Sky-high premiums, unfair restrictions – it’s enough to make anyone sick.
Any claims for illness made during the first few months of coverage are generally viewed with the suspicion that the claim may be for a pre-existing condition. A cautious person would wait a while before seeking any optional treatment. An extremely cautious person might even change doctors, since the bill for a “new patient” exam tends to attract less scrutiny.”
Exclusion riders. Some companies offer exclusion riders, which are agreements stating that a certain pre-existing condition or treatment to a certain part of the body is exempt from coverage, either for a specified period of time or for the life of the policy. Even minor but chronic problems such as migraine headaches or an old football injury might warrant an exclusion. This seems unfair, but the alternative is to be denied coverage altogether.
Exclusions and limitations. Every policy has a long list of exclusions and limitations to covered services. It’s well worth your time to familiarize yourself with the fine print of your insurance policy. There are some common exclusions: routine physical examinations, routine chest X-rays, cosmetic procedures, organ transplants, sterilization or fertility treatments, calluses and corns, oral surgery, orthopedic shoes, well baby care, contact lenses or eye-glasses and exams for their fitting, eye surgery to correct vision, self-inflicted injuries, and vitamins.
Chiropractic, acupuncture, and infertility treatments usually have restrictive limits or are completely ineligible for reimbursement. Benefits for psychological counseling and treatment for substance abuse, if they’re allowed, are usually paid at the rate of 50% or less, with strict annual maximum benefit limits. Unless you specifically purchase maternity coverage (at an additional cost and well in advance of pregnancy), generally only complications of pregnancy are covered. Dental coverage may be purchased separately for a small extra monthly premium.
Most insurers will not cover you for injuries that would ordinarily be covered by a workers’ compensation insurance policy. In other words, if you get hit by a truck while picking up salon supplies during work hours, you’re not covered by your own insurance, whereas if you’re hit on your way to the cleaners, you are covered. Some companies offer what’s called “occupational” or “24-hour” protection at a moderate additional cost to individuals not covered by workers’ compensation, such as part-time employees and independent contractors.
Pre-certification. In order to keep costs down, most policies require pre-certification before any non-emergency hospital procedures and some outpatient treatments cane be performed. Pre-certification means you or your doctor must call the insurance carrier in advance of the procedure to obtain approval.
Rate Increases and Termination
Unfortunately, rate increases are a certainly. At one point, my own rates tripled over the course of a year. A good insurance agent will evaluate a company’s rate history before recommending a policy, but there are never any guarantees of stable premiums.
One factor used to determine rates is your age. Unless you belong to an HMO, you can expect an increase after every “big” birthday, roughly every five years.
Theoretically, you can’t be singled out for a rate increase or termination if you become ill. However, when you are accepted for coverage, your individual policy is grouped with similar policy-holders on your plan. Periodically, your insurance company evaluates whether it is making an acceptable profit on your group as a whole. If not, it will institute a large, across-the-board rate increase. What often happens then is that healthier policy-holders are offered the opportunity to join a different plan at a lower rate. Those people with chronic or serious illnesses are forced to either pay the higher rates or change insurers (which is next to impossible when you’re currently in treatment).
Similarly, a small business owner may receive preferred rates during the first year of a policy. If the business submits a lot of costly claims, the insurer reclassifies the business with other groups whose costs are higher and then raises their rates.
Most insurers will guarantee that they will not terminate your individual coverage unless you fail to pay your premium or unless they terminate all individuals with similar policies. This offers you some protection from cancellation if you become seriously ill. Blue Cross/blue Shield providers claim they will not cancel your policy unless they discover within the first two years that you failed to disclose a pre-existing condition. And, a precious handful of insurers will guarantee not to terminate coverage for any reason other than non-payment. Two such quartered in Des Moines, Illinois, and benefit Trust Life, located in Lake Forest, lowa.
The Application Procedure
Insurance carriers weigh several factors to determine your eligibility for coverage – most important, your health history. A typical application form asks such questions as “Have you received treatment for any disease, sickness, or disorder other than colds or flu in the last 24 months?” or “Have you ever been disabled, had surgery, been confined to a hospital, nursing home rehabilitation facility, or been treated by a chiropractor?”
A “yes” to any of these questions can frequently result in denial of coverage.
The screening process is much the same for a small group (usually defined as 3-49 people) as for an individual. With a large group, the insurer can be reasonably assured that a few costly illnesses will be compensated for by a large number of healthy people and will request little or no medical information. With small group, however, insurers try to minimize their risk by evaluating the medical history of each applicant. Coverage may be denied to individuals or to the group as a whole on the basis of one serious illness.
It may be tempting to conceal a history of poor health, but you shouldn’t lie about your health on your application. For one, it’s easy to get caught; for two, you could lose all your benefits if you do. When you sign the bottom of the application form, you’re giving your potential insurer access to your medical records. Even after you have been accepted for coverage, your insurer requires authorization to investigate every claim submitted. If you submit a claim for treatment of a pre-existing condition that you neglected to mention on your application and this comes to light, your insurer may well rescind your coverage retro-actively, leaving you to pay them back for all benefits received since day one of coverage.
Remember that your medical history follows you around for life. On general principle, you should be careful and consistent about what you or your doctor commit to writing. Even a suspected diagnosis that later proves untrue can cause problems.
A Boston-based organization called the Medical Information Bureau (MIB) keeps records relating to your medical risk factor much in the same way TRW keeps an eye on your credit. If you’re curious, you can request a copy of your record free of charge.
In some states, people who have physical conditions that make them virtually uninsurable, such as multiple sclerosis, cancer, or ulcerative colitis, can apply for coverage under a state-funded high-risk policy, which works much like an assigned risk auto insurance policy. These policies cost a little more, but are absolutely invaluable for many individuals.
It takes a little time (and a fair amount of money), but you can generally make the system work for you clearly, our present health care insurance system is flawed. Increasingly it shuts out precisely those people who need care the most. Consumer groups are currently active in 35 states encouraging support for a nationalized health care plan.
Until that happens you can always consider getting married.