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Tips for answering medical questions on an insurance application

by Tony Novak, CPA, MBA, MT,   updated August 17, 2013

 

The federal, state and commercial health insurance exchanges require an applicant to answer questions about medical history when applying for coverage and sometimes even to get pricing (for group coverage). Sometimes this can be challenging, especially when it is difficult to understand the meaning or the intent of the questions. This article is meant to offer practical suggestions.

General advice on answering medical questions on an insurance application:

1. The response on the insurance application must be your own (or a legal guardian, if applicable). No other person is legally authorized to provide the responses on an insurance application. If another person answers the application questions, you are still legally responsible in the same manner as if you had answered the questions yourself. Insurance company personnel, agents, brokers and insurance advisers are specifically prohibited from answering these questions. Professionals in the medical field and human resource departments should avoid providing answers to insurance application questions as a matter of professional standards and liability management but they are not legally prohibited from doing so under state or federal law.

2. It is not necessary to obtain and review a copy of your personal medical records from all of your medical providers, however, it might be smart to do so. The medical records may be quite different from our understanding or recall of the diagnosis and treatment due to a number of factors including memory and recall issues, imprecise medical terminology used in verbal discussions with providers and perhaps a tendency for medical providers to attempt to maximize the patient’s positive mental state during treatment by minimizing the discussion of adverse medical findings. We frequently find that basic key words like “diabetes” and “cancer” are not interpreted by the patient in the same way as  recorded in the medical records. Remember that in the event of a difference between a written detail in a medical record and a non-written detail, the written record will always prevail.

3. You are under a legal requirement of the laws of your state to answer the insurance application questions honestly and to the best of your ability.

4. Don't lose sleep over an unintentional error. There is no legal requirement that you answer the insurance applications with 100% error-free accuracy and completeness. Health reform laws are specifically intended to protect those who make an unintentional error on an insurance application. Consumer-protection laws overwhelmingly side with the consumer unless there is clear intention of fraud.

Insurance company possible actions:

5. In the event that there is overwhelming evidence that an insurance applicant deliberately questions falsely, the insurance company can cancel or rescind the insurance for fraud. This action is severely limited by the Affordable Care Act of 2010.

6. In the event that an inadvertent error was made in answering the questions, the insurer may not cancel or rescind coverage but may deny specific coverage or a claim based on the facts. For example, a claim in the first month of the policy may be denied on the basis that a pre-existing condition was not disclosed on the application and the policy has a 6 month waiting period for pre-existing conditions.

Pre-existing conditions:

7. Pre-existing medical conditions trigger two questions that must be addressed independently:

a. Does my pre-existing condition allow me to qualify for enrollment in a specific insurance?

b. If enrolled, how will my pre-existing condition be covered?

Each of these questions must be addressed separately and additional suggestions follow below.

8. The definition of pre-existing condition varies from state-to-state and may not apply to medical conditions that occurred in the distant past. It might not be as encompassing as you suspect. If in doubt, ask OnlineAdviser for the state-specific definition of pre-existing condition.

Insurance law:

9. The intention of federal and state health reform law is to make individuals eligible for insurance regardless of health history (not be declined for pre-existing conditions). The trade-off is that guaranteed issue coverage might only be offered at certain open enrollment periods each year and not on a permanent ongoing basis.

10. Health reform laws do not completely eliminate restrictions on coverage, waiting periods or exclusions for pre-existing conditions when there has been a significant gap in coverage.

11. Short term major medical insurance does not cover the cost of treating pre-existing medical conditions and is exempt from the reform laws that would suggest otherwise.

12. Everyone, regardless of medical history, is eligible for at least one health insurance plan. Federal health reform law set up new health plans for those with pre-existing conditions who were not able to find coverage for an extended period of time.

13. Employer-sponsored health plans accept all eligible employees regardless of medical history during periods of open enrollment. Waiting periods of up to 90 days for eligibility still apply to most employer-provided health plans. Employers are permitted to charge employees different rates for insurance based on their participation and results of health improvement plans but not based solely on their answers to medical questions.

14. Some individual insurance plans will continue to be available only to preferred risk applicants who answer a number of medical questions even after full implementation of federal health reform laws.

Summary:

15. Don’t fight with the insurance application. Avoid “over-thinking” the issue. Don't provide more information than is requested. Answer simply with the response that strikes you as most appropriate when applying common sense.  

 

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