(But not for you)

How you may be giving your health insurance company money for NOT covering insurance is unethical

Frankie had health insurance. Frankie is a good family man and has had health insurance for his family with the same company for years. His youngest daughter, Amy, has diabetes and Frankie’s health insurance covers her medication.

One month, Frankie is late on a payment. He sent it in, but it just didn’t arrive in time. Frankie worried about that and called to make sure they knew it was coming. He was told that they would look for it, but would not process it if it arrived later than the due date. Frankie kept his fingers crossed. A month went by, but he never received any notices, reminders, phone calls or emails about it, so he assumed everything was okay. Then, as he’s reconciling his checkbook, he notices that his insurance check still had not been cashed. Concerned, Frankie looked through that day’s stack of mail and found a letter from his insurance company. It told him that his coverage was cancelled. He didn’t know it, but they had cancelled it the day his payment was late. They didn’t give him a grace period, they didn’t give him a courtesy call to make a payment over the phone. They just cancelled his family’s health insurance policy and didn’t tell him about it for an entire month.

Last month Frankie took the kids rock climbing. With a surprising shock, he thought, “What if one of them had gotten hurt? We wouldn’t be able to help her.”

As soon as Frankie got the cancellation notice, he called the insurance company. They told him they would reinstate him, but he has to pay for the missing month.

Yes. You read that correctly. Frankie had to pay a month of full coverage for the month that his family had no coverage. In order to get insurance for his family again, Frankie had to pay the insurance company the full amount for the month that the insurance company refused coverage.

Confused and upset, Frankie called an attorney friend. They referred him to the Department of Consumer Affairs. The Department of Consumer Affairs told him that it was no violation of the Insurance Code for an Insurance company to force a customer to pay the back premiums prior to reinstatement. If your coverage lapses, they told him, and you reinstate coverage, you must pay for the months that you were not covered.

Frankie was furious. But there was absolutely nothing at all that he could do. He took it to the highest levels of the governing body itself and was turned away. In order to get health insurance for his family again, Frankie had to give his insurance company Two payments of $547… one for the current month and one for last month when he didn’t have any coverage. $547 for not being covered. That’s like paying for a month of electricity when the power was out the whole time.

This is a story that has been heard all over the country for years. Brokers and agents all know about it. The Department of Insurance Consumer Affairs (who is supposed to be protecting the consumer) even condones it! Apparently it is legal and acceptable to charge a customer Back Premiums for coverage that was never provided before any agency will reinstate that customer’s insurance.

I believe that being covered by health insurance is a good thing. And I’m glad our government is trying to fix the problems that plague our health care system.
But being FORCED to have health insurance, and being FORCED to pay for months you aren’t covered is not what I call “fixing it”. It is completely and utterly wrong.

Now… how do we make this right?


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