By Steven R. Maher
Health insurance is a big issue when switching jobs. The story of Mike is instructive when dealing with insurance companies.
Mike (not his real name) started a new job in September 2007, moving from a large corporation to a larger corporation, both companies having the same health insurer. In his early fifties, Mike was in good health except for soreness in the arms brought on by aggressive weight lifting, which had been diagnosed prior to starting his new job. Mike started physical therapy for this condition shortly after his new employer’s health insurance kicked in. It was then that Mike received the letter.
The letter was from the new insurance provider saying they needed more information pre-existing conditions, and that there were forms that needed to be signed. As Mike read further, his spirits faltered. The letter read:
• ”Your plan includes a pre-existing condition exclusion. This means that if you had a medical condition before coming to our plan, you may have to wait a certain of period of time before the plan will provide coverage for that condition. This exclusion applies only to conditions for which medical advice, diagnosis, care or treatment was recommended or received within a three month period. Generally, this period ends the day before the coverage of your new plan becomes effective…The pre-existing exclusion does not apply to pregnancy or a child who is enrolled in the plan within 30 days after birth, adoption or placement for adoption.
• “This exclusion may last up to twelve months (18 months if you are a late enrollee) from your first day if coverage or, if applicable, from the first day of your waiting period. However, you can reduce the length of this exclusion period based on the length of your prior ‘creditable coverage.’ Most prior health care coverage is considered creditable coverage and can be used to reduce the pre-existing condition exclusion if you have not experienced a break in coverage of at least 63 days.
• “To reduce the 12 month (or 18 month) exclusion period, mail us a copy of your certificate of creditable coverage from your previous health benefit plan. If you do not have a certificate, but you did have prior coverage, we will help you obtain a certificate from your previous plan. There are also other ways to show creditable coverage. Please contact us if you need help demonstrating creditable coverage.”
Crestfallen, Mike read to the end of the letter, which asked him to identify all medical personnel who had treated him in the past three months. There was an authorization form he was asked to sign, which read: “On behalf of me and anyone enrolled in or added to this application (“us”), I authorize any physician, health care professional, or entity to give the health plan, insurer, my employer, or any other designees, any and all records or information pertaining to medical history or services provided to us for any administrative purpose, including evaluation of an application or claim.”
“I don’t know which made me feel worse, the fact that expensive physical therapy might not be covered for twelve months, or that my medical records for the past fifty years could be turned over to my new employer,” commented Mike. “To make it worse, I got this on a Friday, so I had to spend a whole weekend worrying about this before I could call the insurance company.”
Mike searched his records and found the “certificate of creditable coverage” from his previous health benefit plan. “It was from the same insurer who now wanted me to disclose my records,” said a perplexed Mike. “That struck me as strange.”
Consulted a lawyer
Mike also consulted a lawyer. The attorney went on the Internet and called up the database of Massachusetts law, which is available free of charge on the state’s web site, and typed in as a search phrase “pre-existing condition exclusion”. Up on the screen popped the “Portability of Health Insurance Act”. The salient points:
• The key phrase for Mike read: “The waiting period [during which pre-existing conditions are not covered] may only apply to services which the new plan covers, but which were not covered under the old plan.” Since Mike’s physical therapy was covered under the old plan, it could not be excluded as a pre-existing condition under the new plan.
• The law said the waiting period for excluding pre-existing conditions could not be longer than six months, not the twelve months Mike’s insurer said.
• The “Portability of Health Insurance Act” specified that emergency services had to be covered by the new plan regardless of any waiting period.
Next, the lawyer turned to the authorization form asking Mike to release all his medical records.
A search turned up the Massachusetts Information and Privacy Protection Act. This law strictly limited the time period for which such authorization forms can be in effect; limits to whom information can be disclosed; and most important of all, requires the authorization form to specify “the purposes for which the information is collected.” Mike’s lawyer opined that the authorization form was of questionable legality.
“I called the insurance company on Monday expecting a battle,” said Mike. “As soon as I brought up that I had the ‘certificate of creditable coverage’ from my prior health care provider, the representative told me to fax them that and the letter I got on Friday, prefaced by a cover letter. I was told I didn’t have to sign any forms, especially the disclosure form on my medical records. I didn’t identify my doctor or other medical providers.”
A week later Mike’s new insurer received and paid a hefty bill from Mike’s physical therapist.
This episode provides many lessons. First, save all communications from your insurance company, particularly when changing plans. Second, don’t be afraid to question authority. If Mike had meekly accepted what his insurance company was telling him, he likely would have paid thousands of dollars for physical therapy and his new employer would have all of his medical records. Third, consult with a human resources professional or attorney before signing away your rights.