Rescission and What it Means to You

Rescission is one way you can lose your health insurance.  ”Just when you need it most“.  By now you have heard this lamented by our President as being a big reason for Government run health care.  Some cases are truly an insurance nightmare. Someone was victimized. 

Rescission is the process used by an insurance carrier when they discover a member has omitted critical health information. When an individual applies for coverage, they submit a medical application.  People don’t remember everything. This is normal and the insurance companies know that. When insurance companies discover omissions that would have effected the insurability of the applicant they can rescind the insurance. That means they give the member all their premium back and let them know they can pay their own bills.  Not long ago a major case went to court and the insurance company lost. Punitive damages were also awarded. The issue was that the applicant did not put down her true height and weight. Within a month she found she had cancer. The insurance company acted very slowly. When they finally rescinded the policy, she had costly bills that the insurance company gave back to her to pay.

In most instances the insurance company is tipped off by medical records submitted for claim payment. Typically the physician will report why they are running a test. Perhaps they will note that the patient has had this problem for many months.  If the patient/health insurance member has had the policy less then a month, the insurance company pulls the application to see if the  “problem” was noted.  If not they could let it go or rescind it. 

With the advent of online enrollments from direct insurance advertising and “e-health insurance” sales production, there have been more rescissions. I personally believe a person finds it easier to lie to the computer then to an agent.  I also believe that many “insurance mills” hire people and pay them for the first sale and do not encourage customer service.  I had my secret shopper call a major online health insurance entity. She told them her daughter had IBS  (irritable bowel syndrome) and the sales person said it was no problem. For your info that is a declinable health condition. 

Insurance companies realized they had a problem. They didn’t have a dedicated membership staff to follow up on these mis-truths. They created recission departments whose sole purpose was to find  untruthful members and recind their policies. Sort of like hiring a bunch of pit bulls. You see the pattern here? Action – reaction.  In fact the insurance companies wanted the business  from the E-health insurance companies. To this day those companies now do the bulk of the individual health insurance business.

Finally on recission: How long can an insurance company take in discovering something about you?  The current answer is 2 years. That is an unwritten law and follows life insurance. If you have had your life insurance policy for over 2 years and committ suicide it will stay pay out. Good to know.  By the way the California insurance commissioner Steve Poizner, is working on legislation to shorten that time frame.

I have only had one recission in 11 years. The member clearly admitted she omitted critical information.  At the time of the recission, my client was eligible for her husband’s group policy (guaranteed issue) and her bills equalled the premium given back to her.  I received the charge back in commission though. I was happy that I wasn’t sued.

Mainstream media is televising the various town hall meetings across the United States.  These meetings show people being hushed and forced to leave the meeting.  The elected officials are discounting citizens as being planted by the Republican party.  Some accounts mention that Sean Hannity and Glen Beck have sent irate constituents to these meetings to create a disruptive tone.  I think the anger is coming from fear.  Continually our President reminds us that he will pass this legislation whether “some” like it or not.  When he speaks of the legislation, it sounds as though he is discounting those who disagree as only misinformed or planted by the Republican party. Not once has he addressed points of concern in his legislation.  I personally doubt that he has even read it page by page.  Of course that would be beneath him to do so.

This morning I tuned in and heard of a man who was concerned for his child with Cerebral Palsy. What sort of medical care will this child experience? Will a government entity determine that this child should just be medically maintained?  Good question. Then the Democratic Media consultant pointed out that the insurance companies decline care on a regular basis. This tactic makes me want to scream. In California, the insurance companies are required to provide a road map for appealing ANY denial.  The mediation entity is an independant group that is paid to examine the medical worthiness of the treatment. This medical entity is a third party group comprised of doctors.  They require written reports from the doctor that include medical outcomes of other similar treatments.   The key to most decisions is simple.  Is it medically necessary?  Is the treatment proven and accepted?  The time involved is delayed by the state.  There are not enough people assigned to process the paperwork for submitting these appeals to the independant third party. That department is run by the State.  My point to this concern. WE already have the State mingling in the decision and it slows the process down.

For those who have had problems. I would like to see their road map. Personally I can attest to going through one of these denial procedures.  It was a hassle. However I did prevail. If my life depended on it and there was not enough time,  I would pay for it and fight later. I believe that most prudent treatments would be approved. If  a person is wanting a vitamin therapy for cancer…maybe not.  I still have that freedom to try it. Really it is a matter of restricting MONEY. No one tells you that you can’t have a treatment if you are willing to pay for it.  Perhaps the government run system will create niche medical practices that will be paid for by cash.  Eventually we will have a system that produces  mediocre care for the masses and cutting edge medical care for the wealthy and the legislators.