If the age of the person whose life is at risk is misstated in a
life insurance application and the error is not adjusted during his or her lifetime, the amount payable under the policy is what would be paid if the age had been stated correctly. The insurer is not liable for
death benefits if the insured was older than the age limit designated by the insurer for issuance of the policy.
Examples:
The holder of an individual
term life insurance policy in
Wisconsin was killed in an automobile accident. The insured was under the maximum age limit designated by the
insurance company. The insured’s wife, who was named as beneficiary, filed a claim with the insurance company for the death benefits. The company refused to honor the claim on the ground that the insured misstated his age in the application. Can the insurance company refuse payment?
No. Under s. 632.46 (3), Wis. Stat., if the age of the insured is misstated on the application for the policy and the error is not adjusted during his lifetime, the amount payable under the policy is what the premiums paid would have purchased if the age had been stated correctly.
• The holder of an individual term life insurance policy suffered a fatal heart attack four years after the policy was issued. The contract contained a two-year incontestability provision. At the time of application for insurance, the insured had mistakenly answered in writing that he had no prior physical problems with his heart, although he had been treated for minor coronary ailments including high blood pressure. Can the insurance company now refuse to pay the claim on the ground that the insured had made a material misrepresentation which allowed the company to void the policy?
No. Under s. 632.46 (1), Wis. Stat., once the policy has been in effect for two years, the insurance company may not contest the policy
It can be an emotional and trying time for parents sending a student to college. Remembering to pack everything they will need while away from home is a challenge - and so is ensuring they have adequate insurance protection. Insuranceandannuities.com offers these tips about health insurance to help you review and update your insurance policies to cover your college student.
Health Insurance
Most health insurance policies cover dependents who are full-time students until the age of 23. Generally, a student must be enrolled in at least 12 credit hours per semester (six or nine credit hours in the summer) to be considered a full-time student. Individual policies differ, so check with your health insurer or benefits administrator about how the policy defines a full-time student and the maximum age of coverage.
Know Your Policy
- Before leaving home, make sure your student has a copy of the relevant insurance cards and knows about obtaining referrals and approvals (if necessary) before seeking treatment.
- If you are insured by a health maintenance organization (HMO), check to see if your student will be outside the HMO service area while away at school. If this occurs, the student likely will have coverage for emergency care, but might have to travel to a physician or hospital within the HMO service area for routine care.
- If your insurer is part of a preferred provider organization (PPO), your insurer may pay benefits at out-of-network levels if you are outside your network. Check your plan provisions or speak with your insurer to find out what level of benefits are provided by your policy.
Student Health Insurance Plans
- If your student's healthcare coverage is limited by the network service area, another option is a student health insurance plan. These plans are sold by an insurer that has contracted with a college to offer coverage to its students.
- In general, these plans have more limited benefits and more exclusions than traditional health insurance plans.
In Indiana, some insurance policies are protected from whole or partial loss by guaranty funds. Guaranty funds operate something like the FDIC – covering a consumer’s losses up to a certain amount if the insurer is found to be insolvent and ordered into liquidation by a court. However, not all policies are covered by the guaranty funds, and consumers should always exercise prudence in selecting an insurance policy.
Consumer Alert
The Department of Insurance recently published a consumer alert regarding The Indiana Life and Health Insurance Guaranty Association (ILHIGA).
Limited Coverage
The amount of coverage provided by the guaranty associations generally depends on the type of insurance product. Basic coverage limits are:
- Life Insurance: $300,000 in death benefit and $100,000 in net cash surrender value per insured regardless of the number of policies you may have with the liquidated company.
- Health Insurance: $300,000 in health insurance benefits per insured regardless of the number of policies you may have with the liquidated company.
- Annuity Contracts: $100,000 in present value of the annuity benefits (including net cash surrender and withdrawal value) per annuitant regardless of the number of annuities you may have with the liquidated company.
- Property & Casualty Insurance: $100,000 per covered claim, up to $300,000 per occurrence
Life and Health Guaranty Fund
The Indiana Life and Health Insurance Guaranty Association, or ILHIGA, was created by the state legislature.
Insurance agents are not allowed to advertise the fact that a policy is subject to coverage by the guaranty association.
Property and Casualty Guaranty Fund
The property and casualty guaranty association – known as the Indiana Insurance Guaranty Association, or IIGA – was also created by the state legislature.
Insurance agents are not allowed to use the existence of the Indiana Insurance Guaranty Association for the purpose of selling or soliciting the sale of any form of insurance covered by IIGA.
1. Buyers Beware!
Because discount cards are not health insurance, fewer consumer protections exist for buyers. Many state insurance departments do not regulate the entities that sell discount health cards, although some insurance departments have recently enacted legislation to allow regulation, including licensing or registration requirements.
2. Double-check the Company and Agent
Some insurance carriers offer discount cards at little or no cost as an added value to their members. Certain associations, banks, employers and others also provide discount cards. However, there is the potential for confusion and fraud with respect to discount cards. Beware of salespeople and advertisements that use words like “co-payments” or “premiums” to deceive consumers into thinking a discount plan is insurance. Avoid sales personnel or companies of discount plans that insist on debit or credit card information and may pressure you to make quick decisions. Ask the sales person or company if the product is an insurance plan or a discount plan. Contact insuranceandannuities.com to see if complaints have been made against the entity.
3. Check the Benefits
While some deceptive discount health card issuers claim that their product is health insurance, discount cards do not pay medical claims. Instead, enrollees are responsible for paying for services at the time care is received. Some discount plans may exaggerate the savings potential and promise discounts that might not be available. Also, many of these misleading discount plans do not cover all types of services or conditions. Check with the company to make sure that there is a provider in its network that meets your needs and double check directly with the provider that the plan is accepted. Even if the card produces the discounts it claims, you could still be out thousands of dollars if you are hospitalized. Make sure that the discount plan has a toll-free phone number for customer service, a reasonable complaint procedure and clear refund and cancellation policy.
4. Discount Card “Red Flags”
Here are some warnings against possible fraudulent plans:
• The discount plans are often advertised through blast faxes, spam e-mails, Internet pop-ups or signs posted on telephone poles.
• The company claims you can save a considerable amount on health and life insurance.
• The company or agent will not give you a list of providers until after you purchase the discount card.
• The company uses high-pressure marketing and an
extreme sense of urgency, telling you that you “must act now” or “this one-time offer.”
• You are asked for debit or credit card information or a large up-front fee. Legitimate discount cards will not mandate large application fees or up-front costs.
• Legitimate discount card issuers will state on all their marketing material “This is not insurance.”
• Legitimate discount card issuers will never suggest you drop your health insurance.
• If it seems too good to be true, it probably is!
A domestic partnership describes a same-sex or opposite sex couple in a committed relationship—similar to a marriage—but without an official marriage license. The 2000 U.S. Census estimates that there are more than 770,000 domestic partnerships in the United States.
State and local law, rather than federal law, governs most issues regarding the recognition of domestic partners and the rights, benefits and privileges associated with recognition of domestic partnerships. Some state laws recognize domestic partnerships through registration, civil unions or otherwise. Other state laws are silent. As a result, there are inconsistencies across the country regarding the benefits and responsibilities afforded to domestic partners. Check with your legal advisor to determine whether or not your state recognizes domestic partnerships.
State laws do not limit employers or insurance companies from recognizing domestic partners under contracts or benefit plans. Domestic partners should keep in mind that some insurance providers and employers may require formal proof of your relationship in order to provide insurance benefits. Make sure you can supply this documentation, which may include a domestic partnership affidavit, a copy of a lease, homeowners policy or a joint financial account showing both names.
To help domestic partners better understand their insurance needs, insuranceandannuities.com offers tips and considerations regarding health insurance.
Health Insurance Tips:
- As the number of domestic partnerships increase, more employers are offering domestic partner benefits. To make sure your partner is eligible for benefits, check your employer’s definition of “family member,” “dependent” or “domestic partnership” in the employee handbook and/or check with your human resources department. Before enrolling, also check directly with the health insurance company to make sure that your partner will be covered.
- If you and your domestic partner have dependent children, they may be eligible for healthcare coverage as “dependents.” You may need to provide your employer or insurance company with legal documentation as proof of their dependency.
- Employer-provided domestic partner benefits are not exempt from federal tax liability. State tax exemptions vary on a state by state basis. As a result, the benefits are imputed income to the employee. Also, pre-tax dollars from flexible spending accounts or health savings accounts cannot be used to cover domestic partner benefits.
- If your domestic relationship dissolves, and you are receiving your health benefits from your partner’s employer-sponsored group health plan, you may be entitled to continue your coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) for up to 18 months upon your termination from the plan. Employers with fewer than 20 employees who offer health benefits may be required to offer continuation rights under state COBRA law, sometimes referred to as mini-COBRA. Check with your state insurance department for COBRA laws in your state.
- If you have an individual policy, check with your insurer to add a domestic partner to your policy.
- Domestic partners may want to consider creating a healthcare proxy or healthcare power of attorney document indicating that you have designated your partner to make medical decisions if you are unable to do so and to allow for hospital visitation. The document should be prepared by an attorney and kept in a safe place that is easily accessible if you or your partner needs it. You may also want to place it on file with your medical professionals so that the doctor is aware of your wishes.
Insuranceandannuities.com recognizes that the nation’s health care crisis is beyond the capacity of the states to solve independent of federal reforms. Health insurance markets are locally-based in response to the regional and jurisdictional diversity of our nation. We urge Congress to approach comprehensive reform via a federal-state partnership, recognizing the substantial experience and expertise of the states, and to consider these five keys for the successful transformation of the U.S. health care system:
- Protect the Rights of Consumers. States already have the patient protections, solvency standards, fraud prevention programs, rate review and other oversight mechanisms in place to protect consumers; these should not be preempted by the federal government. We urge federal policymakers to preserve state oversight of health insurance and avoid preempting or superseding state consumer protections.
- Address Health Care Spending. Any effort to increase access to and affordability of insurance will not be successful over time unless the overriding issue of rapidly rising health care costs is addressed. Whatever is done in insurance reform should be done in a manner that is consistent with sound and sustainable cost control practices. We caution federal legislators that any changes in the health insurance sector will not be effective over the long run without accompanying substantial changes in the health care delivery system, such as ensuring access to primary care, managing chronic diseases, and eliminating waste and inefficiency.
- Promote State Innovation. Insuranceandannuities.com urges Congress to review ERISA restrictions and other current federal laws and regulations, including CMS rules governing Medicaid and Medicare, which hinder state efforts to reform the health care system. Just as important, Congress must carefully consider the impact of any new federal reforms on the states’ ability to be effective partners in solving our health care crisis. We encourage the development of broad standards rather than prescriptive rules wherever possible to maximize state flexibility to implement reforms in a manner that is responsive to local and regional market conditions.
- Stop Cost-Shifting. Inadequate reimbursement payments in federal health programs have led to significant shifting of costs to the private sector. This has resulted in higher overall costs and decreased access for many consumers, and hampers the ability of states to implement reforms. Similarly, any federally-offered options must provide full federal fiscal funding to cover increased costs, most particularly for the most high needs beneficiaries. Additional costs cannot be absorbed by the already pressured state budgets.
- Avoid Adverse Selection. Any program that grants consumers the choice between two pools with different rating, benefit, or access requirements will result in adverse selection for one of the pools. Likewise, setting different rules for different plans within the pool or allowing consumers to wait until they get sick to purchase insurance, without penalty, can have adverse consequences on the pool. Any reforms must be carefully constructed to ensure the long-term health of the market. We can support guaranteed issue and elimination of preexisting condition exclusions for individuals to the extent that these reforms are coupled with an effective and enforceable individual purchase mandate and appropriate income-sensitive subsidies to make coverage affordable.
Before you buy health insurance coverage, find out about the company selling the plan. Here are factors to consider:
- Customer Service. Find out how the company services its policyholders. Does the company have a toll-free customer service number?
- Complaint History. Has the company had an unusually high number of consumer complaints?
- Licensing Status. Call your state insurance department to find out if the insurance company is licensed to do business in your State.
- Cost. Premiums for health insurance will vary greatly because there are no standard plans. When you look at bids from several companies, you will also need to look carefully at the benefits offered. Also, keep in mind that the actual cost for your health coverage will be determined after you submit information about your health.
- Financial Stability. Financial stability helps ensure that a company can pay its claims. Your state insurance department establishes requirements that each company must follow and continually monitors the financial stability of insurance companies operating in the state. Independent organizations also rate the financial stability of insurance companies. Remember these ratings are opinions only and do not guarantee that a company is financially sound. Your public library may have published ratings from these sources. Your insurance agent or broker may also have this information.
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Life Insurance
Each year, fewer and fewer Americans are covered under traditional fee-for-service
health insurance plans, in which insured individuals go to a doctor of
their choosing and then submit health insurance claims. Today, more and
more Americans are covered by one of the following arrangements:
- Health Maintenance Organization (HMO). An HMO provides
health services through a network of doctors, hospitals, laboratories,
etc. The health care providers may either be HMO employees or have some
other contract arrangement with the HMO. HMO plans pay providers a
monthly set amount (a capitation fee) regardless of the amount of
services performed. When you enroll in an HMO, you choose one of the
doctors as your primary care physician (PCP) to manage all of your
health care. Whenever you need health care, you first consult your
primary care physician. Your PCP may refer you to an HMO-approved
specialist.
- Preferred Provider Organization (PPO). A PPO is a group of
doctors, hospitals, and other health care providers (preferred
providers) who have agreed to provide services to members of a health
plan for discounted fees. Some employers combine the PPO with a
traditional major medical plan so you can use providers who are not on
the PPOs preferred list. But to encourage you to use a provider who is
on the PPO list, you will usually have lower out-of-pocket expenses
than if you use a provider who is not on the list.
- Point of Service Plans. These plans are essentially HMOs
that allow members to use services provided outside of the network
without prior approval from a network doctor. Point of service plans
offer lower deductibles and no coinsurance for visits to doctors inside the network. Visits outside the network normally require the payment of deductibles and coinsurance the same as a standard insurance policy.
State insurance regulation of health insurance covers millions of
Americans. The health insurance regulatory breakdown for Americans is
as follows:
- State regulation. Some employer or employee groups
purchase health insurance coverage from an insurance company. Others
may purchase group health coverage from a health maintenance
organization (HMO). Both are called fully insured health benefit plans.
The Indiana Department of Insurance regulates Indiana insurers of such
plans.
- Federal regulation. Some employer or employee groups
provide what are called self-funded health benefit plans. This means an
employer or employee group may set aside funds and employee premiums
each month to pay health coverage claims submitted to the plan. If the
plan is self-funded and offered by a private sector employer or bona
fide union, the designated regulatory authority is the U.S. Department
of Labor’s (DOL) Pension and Welfare Benefits Administration.
Sometimes self-funded health benefit plans are confused with fully
insured benefit plans. Employers often hire an insurance company, an
HMO, or a third party administrator to process claims for a self-funded
health benefit plan. If you do not know what kind of plan you have,
review any written plan information you have been given. If you are
still uncertain, ask your employer or plan administrator.
Things to do before you file a claim:
- Review your policy or employee booklet carefully to be sure the service in question is covered.
- Follow any managed care rules, including pre-certification requirements and use of network providers.
- Give claim forms to the provider, with your policy number and other identifying information.
How to submit claim properly:
- Find out if your provider submits the claim for you or if you need to do it.
- If you need to do it, review the information to be sure it is complete and correct.
- File it as soon as you get the bill from the provider.
- Send it to the right address.
- Keep a copy for your reference.
Allow reasonable time for company to process your claim. The
company should inform you if it needs any additional information to
complete the claim. Sometimes, it will request additional information
directly from the providers or return the claim form to you to get more
information. After the company has all the information it needs, it has
a certain number of working days to process your claim. The company
must send you an explanation of benefits that explains its decision.
If your claim is paid:
- If you assigned benefits to the provider, the benefit check will be sent directly to the provider.
- You will pay any deductibles and co-insurance.
- If you did not assign the benefits, the check will come to you and you will need to pay your provider(s) for the entire amount.
If your claim is denied:
- The reason for denial should be stated on your explanation of benefits.
- If you disagree with the basis stated for denial, check your policy or employee booklet for the company's appeal procedures.
- The company should be able to answer procedural questions about appeals over the phone.
- Your appeal should be in writing and may require information from your doctor.
Filing a consumer complaint with the Indiana Department of Insurance:
If you've tried unsuccessfully to resolve a claim problem with your
company or agent, contact the Indiana Department of Insurance. Very
often, companies will resolve disputes after the Department intervenes
on a consumer’s behalf. A formal complaint form is not essential,
however, every request for Department assistance must be in writing. It
should include the following information to speed processing of your
complaint:
- Include your name, address (with ZIP code), and daytime phone number.
- Include the name of the company or agent against whom you are complaining.
- Include your policy number and/or claim number.
- Include a brief description of the problem and how you think it should be resolved.
It is also helpful if you:
- Supply any documentation you have to support your case including phone notes.
- State what has been done to resolve your problem including whom you have talked to and what you were told.
- For future reference, keep a copy of your letter to the state insurance department.
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