by an immediate family member.  If you know that, you will know better than to file an insurance claim if you have your son, the doctor, prescribe something for your blood pressure.

Other exclusions are for things you cannot control.  One of the most common exclusions is called a “war clause.”  For example, if you are in D.C. when the Soviet Union drops a nuclear device, your insurance company does not have to pay your medical bills if there is an exclusion for “acts of war.”

COPY OF YOUR APPLICATION

A copy of the application you completed should also be included in your policy.  If the insurance company finds out, at a later date, that you withheld information that would have been a cause to decline your application, they have the right to “rescind” your coverage for fraud if they are able to prove that you knew about your condition but did not tell them.

“Fraud” can be tough to prove.  Your policy is not going to be “rescinded” merely because you could not remember why you went to the doctor 5 years ago.  Before your policy can be “rescinded” for fraud, the insurance company must prove that you obtained your health insurance through deception.  They must prove that you knew about an illness and withheld pertinent information from them.

When a policy is “rescinded” the insurance company usually will refund any premiums that you have paid and act as if the insurance policy never existed.  If claims have already been paid for other medical conditions, they have the right to seek a refund from you.

FREE LOOK

Because health insurance policies are “Adhesive,” every state requires that you be given a reasonable time to read your contract.  During that time, you may cancel the policy and get a full refund from the insurance company.

If you do not notify them of any objections in your policy during that time, the insurance company will assume that your silence is an indication that you accept (adhere) the terms of your health insurance policy.  If you cancel your policy after the “Free Look” period, the insurance company is not required to refund any money to you.

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