Filing a Claim

All the work you put into choosing the right kind of health insurance for you and your family comes to a point when you make a claim. Getting the best health care means understanding how your health plan works, what your rights are, and how to complain if you need to.

It's important to remember that this is a process. Making a claim is like any other aspect of a contract transaction. The best companies will be supportive and understanding of what you've experienced. But what you really want is to have your claim paid. This chapter will show you how you can make a claim in the most effective way.

Although state laws vary on requiring consumers to make claims within a certain time period, most insurance companies prefer that claims be ftled within 15 days, or as soon as reasonably possible. If someone's been hurt in an accident, there's been serious damage or some law has been broken, call the police first. Then call your insurance company.

Your insurance company may grant you a little extra time if, for example, you're seriously injured and notice cannot be given within the listed time period. You can usually do this by calling the insurance company directly; through your lawyer or through your insurance agent.

Of course, insurance companies want to be notified as quickly as possible. And it's true that, the sooner you file a claim, the sooner you'll get a settlement. After the insurance company receives notice of your claim, it will usually furnish claims forms within a specified number of days.

"Once something happens, you need to let us know immediately; because we may need to investigate something, like tire tracks for example, which don't stay around very long," says one spokeswoman for State Farm Insurance Companies. "Know who you were in an accident with. Get the other party's insurance information, the number on the police report and the name of the person who's insured before calling us."

Most states require insurance companies to either process a . claim, or at least tell you why it hasn't been processed, within 60 or 90 days. If it fails to do so, you may submit a written proof of the occurrence, character and extent of the loss either in the form oian official accident report or an affidavit.

If the company does send you the claims forms you can fill out a proof of loss and submit it within 90 days of the covered loss to be reimbursed. Once again, extra time is granted if it's not possible for you to respond within this time limit. But don't go over one year unless you're legally incapacitated because you may lose your opportunity to collect on a claim. Issues of incapacitation are less important than your forgetfulness and inaccuracy.

An important note: Remember to include all the associated expenses too. Most disputes over claims forms involve situations in which policyholders only include a portion of the expenses they've accrued. Then, when the insurance company only covers some of the bills, accusations start to fly.

Getting Your Claim Paid

Benefits are payable directly to you. Generally, medical insurance policies provide reimbursement for covered expenses. This means your insurance company wants you to pay your medical bills first, and then it will pay you. Traditional insurance companies would rather not get involved with doctors or hospitals at all.

Whether the benefits go to incapacitated person, the insurance company has the option of paying benefits of up to $1,000 to any relative who appears to be entitled to receive the funds.

Since your health insurance policy is a legal contract, the insurance company is obligated to pay the described benefits for all covered expenses under the policy. If your insurer doesn't live up to it's obligations, you have the right to sue them. However, no legal action may be taken against the company prior to 60 days after proof of loss has been furnished, or more than three years after the date proof of loss is required to be furnished.

For example, you submit proof of loss for hospital bills. The insurance company doesn't deny the claim, but it doesn't pay it either. You get on with your life and four years pass before you realize the insurance company never reimbursed you. At this point, you can't sue the ip.surance company because you've forfeited the right of legal action by taking too long.

While your claim is being verified, your insurance company also has the right-at its own expense, of courseto require you to submit to a physical examination. However, this typically occurs only in rare cases in which an insurance company suspects fraud.

One common error that can slow the claims process is a misstated age on your insurance application. If this occurs, any. benefits payable will be adjusted to the amount that the premium would have been, if purchased at the correct age. This item usually governs situations in which older policyholders lie about their age ih order to get cheaper premiums.

Delaying Payment Insurance companies used to settle claims more quickly than they do today. The theory was that if they settled quickly; they could do so for a smaller amount-they'd just make sure the policyholder signed a release denying any further claims related to the accident in question. But, policies have become more complicated and many insurance companies have changed their tactics. Now; many insurance companies delay payments as long as they can without inviting lawsuits.

You don't have to accept the delays, though. There are several basic principles that you should use in collecting from insurance companies:

• Analyze every part of loss for how it might be covered by your policy.
• Consider all of the claims you might make following an accident or loss. If you have health insurance or are covered under workers' comp can you make claims under these coverages?

Don't accept a .first offer-or even. a first denial-by an insurance company as the final, unequivocal word..

Insurance companies will delay or deny claims if they can. If they do, ask for an explanation for their delay or denial. In response, you should gather facts and reread your policies yourself. If you can't decipher everything in the policy, talk to your agent or-if necessary-a lawyer.

You might check the policy's excll1signs too. Exclusions identify types of losses that are not covered by the policy. They help to shape ,the coverage or narrow the scope of coverage by specifying the losses that thepolicywotit pay for.

Exclusions usually form the basis of most of the legal disputes that occur between policyholders and insurance companies. They are generally included to accomplish these four broad purposes:

• to clarify intent of coverage
• to remove coverages for losses which should be covered by other insurance
• to remove coverage for losses which result from above-average risk factors which are not anticipated in rates and premiums (usually this coverage is available at an additional charge)
• to remove coverage for catastrophic losses which are generally not insurable (although coverage may be available through special insurance pools or government programs)

Even if denial isn't your insurance company's ultimate goal, by playing the denial game, it can achieve something almost as advantageous-a lengthy delay in paying the claim. The longer an insurance company. can hold on to its mone}; the better off it is. But the la'\v, and more importantly the courts, don't give insurance companies free rein to delay fair settlements as they please.

What To Do if the Company Denies a Claim

If your insurance company denies your claim, ask why the claim was rejected. If the company's answer involves a service that isn't covered under your policy (and you're more than certain it is covered), check the claim form. It could be that the provider entered an incorrect diagnosis or procedure code. You might also want to check whether your deductible was correctly calculated or whether you didn't skip an essential part of the process. If everything still seems to be in order, you can then ask your insurance company to review the claim.

For cases like these, it often helps to keep written records of the following:

• All correspondence with the plan.
• Claims forms and copies of bills.
• Phone conversations-the date and time, the people you speak with, and the nature of each call.

If the insurance company still denies your claim or insists you take it to court for your money, don't be intimidated. Ask for the language in your policy or in state law that allows it to deny your claim. Save all paperwork and log all phone conversations with company representatives.

If what your insurance company says doesn't agree with your reading of your policy, ask your state regulator. While state insurance commissioners usually have no legal authority to force an insurance company to pay an individual claim, the commissioner can rille a company or take other punitive actions if an insurance company makes a practice of unfairly underpaying or denying claims.

Bad Faith

One way in which an insurance company can act in bad faith is by not investigating a claim with an eye toward providing coverage.

Lawsuits or regulatory complaints relating to delays or denials usually allege bad faith on the part of the insurance company. This is one of the heaviest clubs a policyholder can wield to strike back at an insurance company.

"The investigation should be geared toward paying the claim, not denial. Nine out of 10 times, however, that investigation is designed to turn something up that justifies denying the claim. Their eye should be toward protecting their policyholder, but it's not," said William Shernoff of Shernoff, Bidart & Darras, a California-based risk management consulting group.

Regulatory Reform Issues

In 1993, California Insurance Commissioner John Garamendi put in place a number of regulations to simplify the claims process. The California regulations were loosely patterned after model standards adopted in 1991 by the National Association of Insurance Commissioners. Insurance industry analysts predicted their use in California may influence other states' treatment of similar standards.

Among Garamendi's 1993 regulations:

• Within 15 days of any notice of claim, an insurance company ~ust acknowledge receiving the notice. The company must also start its investigation within 15 days of receiving a notice of claim.
• Within 40 days of receiving a notice of claim, an insurance company must affirm or deny the claim and affirm or deny liability.
• If 40 days isn't sufficient time, the company must write to the claimant and specify why more time is needed, and what further information it needs.
• A denial of a claim, in whole or part, must be accompanied by a letter that spells out the policy provisions and factors upon which the company is relying. All denials must include a notice that the company's decision can be reviewed by the Insurance Department.
• Insurance companies must disclose to their policyholders all benefits, coverage, time limits or other relevant provisions of any policy they have issued that may apply to a claim.
• Any other communication that "reasonably suggests that a response is expected," with regard to a claim not in litigation, must be responded to within 15 days of receipt.

Outpatient Services

If you have coverage for outpatient services under your plan, the plan will usually pay for 80 percent of covered outpatient services and supplies, subject to the maximum benefit amount shown in your policy's benefit schedule. You will be required to pay the other 20 percent of the charges or co-payment.

Here's a list of outpatient services. and supplies that health plans typically cover:

• x-ray and fluoroscopic examinations
• radium, and other radioactive substance
• electrocardiograms, microscopic, and laboratory tests
• drugs and medicines which may be purchased only ,on the attending physician's written prescription and which are dispensed by a licensed pharmacist
• casts, splints, braces, crutches and artificial limbs
• oxygen and equipment used for its administration

Outpatient services are covered when rendered due to injury or sickness, while coverage is in force for the insured person, and at tlJ.e direction of a physician or surgeon. These outpatient benefits' 00 not include benefits for the services of a radiologist, pathologist, anesthesiologist, physician or surgeon.

Inpatient Care

Hospital inpatient care provides you with benefits for charges a hospital makes on its own behalf. For example, room and board, nursing care, etc. Most plans limit room and board to a semi-private room rate, a maximum dollar amount per day, and a maximum number of days confinement. Benefits for miscellaneous services are also limited to a maximum dollar amount.

For example, you have inpatient coverage with benefits of $300 a day for a maximum of 365 days. You're co ed for 10 days in a private room. The hospital charges $325 a day or a private room and only $ 250 a day for a. semi-private room Your policy will only pay $2,500-the semi-private room rate for 10 days. You must pay the difference. Inpatient benefits can provide coverage for confinement for mental, emotional, or nervous disorders, alcoholism and drug dependency-but not more than 30 days in anyone policy year.

Also, you might want to check with your plan administrator to see if your policy covers extended care facility coverage, or extra hospital miscellaneous expense coverage. These coverages are optional and provide an additional amount of insurance while you are an inpatient. Hospital intensive care unit coverage may also be covered.

For example, you have an appendectomy and spend three days in a hospital. After release, the incisions become infected and you're readmitted 20 days later. For benefit purposes, both periods in the hospital related to the appendectomy are treated as a single confinement.

Who is Covered Under The Policy?

In the general agreement of your policy, the insurance company states that it relied upon the information given in the application and issued the policy because you paid the first premium. This is important because coverage applies only to each person shown in the policy schedule (which may be cross-referenced by page number). Mter the policy is in effect, any changes you make to the persons insured under the policy, coverages, or benefits must be attached to the policy and coverage will remain in force for any period in which the insurance company accepts a premium payment.

Paying Your Premium

Your first premium payment usually will be due in advance. Although the policy says that subsequent premium payments are also due in advance, you're usually allotted a grace period of 31 days after the premium due date. You can pay your premiums annually or, if acceptable to your insurance company, semi-monthly, quarterly or monthly. If you do not pay your premium on time, the insurance company may deny coverage.

Your insurance company has the right to raise your premium on each annual anniversary date to reflect the advancing age of the insured persons under your policy, increased costs of medical care, and any changes in deductibles (higher deductibles tend to reduce the premium, while lower deductibles tend to increase the premiunl).

If you move to a new residence, a premium adjustment may be made to reflect the premium rates that apply to the new location.

Excluding the above premium changes, your insurance company may change premiums only if it does so for all policies of the same type in your state. It can't change the premium for an individual policy except for changes in age, medical cost, deductibles and location.

Termination of a Policy

Your insurance company can terminate your health insurance coverage if you fail to pay a premium before the end of a grace period. It won't affect any - claims that you incurred before your coverage ended, but it will terminate your coverage on the original due date of your premium. Any claims that you make during the grace period will not be covered.

For,.example, you failed to pay your premium due February 15. On March 15, your coverage terminated for nonpayment of premium. You were hospitalized in January, submitted a timely notice of claim, and furnished proof of Joss on April 1 (within the ~O-dayreq11irement). The claim f9r the hospital expenses is covered.

How Individuals are Terminated

In some policies, your insurance may be continued only until you reach age 65-or become eligible for Medicare whichever occurs fist. Coverage will end during the month of the event on the day that coincides with the policy date.

For instance, your 65th birthday occurs on August 20 and you become eligible for Medicare on September 10. Even though your policy date is January 15, your coverage ends on August 15 (the day that matches the policy date during the month of your birthday). If you have children, their coverage usually ends when they reach age 25 (though some policies will use other ages), get married or are no longer dependent on you for coverage.

Coverage or a child will not. end if you l1ave a child that is mentally or physically handicapped, remains dependent on you, and is not eligible for Medicare. But you will. have to show proof of incapacity and dependency within 31 days of the child's 25th birthday in order to receive coverage. The :insurance company may require you to submit additional proof, but not more than once each year after the child reaches the age 27.

Whenever a policy is terminated due to the above factors, coverage usually will continue far any period in which a premium has been accepted and claims far expenses incurred prior to termination will still be covered.

Extension of Coverage

As mentioned earlier, your insurance company will usually extend your coverage if you are being treated far a continuous injury or sickness if the policy is not renewed or if coverage terminates far a reason other than nonpayment of premium. Coverage is typically extended up to' 90 days.

Another option when coverage termination due to age or eligibility for Medicare, is to convert another policy; You have to' apply for a policy your insurance company will only issue this type of policy after it receives a written application and 1?aYtnent of the first premium at least 31 days before coverage initiates.

Preexisting Conditions As we have mentioned through out the preexisting conditions are an important issue to' look into' when shopping for health insurance. Why? Limits an preexisting conditions are usually the mast common issue in health insurance coverage disputes.

Mast plans don't caver preexisting conditions during the six months following the effective date of coverage, or any disease or physical condition named or specifically described as excluded in any endorsement attached to' this policy.

Pay close attention to' any talk of specific or custom exclusions an any policy. This holds especially true if you've had any notable illness or disability in the last ten years-even if it's healed or in remission.

An example: When you applied far insurance, you disclosed that you'd been treated far a heart condition during the past two' years. If the insurance company doesn't attach a specific exclusion, you would have coverage for the heart condition-but only after a waiting period. If the heart condition is excluded, you will never have coverage for that condition, regardless of how long the policy is in effect. While some states are moving toward cost containment, others have moved in the opposite direction-stressing what they call "consumer choice."

Adding Insureds to a Policy

If you're about to have a baby, you might want to read your policy carefully and be extremely cautious about changing your insurance.

Coverage for a newborn child includes coverage for:

• congenital defects . birth abnormalities
• injury or sickness

An important note: No benefits are provided for premature birth (where no defects or abnormalities are involved) or well baby care.

If you want to add someone other than a newborn, such as, a new spouse, or adopted child, you must make an application for coverage, submit proof of insurability, and pay an additional premium.

Summary

When it comes to insurance, problems don't surface until you make a claim which is denied or underpaid. Many of the same issues that influence how much a health coverage plan costs also influence how the same plan pays claims.

The main mistake people make when they have trouble getting a claim paid is that they assume the insurance company or managed care group has more authority than it really does. Insurance companies don't have any special power over policyholders-both sides are simply parties to a contract.

That contract-the insurance policy-states how many issues will be resolved. Claims disputes are certainly one of those issues. But, within the parameters set by the contract, there is much room for negotiation and compromise. Much of the time, the insurance company or managed care group is counting on that room to work to its advantage. Mter all, it employs people who spend their days reading and enforcing insurance contracts.

But there's room in the contract for you, the policyholder, too. If you don't like the fact -or the manner in which-a claim was denied, you can press your issue. Your pressure will usually need to start within the insurance company's own appeals process. If that doesn't accomplish anything, you can resort to regulatory agencies.

The important thing~ to remember is that insurance companies are in business to make a profit. This will usually give them-despite how their employees may act-an impulse to settle disputes that they can't avoid. If your position is well-reasoned and. consistently made, you may get more satisfaction than you initially expected.