need to start with a spoiler alert while
revamping this article. Everything here is about
to change Jan 1st 2014 and some new programs are
available so we'll make the information current
and re-evaluate as we get closer to 2014. For
now, however, what if you are declined
individual health insurance?
From our experience, about 15-25% of the California individual health applications that go through medical underwriting (the process of evaluating a person's health history for eligibility) are declined coverage. This can be frustrating for both the applicant and us as the health broker. The process of choosing a California individual health insurance plan not to mention completing the application and underwriting process is never fun and to get a declination after that work is the last thing you want hear. Before we look at back up options (since individual family is usually less expensive and our first option), let's take a quick look at how the carriers view health history and issues.
The underwriting process and health insurance declinations
You submit your application and health history questionnaire to the California health carrier for review. Based on the information listed in the application and a phone interview conducted shortly after (rarely with a request for medical records) the carrier will come back with one of three replies: An approval at the best rate; an approval at a higher tier (higher rate); or a declination. This process generally takes about 2 weeks with our priority underwriting but it can go over a month depending on how complex a person's medical history is and how smoothly medical records are retrieved (if needed).
They will send a letter to the applicant with
an explanation of their decision. There is a lot
of legal verbiage on the letter but the
important items are the listed health issues.
They may read as "broken bone within last year";
"ongoing multiple medications", "height and
weight outside guidelines", etc. The carrier
typically lists all the various items but
usually, there is one or a few that are really
driving the decision. There is also information
in the letter about refuting or appealing their
decision based on missing or incorrect
information. This can happen as doctors will
sometimes note issues in medical records which
are not correct or unknown fully to the patient.
There may be issues listed that the applicant
can clear up with the underwriter via written
appeal. If there is no new information that can
be appealed (there listed reasons are correct),
then the applicant may need to look at other
options. Unless the health issue is very
serious, it might make sense to apply to another
carrier since we do get different decisions back
on the exact same applicant for various reasons.
Keep in mind that children are guaranteed issue
now and will not be declined due to health
although they can have a higher rate applied to
Health insurance options for someone who is declined coverage
1. Cobra or Group option.
If you have a continuation option through a
prior company-sponsored health plan, make sure
not to lose that option or exhaust the
enrollment period. Some people want to apply for
individual health insurance to compare with
their Cobra option. You want to make sure that
the Cobra eligibility window does not close.
Always keep this option open. You may also have
a Cal-Cobra extension for another 18 months.
Double check with your carrier or
administrator...they don't always offer this
information of their own accord. Also, if you
have health insurance options through a new
company, qualified group health insurance in
California is guaranteed issue which means they
cannot declined you due to health. Make sure not
to lose this option either. HIPAA guaranteed
issue may be an option as well if you have
exhausted Cobra and/or met the requirements for
2. If you have not had coverage in the last 6 months, check out the PCIP plan.
This is the Pre-existing Condition Insurance
Plan available on a guaranteed issue basis. You
can quote it here along with the other plans.
You will likely need a decision somewhere else
2. Apply for other carrier.
There are times when we get a declination
from one carrier and an approval from another
carrier for the same client. Carriers tend to
tighten and loosen underwriting depending on
what's happening on the claims side. In
California, the major carrier underwriting tends
to be more pragmatic with Anthem Blue Cross,
Blue Shield of California, Aetna, and Health Net
in that order but concretely so. Kaiser does not
deal with brokers so we are unsure as to their
underwriting. There is no downside in applying
to multiple carriers (aside from the time and
effort) as they do not charge an application fee
and you have a 10 day free look period after
notification from the carrier of their offer to
cancel the coverage never effective.
3. MRMIP through the State is a back-up option to investigate.
MRMIP is administered through the major
carriers for people without options. The AIM
program for pregnant women is also found here.
4. Short term application declined.
Short term is a simplified issue plan which
means that they do not request medical records.
They make a decision based on the information
listed on the application. If you are declined
coverage with Short term coverage, apply to a
standard plan with Anthem Blue Cross or Blue
Shield of California (two most practical). There
are many health issues which a carrier needs to
request medical records or just more information
in order to make a decision and the standard
plans will permit the carrier to do this.
Qualify for medical insurance based on good health
The take away from this is that the time to apply for individual family health insurance in California is when you are healthy. Do not wait for health to change as insurance does not work that way. Jan 2014, coverage will be guaranteed issue through the Exchange for individuals and families. The costs will be higher as a result but there may be subsidies available depending on income levels (up to 400% of poverty).
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