If you have health insurance, then you probably think that you’re safe should anything happen, such as an illness or injury. Fortunately, this is usually the case, but what happens if your insurance company retroactively cancels your policy? This doesn’t happen very often — less than 0.5% of the time, according to USA Today — but if it does, you can find yourself in medical debt that numbers into the hundreds of thousands of dollars. When an insurance company retroactively cancels your health insurance, that means you are liable for the money spent on your health care, regardless of the reasons.
Lawsuits across the country are pending as to whether or not this practice is illegal. According to the law, insurance companies cannot retroactively cancel a health insurance policy unless they have been defrauded in some way by the consumer. For example, if you failed to disclose a heart condition, your insurance company might retroactively cancel your policy if you wind up in the hospital after a heart attack.
In order to obtain health insurance, you must, at the very least, fill out an application that goes into detail about your medical history. Omitting facts or misrepresenting them is considered insurance fraud and could result in the retroactive cancellation of your health insurance policy. In some cases, physicals are required in order to obtain health insurance, but this is certainly not a universal policy. The health insurance company relies on you, the consumer, to disclose any information that might affect their decision to insure you.
When you provide the health insurance company with false or incomplete information regarding your medical history or a past diagnosis, they have the right to claim that you defrauded them. They will say that they would have declined to insure you or that they would have charged you a higher rate based on the risk factor in providing you with insurance. When the insurance company retroactively cancels an insurance policy, the consumer has little recourse except to file a lawsuit, which some incensed consumers have done over the last five years.
To avoid having your health insurance retroactively canceled, your best bet is to provide full and complete disclosure of your medical history:
1. Mention any past diagnoses, no matter how small they might seem. Even if your physician has declared that you are cured, the insurance company should know about it.
2. Ask the insurance company when in doubt about what to include. You can also consult with an attorney for advice on what to put on your health insurance application form.
3. Clarify the specifics of a diagnosis. Sometimes, insurance companies retroactively cancel a health insurance plan even because of an honest mistake. If you don’t understand your diagnosis, ask your physician to provide further details.
You don’t want to find yourself in a situation where you lack health insurance, so make sure that you are following all of the rules and procedures down to a “T”. If your insurance company does retroactively cancel your health insurance, contact an attorney immediately to pursue any recourse and to determine your options.
