Individual versus Group Health Underwriting

Healthnet has been in the news lately. Which insurance carrier has not? Anyhow it seems that Healthnet acted improperly and with malice (per the court) towards an insured that had been approved with and individual policy and then has her coverage terminated while undergoing cancer treatment. The judge in arbitration found for plaintiff - the insured - and awarded over $9 million dollars in penalties and fines.

Many of my clients have raised concerns this last week that this could happen to them. Because I have received more than one phone call, I thought I would try to put fears to rest in my blog.

First, if you are insured through an employer sponsored plan, it is group coverage, not individual coverage. The carrier cannot terminate you from that plan unless you have been terminated by your employer. Group insurance rules apply. The case in the media was around individual health insurance coverage that has very different underwriting rules.

Second, although HealthNet has been fined for this practice, all carriers that write individual health insurance have had underwriting practices under the microscope lately. Blue Cross recently recinded the practice of sending letters to doctors asking them to notify Blue Cross if patients covered under individual plans had illnesses or issues that might not have been disclosed in applications. What was not made public in this HealthNet case was the reason why this person had her coverage terminated? Was her application correctly filled out? Did she pay her premium? There are some unanswered questions in my mind as to what really happened here. However, we must rely on the court system and the judge hearing this case. He obviously had access to information that allowed him to rule in this way.

This entire issue clearly brings to light how challenging it is to find individual health insurance - even if you can pay for it! The underwriting rules have become so strict that if you have sneezed in the last month, forget it. I am not sure this problem will be legislated away. Finding health insurance and keeping it will continue to be a very important issue for everyone, especially with our ability to live longer than ever before.