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What Missourian's with Disabilities Need to Know About Insurance

Contents

Issues in Medical Insurance

How To Use Your Rights

How To Get More Help

Introduction

The purchase of insurance is a prudent investment against the unforeseeable. The primary reason that people obtain insurance is to financially protect themselves in the event of, for example, a fire, automobile accident or medical emergency. In some instances, such as when taking a home mortgage or obtaining a driver's license, providing proof of insurance is a requirement.

The need for insurance among people with disabilities is no different then it is in the rest of the population. After all, people with disabilities drive cars, own homes and want to assure they will be protected in the case of a hospital stay. But people with disabilities often have difficulty even obtaining insurance coverage. Among those who do have insurance, they experience a higher rate of claim denials, larger premiums, more cancellations and more refusals to renew policies than the general population. While these problems are most frequently experienced within the area of health insurance, people with disabilities also experience them in relation to their homeowners, renters, automobile and other insurance coverages. Under Missouri law, such actions may constitute illegal discrimination ( 375.930 RSMO).

This booklet is designed to aid Missourians with disabilities in understanding what protections they have once they purchase insurance, or when they try and are denied for reasons they find questionable. In some instances, the actions of insurers may constitute outright discrimination. In others, while the insurer's actions may not be illegal, their erroneous assumptions and misunderstandings about people with disabilities have negatively affected their interpretation or writing of a policy. Therefore, this booklet is also intended to be a useful resource for people in the insurance business, a guide to help them make the proper determinations about people with disabilities and their insurance coverage.

The rest of this booklet is designed to answer such questions as:

The above questions are basic issues that apply to all forms of insurance. Medical insurance, though, has several unique nuances and, thus, deserve individual attention. As a result, a separate section outlining some of the issues found within medical insurance has been added to this booklet. Among the questions addressed are:

The Basics

How Is The Term "Disability" Defined?

Disability is commonly defined as a physical or mental impairment that substantially limits one or more of a person's major life activities. This is the definition cited in the Americans with Disabilities Act (ADA) of 1990. If an individual has difficulty performing a major life activity, or combination of activities, such as walking, breathing, seeing, performing manual tasks, working, learning or hearing, they may be considered disabled. In Missouri, it is estimated that nearly 720,000 individuals have some type of mental or physical condition that would qualify them as disabled. Put another way, one in every seven Missourians has a disability.

What Protection Does The Law Give A Missourian With A Disability Who Is Covered By An Insurance Company?

When a Missourian with a mental, physical or functional impairment has obtained, or is seeking to obtain, insurance through an insurance company, they are protected by Missouri Insurance law against unfair discrimination based on disability. The Missouri Insurance Code (section 375.936) prohibits insurance companies from denying, limiting, refusing to renew, or charging more for coverage because of a disability. This means an insurance company cannot legally deny or limit your coverage, charge more for it, or refuse to renew it, if they cannot prove that you present a higher risk than other consumers they insure.

Are There Instances In Which My Disability Will Prevent Me From Getting Insurance?

The same piece of legislation cited above does enable insurance companies to exclude persons with disabilities from coverage if they can prove their refusal, limitations or higher rates were "based on sound actuarial principles, or is related to actual or reasonably anticipated experience." In other words, the insurance company has determined an individual to be a higher "risk" to make a claim on the policy then would other consumers for whom a policy has been written.

How Does The Company Decide I Am A Higher "Risk?"

Insurance companies evaluate a number of risk factors such as age, occupation, driving record, home location or recent medical history in determining whether or not to provide an individual with insurance. This information is contrasted against people in similar situations. This practice is known as "underwriting." When a person's level of "risk" for a claim falls within the guidelines of the insurer, a policy is written. If a company can establish that there is a high probability or "risk," that an individual will file a claim under the policy, then they deny a policy. The following examples illustrate this concept:

If............ I recently had cancer.
And........ I am trying to get a health insurance policy.
But......... Statistics may show I'm a higher risk for a claim.
Result.... I may not be able to get a policy, or I may have to pay more, or get limited coverage.
   
If............ I have a non-correctable vision impairment.
And........ I am seeking an auto policy.
But......... My functional impairments make me a greater risk as a driver.
Result.... I may not be able to get coverage as a driver, or I may have to have someone else drive my car in order to get coverage.

Keep in mind that if the company denies or limits coverage, they must do so based on ample evidence that you will be higher risk than other individuals for whom they write policies. You should request from the company the evidence they used in establishing that you are a higher "risk." Such evidence must be hard data based on real facts, not assumptions. The following examples highlight instances in which a person's disability should not make them a higher "risk" than other individuals.

If............ I have an artificial limb, but no other health problems.
And........ I am looking for a health insurance policy.
But......... I am not a greater risk to make a health insurance claim.
Result.... I should get the same consideration for a policy as anyone else.
   
If............ I am deaf.
And........ I am seeking a policy on my home.
But......... I am not a greater risk to make a health insurance claim.
Result.... I should be judged on my home, not my disability, and have the same consideration as a person without a disability.
   
If............ I am a paraplegic and use hand controls to drive.
And........ I am seeking an auto policy.
But......... I am not a greater risk as a driver.
Result.... I should be evaluated on my driving record, not my disability; the same as any other person.

If your disability does not increase your chance of a claim, your ability to purchase insurance should not be affected.

Issues in Medical Insurance

Background

Of the various forms of insurance, medical insurance has been perhaps the most difficult one for persons with disabilities to obtain and retain. A number of reasons exist for why this area of insurance has been so problematic for persons with disabilities. By far, the leading reason people with disabilities are denied medical insurance is because they posses a pre-existing condition. An additional factor is that many insurers believe that people with disabilities will experience higher rates of medical need, thus being less cost effective to insure.

There are two basic types of health insurance: group and individual. Group health insurance provides benefits to a defined group of individuals who are eligible via their association with a particular organization (i.e., employer, labor union, professional or fraternal organization). Employers who offer group health do so either by contracting with an insurance company or through self-funded plans. Employers who offer group health plans via a contract with an insurance company provide a specific combination of benefits to all members of the organization. These may be offered in the form of an HMO, PPO or other option. Rather than purchasing insurance from a company, a self-funded employer pays insurance benefits either from current revenues or a trust fund for any of a range of health service options.

Individual health insurance policies (sometimes called personal or family policies) are sold, either by agents or insurance companies, to individuals and families. The individual owns the policy and pays directly for their coverage. Premiums for such policies, which are usually based on individual characteristics such as age, health status or occupation, are generally higher since the pool of individuals covered is less, thus increasing the insurer's risk. In addition, such policies tend to impose more limitation on coverage.

The Health Insurance Portability And Accountability Act Of 1996

The 104th Congress's passage of the Health Insurance Portability and Accountability Act of 1996 (a.k.a...Kassebaum-Kennedy) is considered by many to be the most sweeping change in this country's system of medical insurance in the last 30 years. Unfortunately, the Act does not solve the array of health insurance problems facing people with and without disabilities. It does, however, offer new protections for people in the job market.

This legislation, implementation of which began on July 1st of 1997, is designed to insure that people moving from one job to another or from employment to unemployment are not denied health insurance because of a pre-existing condition. In addition, it reduces the pre-existing condition waiting period imposed by employers on new hires who have a pre-existing condition. The Act reduces this waiting period by allowing employees to apply prior coverage (including Medicaid) against the waiting period, thus greatly reducing, and in some cases eliminating, the pre-existing condition waiting period.

What Are Pre-existing Conditions?

A simple definition of pre-existing condition is a condition in which a prudent person would be expected to, or did, seek medical advice or treatment. In instances of employment based coverage, the Health Insurance Portability and Accountability Act defines a pre-existing condition as: a condition for which medical advice, care, diagnosis or treatment was recommended or received within the previous six months. Examples of pre-existing conditions include diabetes, heart problems, cerebral palsy and multiple sclerosis. Individuals must disclose any pre-existing conditions when they apply for insurance. Failure to do so could jeopardize future claims or the policy itself.

How Are Pre-existing Conditions Addressed Under The Health Insurance Portability and Accountability Act?

Within the Act, the concept of "creditable coverage" is introduced. In essence, individuals who have had insurance coverage (including Medicaid) are given "credit" for this coverage. Traditionally, employers have implemented an exclusion or limitation period on new hires with a pre-existing condition. The Act changes this practice by allowing employees to apply prior creditable coverage against their exclusion or waiting period, thus greatly reducing and in some cases eliminating an exclusion or waiting period. If you move from one group plan to another group plan, the new group plan must reduce any exclusion or waiting period based on a preexisting condition by one month for every month that you had creditable coverage under a previous plan, provided that you enroll when first eligible and had no break in previous coverage greater than 62 days. Once a 12-month limitation period is met, no new limitation may ever be imposed on you as long as you maintain continuous coverage, even if you change jobs or health plans.

As example, if you have six months of prior creditable coverage (including Medicaid) you could face a maximum exclusion or limitation period of six months. Employees who have not achieved any creditable coverage, though, can be subjected to an exclusion or waiting period of up to 12 months. It can not, however, exceed 12-months unless an employee enrolls in the plan late, in which case the limitation can last up to 18 months.

Creditable coverage is determined based on the provision of a certificate by an individual's former employer. The certificate will be required to state the amount of creditable coverage the employee received and whether they were subjected to any waiting period under the prior insurance plan. A preexisting condition limitation period, it should be noted, should not be confused with the common employment practice of establishing a waiting period before new employees are eligible for employer-sponsored health insurance. New employee waiting periods and pre-existing condition limitation periods, however, must run concurrently.

Out of Fear of Losing My Medical Insurance, I Have Been Afraid To Change Jobs. How Has The Law Affected This Dilemma?

For years, thousands of families have encountered the unfortunate situation of having to stay in a job out of fear of not being able to obtain medical insurance coverage for themselves, for a child or for a spouse. This experience is often referred to as "job lock." The Act essentially ends this dilemma. If you meet the criteria for creditable coverage, you cannot be denied eligibility to the plan based on any of the following conditions:

  1. Health Status
  2. Medical Conditions (physical or mental)
  3. Claims Experience
  4. Receipt of Health Care
  5. Medical History
  6. Genetic Information
  7. Evidence of Insurability
  8. Disability

Should an individual become ill or begin consuming significant amounts of medical care, their employer cannot drop them or fail to re-enroll them in the plan. Individuals cannot be excluded based on factors related to health status.

It is important to keep in mind that while many employers offer their employees the opportunity to insure their spouse and/or children under the employers' group plan, this is not always the case. Medical insurance is a benefit of employment, not a requirement of the employer.

Does "Portability" in the Law's Title Mean That If I Change Jobs, I Can Take My Current Insurance Coverage With Me?

No, taking a specific health insurance policy from one job to another is not a provision of the law. The "portability" component of the act refers to being able to maintain coverage and being given credit for having been insured when changing health plans.

What If I Leave My Job For Self-Employment?

If you decide to leave your employer in favor of self-employment, insurance options are still available. Upon termination of employment, if you decided to purchase an individual policy, the Act requires that insurance companies who sell individual policies do so to anyone who has had 18 months of prior creditable coverage. An individual must use up any COBRA coverage that they may have, but the individual is responsible for the full payment of the policy.

Will My Newborn Child Be Covered?

If you give birth or adopt a child while covered by a group health insurance plan, the child should be covered as long as they are added to the plan within thirty (30) days. If the child is born with a pre-existing condition, they can still be covered as long as the policy-holder has had continuous coverage. Individuals are highly encouraged to review their policy since in some instances employers and/or insurance companies require notification about a newborn child prior to birth. Also keep in mind that employers are not required to provide insurance coverage for children and/or spouses.

I Work For A Small Employer Who Has Had Trouble Getting Insurance. Does the Act Improve Our Insurance Options?

Under the Act, insurance companies who offer policies in the small group market (2-50 employees) must accept any small employer who applies for coverage. This provision may open the market for families who work in businesses that have had difficulty getting insurance. Furthermore, insurance companies must continue to provide coverage to any group that requests renewal, regardless of the health status of the group.

Will The Act Help Me If I Am Currently Uninsured Or Work Part-time?

Most individuals entering, currently in, or leaving the job market will be assisted by this Act. This may help reduce the number of individuals who have no medical insurance, currently around 40 million. However, for those individuals who are not in the job market and are presently uninsured, the Act will do little. Part-time, seasonal and temporary workers may also be excluded from the Act's benefits.

Does The Act Help Individuals With A History of Mental Illness Or A Need For Mental Health Services?

The Act prohibits group health insurers and employers who offer health coverage from establishing rules for eligibility based on a medical condition, including mental illness. However, it does not address the issue of parity between lifetime coverage for mental illness and lifetime coverage for physical illness. Traditionally, plans have set far lower lifetime coverage amounts for mental illness than they have for physical illness. The same session of congress passed a subsequent law that balances the lifetime coverage amounts for mental illness with those of physical illness. Under P.L. 104-204, a group health plan must provide for parity in the imposition of aggregate lifetime limits and annual limits on mental health services with those of physical health. The requirements, though, are not effective until, at the earliest, January 1, 1998 and will not apply to plans with 50 employees or less.

How to Use Your Rights

Numerous consumer protections have been established to assist individuals who feel they have been discriminated against based on their disability. Additional protections are provided to help individuals redress claims that have been denied by their insurance carrier. How effective these protections are is based partially on how well individuals understand their insurance and document contact with their carrier. A few common sense practices can help:

How Do I Recognize Discriminatory Practices?

Because you have little information about how policyholders or applicants with disabilities are being treated by a company, it may not be easy for you to know when you have been discriminated against. Some of the following practices may alert you to discrimination because of your disability:

If you do suspect discrimination, talk to your company and your agent. Ask for a written explanation of why your policy is being denied, canceled, non-renewed or rated, and what the company is using as a justification. Make sure you ask both the company and the agent for a written explanation of the reasons for the action you think is discriminatory. Compare the agent's response with the company's to see if you are getting a consistent response.

What Should I Do If I Think I Have Experienced Discrimination?

File a complaint . . . If you think an insurance company has treated you unfairly, or you cannot get answers to your questions, you have the right to file a complaint with the Missouri Department of Insurance Consumer Affairs Division at the following address:

Missouri Department of Insurance
Consumer Affairs
Post Office Box 690
Jefferson City, Missouri 65102

Be sure to include the insurance company's full name and your policy number, if any. You can order a complaint form by calling:

Statewide - (800) 726-7390
St. Louis - (314) 340-6831 or (314) 340-6832
Kansas City - (816) 889-2381

Seek Legal Advice . . . Some private practice attorneys specialize in insurance issues. Inexpensive or free legal assistance may be available through local or government- sponsored programs. Missouri Protection and Advocacy Services may also be able to assist if your case falls under their priority areas. When considering taking legal action, proceed prudently. Legal action against an insurance company should only be considered if all other methods of resolving the dilemma have been exhausted.

File an ADA Complaint . . . You can file a complaint under the Americans with Disabilities Act for insurance issues subject to federal laws and regulations. You can obtain more information by contacting the ADA Technical Assistance Center in your area, the nearest office of the Department of Justice, or the Equal Employment Opportunity Commission.

File a complaint with the Missouri Commission on Human Rights . . . The Human Rights Commission provides legal and regulatory help to persons with disabilities on employment matters including matters which involve employment related benefits.

Contact other organizations who might be able to help . . . The last section of this booklet provides a list of possible organizations which might be of help.

What Should I Do If A Claim Is Denied?

Regardless of whether you suspect discrimination, it is likely that you will experience a denied claim at some time. Within medical insurance, some common reasons for denial are because the company deems a treatment to be "not medically necessary," "experimental," or "custodial in nature." Always make sure you ask for an explanation in writing.

Always consider appealing and/or making a complaint if a claim you feel is valid has been denied. Using the grievance and appeals policy assumes that your complaint will be heard by the appropriate management of the carrier. If you are still dissatisfied after the appeals process, try to contact the next level of oversight. For many types of insurance plans, the appropriate next level of oversight is the Missouri Department of Insurance.

Remember, the real keys to appealing denials are persistence and follow through.

How to Get More Help

Can I Get Help In Finding Insurance Coverage?

For assistance in ordering publications that will help you shop for insurance coverage and help you get the best deal for your money, call the Missouri Department of Insurance Hot Line numbers:

Statewide - (800) 726-7390
St. Louis - (314) 340-6831
Kansas City - (816) 889-2381

You can also get information about a company's license status, complaint history and financial standing at these numbers.

To order a free consumer publication, call the toll-free, 24-hour, automated publication ordering system, (800) 726-7390. Some of the most frequently requested publications are:

Who Might Help Me With My Insurance Questions?

A sampling of state and federal agencies that provide services to Missourians with disabilities includes: