Health Insurance Policy Introduction
Have you ever read your individual health insurance policy? Probably not. It’s not exactly on the bestseller list. And even if you were to skim it just to say you’ve done it, would you understand it? Probably not. It’s not really written for the consumer. This series of articles will provide you with the tools to understand many of the terms and provisions included in your policy. They will translate the insurance language and legalese into English.
Why is it so important to understand your policy? Do you know what your rights are and what the insurance company’s rights are if you are denied coverage? Can the company just cancel or non-renew your policy? Do you know how much time you have to pay your premium before the company can cancel your policy? You probably don’t know, do you? That’s why it’s important to understand your individual health insurance policy. Don’t wait until you’re in a difficult predicament to pull it out and read it. Of course you also need to understand it because you are agreeing to it and you have absolutely no input in what it says. It is known as a contract of adhesion.
Contract of Adhesion
|A contract of adhesion is when one party to a contract sets the terms of that contract and there are no negotiations. You have no say as to what the provisions are. You either take it or leave it.|
This may seem unfair to you because the insurance company has all the underwriting and claims experts and attorneys to craft an insurance contract with all the special wording necessary to protect the insurance company’s best interests. Ah, so perhaps you do need to educate yourself as to what it is you are agreeing to. Most people come with little insurance knowledge, so your only leverage is that you might be able to get a similar policy from another company, which will also offer you a contract of adhesion.
Note that in an attempt to level the playing field and ease this unfairness, some new laws have been enacted and consumer-friendly judicial decisions have come down. The courts have recognized that you have no opportunity to negotiate the provisions of your policy and you basically have to accept the wording the insurance company has drafted with the advice of all their experts. Therefore, the courts have begun to construe any ambiguity in policy wording in your favor. In other words, the courts say that since you had no opportunity to provide input into the wording of the policy, any problems with that wording will be considered to be the insurance company’s fault. After all, they wrote it.
If that’s not quite enough, the states have enacted laws that mandate that insurance companies have certain specific provisions in their health insurance policies, called required provisions, and that they be worded in a precise way. This series of articles will provide you with the standard acceptable wording for each provision and what that provision means. An insurance company may, at its option, substitute different wording, but only if that wording is approved by the state insurance commissioner to and if the alternative wording is not less favorable in any respect to you. Every state has passed these laws and most of these state laws are very similar. Many, but not all, of these required provisions lean more towards benefiting the insured rather than the insurer.