States act to protect individual health insurance coverage
Fabruary 22, 2008
Lawmakers in several states are limiting insurers' ability to cancel health policies for consumers who buy their own coverage.
The state actions come as more people buy individual insurance policies because they are self-employed, unemployed or don't get coverage at work. More than 18 million people have individual coverage.
Unlike group health policies offered by employers, individual plans require applicants to submit many years' worth of detailed medical information. The insurers use that information in deciding whether to offer coverage and how much to charge.
Most states allow insurers to revoke an individual policy — generally within two years of granting it — if they find an applicant lied or inadvertently omitted information on an application.
Cancellation of a policy is retroactive. Patients must pay for all their past medical care, even if the insurer previously approved and paid for the care. There is little nationwide data on the extent of cancellations. Blue Cross of California has said it cancels fewer than one-half of 1% of all new policies, an average of 1,000 a year.
References : http://www.usatoday.com
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