Option NOT to cure a lapse in health insurance coverage?
January 19, 2010 8:06 AM Subscribe
Can I and/or should I be reimbursed for an employer-caused lapse of less than 30 days in group health insurance in Connecticut?
Here are the pertinent background facts. My employer is based in Connecticut, and our group health insurance policy through Oxford (a United Health subsidiary) is governed by Connecticut law. I am the primary insured, and my employer pays 100% of my premium. My husband is on the plan as well, and I pay 100% of my husband's premium (which is about $900/month). Effective December 31, 2009, our coverage was cancelled because of non-payment by my employer. In December 2009 and January 2010, I nevertheless had the full amount of my husband's premium deducted from my paycheck. My employer has now paid the past-due premium, and submitted appropriate reinstatement forms. At some point in the next few days once the appropriate vengeful bureaucracy gods have received their vestal offerings, our coverage will be reinstated in a backdated manner, i.e. effective January 1, 2010 to show no lapse in coverage. In Connecticut, as I understand it from reading this, coverage is determined to be continuous if any lapses are less than 120 days. Our lapse has been, to date, 19 days.
My husband's health insurance costs me about $30 per day, a year-to-date cost of about $570. This is break-the-bank big money for us. I feel that, since the 19 day lapse in coverage should be under the threshold for pre-existing coverage triggers, that I would prefer to have the policy reinstated effective tomorrow, and be refunded the pro-rata cost paid for the days there were no coverage.
Oxford correctly pointed out that because of the backdating, any costs incurred during the last two weeks will be reimbursed to the extent covered. On the other hand, I feel that I cannot go back in time and go to the doctor last week. We knew we didn't have the coverage (we received written communication on January 6), and therefore we did not use it. As a result, it seems to me that it would be preferable not to have the coverage backdated.
I realize this is a very specific question, and that no one may have any answers. I am not looking for advice (legal or otherwise) on whether it would be favorable to accept the lapse in coverage and be reimbursed, I am rather looking for insight on whether it is possible. Has anyone done it? Has anyone heard of anyone doing it? Am I missing some clear and obvious reason this is a really bad idea? Thoughts?
(I have long been considering cancelling this 5-star plan for my husband, and transferring him to a more modest plan. The premium cost is 30% of my net income. I can't afford to pay it to have him covered; I certainly can't afford to pay it for no coverage. If my only real option to be reimbursed is to opt-out of coverage and obtain a cheaper plan within the 120 grace period, that would be helpful to know.)
Here are the pertinent background facts. My employer is based in Connecticut, and our group health insurance policy through Oxford (a United Health subsidiary) is governed by Connecticut law. I am the primary insured, and my employer pays 100% of my premium. My husband is on the plan as well, and I pay 100% of my husband's premium (which is about $900/month). Effective December 31, 2009, our coverage was cancelled because of non-payment by my employer. In December 2009 and January 2010, I nevertheless had the full amount of my husband's premium deducted from my paycheck. My employer has now paid the past-due premium, and submitted appropriate reinstatement forms. At some point in the next few days once the appropriate vengeful bureaucracy gods have received their vestal offerings, our coverage will be reinstated in a backdated manner, i.e. effective January 1, 2010 to show no lapse in coverage. In Connecticut, as I understand it from reading this, coverage is determined to be continuous if any lapses are less than 120 days. Our lapse has been, to date, 19 days.
My husband's health insurance costs me about $30 per day, a year-to-date cost of about $570. This is break-the-bank big money for us. I feel that, since the 19 day lapse in coverage should be under the threshold for pre-existing coverage triggers, that I would prefer to have the policy reinstated effective tomorrow, and be refunded the pro-rata cost paid for the days there were no coverage.
Oxford correctly pointed out that because of the backdating, any costs incurred during the last two weeks will be reimbursed to the extent covered. On the other hand, I feel that I cannot go back in time and go to the doctor last week. We knew we didn't have the coverage (we received written communication on January 6), and therefore we did not use it. As a result, it seems to me that it would be preferable not to have the coverage backdated.
I realize this is a very specific question, and that no one may have any answers. I am not looking for advice (legal or otherwise) on whether it would be favorable to accept the lapse in coverage and be reimbursed, I am rather looking for insight on whether it is possible. Has anyone done it? Has anyone heard of anyone doing it? Am I missing some clear and obvious reason this is a really bad idea? Thoughts?
(I have long been considering cancelling this 5-star plan for my husband, and transferring him to a more modest plan. The premium cost is 30% of my net income. I can't afford to pay it to have him covered; I certainly can't afford to pay it for no coverage. If my only real option to be reimbursed is to opt-out of coverage and obtain a cheaper plan within the 120 grace period, that would be helpful to know.)
Response by poster: That is understood, assuming that I pay premium to avoid a lapse in coverage and not to actually receive coverage. I hope, however, to terminate (and be refunded) then reinstate with a new coverage inception date (either with this or a cheaper company), because in reality I paid for but did not have health insurance coverage for 19 days. That is, it seems to me that because there are grace periods for lapses in coverage and we are within them (and because no medical services were received during the lapsed time so I have no need to be reimbursed for anything), that I actually receive no benefit for having the coverage backdated. Since I receive no benefit, I am not sure I want to do it. Not for $500.
Ugh, I know this is an absolutely unanswerable question. But I am bashing my head against a wall hoping to figure it out.
posted by bunnycup at 10:12 AM on January 19, 2010
Ugh, I know this is an absolutely unanswerable question. But I am bashing my head against a wall hoping to figure it out.
posted by bunnycup at 10:12 AM on January 19, 2010
You're essentially asking for a refund based on non-usage. Insurance doesn't work that way. I can't cancel my car insurance, for instance, and demand a refund on my premiums that I paid for the past two months because I didn't get in an accident. You don't get a refund in premiums if you don't make any claims.
The mistake was remedied and your policy was reinstated. You have no damages, so there is nothing you can recoup.
Besides, if your plan now is a HIPAA credible plan, you'd have a problem dropping coverage and then applying for new coverage. Chances are, your new plan would not cover any pre-existing conditions for up to a year just because you decided to cancel your policy.
The best advice in insurance is: Don't cancel until you have replacement coverage in place.
posted by FergieBelle at 10:25 AM on January 19, 2010
The mistake was remedied and your policy was reinstated. You have no damages, so there is nothing you can recoup.
Besides, if your plan now is a HIPAA credible plan, you'd have a problem dropping coverage and then applying for new coverage. Chances are, your new plan would not cover any pre-existing conditions for up to a year just because you decided to cancel your policy.
The best advice in insurance is: Don't cancel until you have replacement coverage in place.
posted by FergieBelle at 10:25 AM on January 19, 2010
Response by poster: Just as a data point, I am not asking for a refund because I didn't USE it, but because the policy was not IN FORCE - very, very different from your example of wanting a refund on car insurance because I didn't get into an accident. It was terminated on December 31, and has not yet been reinstated. I am endeavoring to act before it is reinstated. As of this moment, neither of us has health insurance.
However, FergieBelle, on consideration you are right that I could not drop my husband's coverage and reapply immediately, as our open enrollment period is not until November, so it does occur to me that I could not re-add him to my plan. Thanks for the reminder of that!
posted by bunnycup at 10:33 AM on January 19, 2010
However, FergieBelle, on consideration you are right that I could not drop my husband's coverage and reapply immediately, as our open enrollment period is not until November, so it does occur to me that I could not re-add him to my plan. Thanks for the reminder of that!
posted by bunnycup at 10:33 AM on January 19, 2010
I think you're frustrated because you're tangling up two (or more) completely separate problems.
The primary problem seems to be that you can't afford your husband's health insurance. You've felt for a long time that you can't afford it, but haven't changed to more affordable coverage. Money has been getting tighter, but you've been indecisive about what to do about it.
Now comes this hiccup in your existing insurance. This is insurance you chose to buy. The hiccup didn't cost you anything more than you knew it would when you signed up for it. This is a separate problem which has not harmed you. Since the hiccup has been cured, nothing of substance is different from the way you agreed it would be when you signed your husband up on the 5-star insurance plan.
You seem to be hoping to exploit the second problem as a way of easing the first problem. That strikes me as a kind of a silly expectation. I see the claim you're making -- that you would have hesitated to use medical services had you needed them while the insurance was inactive. But from what you wrote, that sounds like an entirely hypothetical harm. I can't see that you're owed anything.
My suggestion is that you look into what you need to do to switch your husband into a plan you can afford, and also politely press for an explanation of the lapse in premium payments. If your employer's cash flow is so tenuous that it's having difficulty paying the health insurance bill, you might want to polish your resume.
You sound really frustrated with your financial circumstance, and I sympathize with that. But I think you're trying to place blame where it doesn't belong, and seeking relief where it won't be found.
posted by jon1270 at 10:44 AM on January 19, 2010 [1 favorite]
The primary problem seems to be that you can't afford your husband's health insurance. You've felt for a long time that you can't afford it, but haven't changed to more affordable coverage. Money has been getting tighter, but you've been indecisive about what to do about it.
Now comes this hiccup in your existing insurance. This is insurance you chose to buy. The hiccup didn't cost you anything more than you knew it would when you signed up for it. This is a separate problem which has not harmed you. Since the hiccup has been cured, nothing of substance is different from the way you agreed it would be when you signed your husband up on the 5-star insurance plan.
You seem to be hoping to exploit the second problem as a way of easing the first problem. That strikes me as a kind of a silly expectation. I see the claim you're making -- that you would have hesitated to use medical services had you needed them while the insurance was inactive. But from what you wrote, that sounds like an entirely hypothetical harm. I can't see that you're owed anything.
My suggestion is that you look into what you need to do to switch your husband into a plan you can afford, and also politely press for an explanation of the lapse in premium payments. If your employer's cash flow is so tenuous that it's having difficulty paying the health insurance bill, you might want to polish your resume.
You sound really frustrated with your financial circumstance, and I sympathize with that. But I think you're trying to place blame where it doesn't belong, and seeking relief where it won't be found.
posted by jon1270 at 10:44 AM on January 19, 2010 [1 favorite]
Response by poster: Jon1270, thanks for your input. I'm not totally sure I agree with it, but thank you. My view is that if I pay for a subscription to a magazine, and it never arrives - I get a refund. If I buy a computer through the mail and it never comes, I get a refund. If I pay for health insurance and then don't receive it, I should get a refund.
Yes, I am definitely hoping to exploit the problem, and use it to my advantage. Wouldn't you, if you paid $900 in consideration for a contract under which the other party didn't provide the promised service?
It's not so much a blame issue as a "Hey, United Healthcare, I paid you $900 this month and you haven't provided coverage. Before you backdate coverage and pretend you provided it, let me just cancel and get my money back" I agree it would be too late to do this after coverage was reinstated, but we'll see. Frankly the replacement plan is also through United Healthcare, so I am wondering if my great employee benefits manager can make something work. Ohh, she just emailed me back!
posted by bunnycup at 10:51 AM on January 19, 2010
Yes, I am definitely hoping to exploit the problem, and use it to my advantage. Wouldn't you, if you paid $900 in consideration for a contract under which the other party didn't provide the promised service?
It's not so much a blame issue as a "Hey, United Healthcare, I paid you $900 this month and you haven't provided coverage. Before you backdate coverage and pretend you provided it, let me just cancel and get my money back" I agree it would be too late to do this after coverage was reinstated, but we'll see. Frankly the replacement plan is also through United Healthcare, so I am wondering if my great employee benefits manager can make something work. Ohh, she just emailed me back!
posted by bunnycup at 10:51 AM on January 19, 2010
I would guess, although not sure, that once reinstated your policy will have been in force for the period in question. Check to make sure that is true.
Meaning, once reinstated, if you have a claim for that period it will be covered. If I'm right, you actually were/are covered for that period once the reinstatement is official. So, you seem to have no issue or damages financial or otherwise.
posted by qwip at 10:54 AM on January 19, 2010
Meaning, once reinstated, if you have a claim for that period it will be covered. If I'm right, you actually were/are covered for that period once the reinstatement is official. So, you seem to have no issue or damages financial or otherwise.
posted by qwip at 10:54 AM on January 19, 2010
There is no way your employer will reimburse you for the days in which you were "not covered" because there were no such days.
This sort of billing & payment snafu happens occasionally; if you had spoken with your employer when you received the termination notice they would probably have explained that the January payment would be made within the insurance company's reinstatement grace period and that your coverage would not have any gaps.
And on preview:
As of this moment, neither of us has health insurance.
That is true on paper... sort of. Your employer is paying all of the January premium because the insurance company intends to cover all of January's claims. Nobody (except for you) is under the impression that you cannot go to the doctor and be covered. If you were hit by a bus today you would be covered even though the paperwork is still being processed. That's how grace periods work; it may suck for you financially, but it's the only option.
posted by stefanie at 10:54 AM on January 19, 2010
This sort of billing & payment snafu happens occasionally; if you had spoken with your employer when you received the termination notice they would probably have explained that the January payment would be made within the insurance company's reinstatement grace period and that your coverage would not have any gaps.
And on preview:
As of this moment, neither of us has health insurance.
That is true on paper... sort of. Your employer is paying all of the January premium because the insurance company intends to cover all of January's claims. Nobody (except for you) is under the impression that you cannot go to the doctor and be covered. If you were hit by a bus today you would be covered even though the paperwork is still being processed. That's how grace periods work; it may suck for you financially, but it's the only option.
posted by stefanie at 10:54 AM on January 19, 2010
Response by poster: As a way of restating my question here, hypothetically, if I simply cancelled the coverage BEFORE it was reinstated, such that I paid the monthly premium in full but coverage was never provided (i.e. not through backdating, not at all.), would I be entitled to a refund? My gut tells me yes, but that once coverage is provided on paper through backdating, I would not be.
posted by bunnycup at 10:54 AM on January 19, 2010
posted by bunnycup at 10:54 AM on January 19, 2010
Response by poster: That's how grace periods work; it may suck for you financially, but it's the only option.
Is that a late-premium grace period, or the lapse in coverage grace period? It looks like for a certain number of days after termination of a policy (120 in CT and 63 in PA, our state of residence which would govern an individual plan), we are immune from pre-existing coverage clauses, treated as if there was continuous coverage.
(Sorry so many questions, even though I have a life insurance license, I'm not well versed on health insurance, and don't have a lot of sources of advice. Answers so far have been incredibly helpful.)
posted by bunnycup at 11:05 AM on January 19, 2010
Is that a late-premium grace period, or the lapse in coverage grace period? It looks like for a certain number of days after termination of a policy (120 in CT and 63 in PA, our state of residence which would govern an individual plan), we are immune from pre-existing coverage clauses, treated as if there was continuous coverage.
(Sorry so many questions, even though I have a life insurance license, I'm not well versed on health insurance, and don't have a lot of sources of advice. Answers so far have been incredibly helpful.)
posted by bunnycup at 11:05 AM on January 19, 2010
I think people have provided good conceptual explanations as to why you aren't entitled to get out of your election here. Additionally, I would bet that Connecticut law (and/or a provision in the group contract) provides for the situation you are currently in. I can't say, because I don't know much about Connecticut insurance law and I haven't seen the group contract, but it is likely that the employer has a certain grace period to pay back premiums to the carrier without causing a lapse in coverage, which is why, in addition to the fact that if you had seen a doctor your claims would be eventually paid, that you really haven't experienced a loss of coverage. What you are trying to get around is a (probable) rule that would exist for your protection.
Someone pointed out that you haven't (really) been harmed. To illustrate the point and take it a step further (I know you don't mention wanting to sue or anything) I don't think many lawyers would take your case based on the claimed harm of your avoiding going to the doctor unless something bad happened to your health because of it.
posted by Pax at 11:14 AM on January 19, 2010
Someone pointed out that you haven't (really) been harmed. To illustrate the point and take it a step further (I know you don't mention wanting to sue or anything) I don't think many lawyers would take your case based on the claimed harm of your avoiding going to the doctor unless something bad happened to your health because of it.
posted by Pax at 11:14 AM on January 19, 2010
Wouldn't you, if you paid $900 in consideration for a contract under which the other party didn't provide the promised service?
From what I can tell, what actually happened was that your employer withheld the premium from your paycheck, but failed to forward it to the insurance company. The insurance company declined to provide a service for which it was NOT paid. Your beef is not with the insurance company; it's with your employer, which failed to pay it's bill on time but nevertheless paid it within a grace period allowed it by PA law and/or its contract. To the extent that you were harmed hypothetically, you were harmed by your employer. You were not actually harmed at all. How much time and goodwill do you want to waste by trying to get your employer to compensate you for a hypothetical harm?
To your Wouldn't you question: no, I wouldn't; at least not after I came to my senses. I might briefly fantasize about it, but I think I would give up the idea pretty quickly.
posted by jon1270 at 11:17 AM on January 19, 2010
From what I can tell, what actually happened was that your employer withheld the premium from your paycheck, but failed to forward it to the insurance company. The insurance company declined to provide a service for which it was NOT paid. Your beef is not with the insurance company; it's with your employer, which failed to pay it's bill on time but nevertheless paid it within a grace period allowed it by PA law and/or its contract. To the extent that you were harmed hypothetically, you were harmed by your employer. You were not actually harmed at all. How much time and goodwill do you want to waste by trying to get your employer to compensate you for a hypothetical harm?
To your Wouldn't you question: no, I wouldn't; at least not after I came to my senses. I might briefly fantasize about it, but I think I would give up the idea pretty quickly.
posted by jon1270 at 11:17 AM on January 19, 2010
Oops, what stefanie said. She's talking about the grace period for premium payment from the plan sponsor (employer) to the issuer.
posted by Pax at 11:17 AM on January 19, 2010
posted by Pax at 11:17 AM on January 19, 2010
Response by poster: I just got off the phone with our group broker. She said that she can and, if I send in the form anytime between now and the end of the month, will, retroactively terminate him back to January 1 (assuming no use of the insurance), and refund any premiums I have paid, and that as long as he is on a new policy within 63 days of the termination date of January 1, the grace period will be used and pre-existing condition exclusions will not apply.
She said the only reason she would recommend against doing this is if there will be a forward going lapse in coverage and the fear that say, the day after termination, he gets in a car accident. She said if I wait and term on Jan 30 retroactive to Jan 1 and have the new policy start Feb 1, that would be the best way to do it.
posted by bunnycup at 11:42 AM on January 19, 2010
She said the only reason she would recommend against doing this is if there will be a forward going lapse in coverage and the fear that say, the day after termination, he gets in a car accident. She said if I wait and term on Jan 30 retroactive to Jan 1 and have the new policy start Feb 1, that would be the best way to do it.
posted by bunnycup at 11:42 AM on January 19, 2010
Here's a more detailed example of how this works:
If your employer had decided (for whatever reason) that they were going to stop paying Oxford forever, then the letter you received would have been totally accurate in saying that your last coverage date was December 31.
What usually happens, though, is that someone screws up and the January payment isn't made on time. These premiums are due in advance, so January's payment should be made before December 31. Your company's payment wasn't received by January 5 (I'm guessing), which is WAY late in insurance company terms, so on January 6, Oxford sends out the "Oh, fine, then. I guess you don't want to be our customer" letter.
Your company then calls and explains that they don't want to cancel, so Oxford says, "Fine. Pay us by January X and fill out this paperwork and we'll pretend this never happened. Disregard that letter we sent to all of your employees"
Unfortunately there's confusion for you in that the letter is basically only accurate if you guys were really terminating coverage or weren't going to pay by the end of January. The letter probably should have said "terminated on December 31 unless payment and reinstatement request received by X day in January" but that's a level of customer service that I don't expect from an insurance company.
Also on preview: I think the option your broker laid out is possible for dependents in any month and is separate from the January payment/termination issue. If you're pressed for time to find a new policy it may be possible to do this in February or later. It's been a while since I dealt with that so definitely double-check with your broker, but it might give you a little bit of breathing room to get your plans settled.
posted by stefanie at 12:01 PM on January 19, 2010
If your employer had decided (for whatever reason) that they were going to stop paying Oxford forever, then the letter you received would have been totally accurate in saying that your last coverage date was December 31.
What usually happens, though, is that someone screws up and the January payment isn't made on time. These premiums are due in advance, so January's payment should be made before December 31. Your company's payment wasn't received by January 5 (I'm guessing), which is WAY late in insurance company terms, so on January 6, Oxford sends out the "Oh, fine, then. I guess you don't want to be our customer" letter.
Your company then calls and explains that they don't want to cancel, so Oxford says, "Fine. Pay us by January X and fill out this paperwork and we'll pretend this never happened. Disregard that letter we sent to all of your employees"
Unfortunately there's confusion for you in that the letter is basically only accurate if you guys were really terminating coverage or weren't going to pay by the end of January. The letter probably should have said "terminated on December 31 unless payment and reinstatement request received by X day in January" but that's a level of customer service that I don't expect from an insurance company.
Also on preview: I think the option your broker laid out is possible for dependents in any month and is separate from the January payment/termination issue. If you're pressed for time to find a new policy it may be possible to do this in February or later. It's been a while since I dealt with that so definitely double-check with your broker, but it might give you a little bit of breathing room to get your plans settled.
posted by stefanie at 12:01 PM on January 19, 2010
Response by poster: Also on preview: I think the option your broker laid out is possible for dependents in any month and is separate from the January payment/termination issue. If you're pressed for time to find a new policy it may be possible to do this in February or later.
This is definitely correct. Resolution is what I wanted, but is not given in particular because of the triggering problem. Nevertheless, it achieves what I wanted and is a major, major help. Our broker was very clear that they would have to complete reinstatement, and then do termination. The method does not matter as much to me as the result, which is that I can get a refund of January's premium and switch to a cheaper plan. I had no idea this was an option for dependent coverage at all.
Thanks, all, for insight!
posted by bunnycup at 12:09 PM on January 19, 2010
This is definitely correct. Resolution is what I wanted, but is not given in particular because of the triggering problem. Nevertheless, it achieves what I wanted and is a major, major help. Our broker was very clear that they would have to complete reinstatement, and then do termination. The method does not matter as much to me as the result, which is that I can get a refund of January's premium and switch to a cheaper plan. I had no idea this was an option for dependent coverage at all.
Thanks, all, for insight!
posted by bunnycup at 12:09 PM on January 19, 2010
I don't think you are protected by law. As someone who closely follows the industry, I know that each state has a set of insurance regulations that regulate exactly what insurance companies are allowed to do. In some states, you're protected from such "lapses" in coverage for a specific number of days. Thank God we have health reform, because many of these things will become obsolete once it's enacted. Unfortunately, Health Reform won't really go into effect until 2014.
The crux of the matter is this: Are you legally protected from losing your coverage due to an employer's carelessness. I don't believe you are, personally. I've looked high and low for such protection at the Connecticut insurance department, and have also checked with various websites. The page listing CT health insurance laws here doesn't seem to include it in its section on state regulations.
I didn't really have time to go through each law, line by line, but if you do then you might find the Connecticut state government's listing of laws related to health coverage helpful. You can find it here: http://www.cga.ct.gov/2009/pub/chap700c.htm
posted by AliaCamu at 10:19 AM on May 19, 2010
The crux of the matter is this: Are you legally protected from losing your coverage due to an employer's carelessness. I don't believe you are, personally. I've looked high and low for such protection at the Connecticut insurance department, and have also checked with various websites. The page listing CT health insurance laws here doesn't seem to include it in its section on state regulations.
I didn't really have time to go through each law, line by line, but if you do then you might find the Connecticut state government's listing of laws related to health coverage helpful. You can find it here: http://www.cga.ct.gov/2009/pub/chap700c.htm
posted by AliaCamu at 10:19 AM on May 19, 2010
This thread is closed to new comments.
posted by domino at 10:00 AM on January 19, 2010