The problem with post-claims underwriting is how it can result in the rug being ripped from right under a person who believed they had solid coverage. They took steps to get insured, and then, when they need it most, they might find out that their claim is being denied or their coverage rescinded altogether as a result of things the insurer found during the post-claims underwriting process.
Short-term health plans are less expensive than ACA-compliant plans and for people who don’t qualify for premium subsidies. But in addition to less benefits provided by short-term plans, post-claims underwriting can be a serious drawback.
Since applicants aren’t always aware of how it works, they may assume they have enough coverage and forego enrollment in a plan that will cover their pre-existing conditions, only finding out when it’s too late that they don’t have the coverage they need.
The best way to avoid post-claims underwriting is to ensure that if you’re buying your own health insurance, it’s a plan compliant with the ACA. This can be a plan purchased in the exchange in your state or an individual major medical plan purchased directly from an insurance company. Because of the ACA, these policies no longer use medical underwriting at all—post-claims or at the time of application.
Under rules that the Trump administration finalized in 2018, short-term health plans are allowed to have terms of up to 364 days and can be renewed for a total duration of up to three years. But about half the states have stricter rules, and many insurance companies that offer short-term plans have opted to limit the available plan durations. Plan availability varies considerably from one area to another.
In areas where you can get a short-term health plan that lasts for nearly a year and can be renewed for up to three years, it’s easy to see how people might confuse the available short-term plans with ACA-compliant plans especially now that there’s no longer a federal penalty for relying on short-term health insurance. Short-term plans are not considered minimum essential coverage, so people who relied on them between 2014 and 2018 were subject to the individual mandate penalty.
But as a general rule of thumb, if the application asks you questions about your health history (other than tobacco use), the plan is not compliant with the ACA. If you enroll in it, be aware that if you have a claim while you’re covered under the plan, the insurer is well within their rights to go back through your medical history with a fine-toothed comb, looking for a reason to deny the claim.
Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.
