Chapter 5 — YOU GOTTA LAUGH: Life in the Trenches of the Health Insurance Business

This month's health insurance nightmare: You submit your health insurance payments through a third party administrator but the administrator does not remit payments to the carrier, therefore all coverages for all employees are canceled.

The situation: The Alagassi Companies uses a broker for their insurance needs. The broker chooses where to submit the business — sometimes it is directly with the carrier, but many times there is a third party intermediary such as a wholesaler or a third party administrator.

Here's how that works: There is no difference in cost for the company purchasing the insurance. A broker chooses either a wholesaler or a Third Party Administrator (TPA) based on additional services that can be received from that organization. A wholesaler typically does not remit payment to the insurance company as the insurance carrier bills the customer directly. The organization processes renewals, runs quotes and handles problems on behalf of the client.

A TPA typically submits payment to the insurance carrier on behalf of the client thus creating another level between the client and the carrier. In fact, it would not be unusual for the TPA to do the billing, rather than the carrier.

The problem: In this case, the Alagassi Companies was using a TPA through their old broker thus submitting payment for their health insurance premiums to the TPA. The TPA unfortunately was not remitting payment to the carrier; thus the employees all received a notice that their coverage was canceled. The client was embarrassed — and furious — all at the same time.

The solution: If this is the process your company uses, make sure you ask your broker if they use a wholesaler or a TPA. It is always better to submit directly to the carrier to avoid these potential issues. With online technology, direct debit payment availability and other useful tools, there is no need to have an administrator collect the money. You want broker representation without multiple layers.

If we were the Health Insurance Ambassadors: We would not allow third party billing and collection of premiums. All insurance carriers should be paid directly from the customer thus alleviating cause for delay and loss of money.

The painful truth: If you are submitting your payments through a third party vendor, do not assume that your premium payment has reached the carrier — even though you have a canceled check. Yes, it's sad but true.

Share your stories: We encourage you to tell us about your insurance nightmares. Send an email to our newsletter editor, "hope@inkandescentpr.com.":mailto:hope@inkandescentpr.com

Chapter 2 — YOU GOTTA LAUGH: My Life in the Trenches of the Health Insurance Business = Continuity of Coverage

This month's health insurance nightmare: Continuity of Coverage

A new book by Stephanie Cohen and Scott Golden
With Hope Katz Gibbs
Coming: Fall 2010

When you leave a position and lose or change coverage, it's essential that you have proof of your previous coverage. You will be covered under the Health Insurance Portability and Accountability Act (HIPAA) that was enacted by Congress in 1996, but you must have proof – a letter from your previous insurance agency and a copy of your insurance card. If you don't keep track of this important information, frustration and complications can result. Consider this dilemma.

The situation

Our client, Ian, who worked for a nonprofit in DC from December 2007 through the end of June 2008, never thought about tracking the insurance he had from his employer and was surprised when he was required to provide his new insurer with proof of coverage. When he took another job in 2009 and applied for health insurance coverage, he called his old insurance company only to find there was no record of his previous coverage – and that's when he called us.

Ian is not alone. When we receive applications for new hires, most people fail to complete this section. Without proof of prior coverage, and if you are applying for coverage with a PPO, it is assumed you have a pre-existing condition. This usually results in a waiting period, which might become a barrier to getting insurance especially if you have a pre-existing limitation.

If you don't have proof of coverage and select an HMO, you are not subject to a waiting period – but only if you enroll in a timely fashion. Be aware that there are employers who do not offer an HMO – and again, you would be considered to have a pre-existing limitation.

Also, if you fail to complete the application in full and you have a "qualifying event," it could result in not being able get into the plan you desire.

A qualifying event includes death, divorce, legal separation of the employee, termination from employment for a reason other than gross misconduct, reduction in working hours, and the change in status of a child who ceases to be classified as a dependent under the terms of the plan. Of course, an employee is entitled to notice of the right to continuation after a qualifying event occurs.

In Ian's case, we called his previous employer who put us in touch with their broker. Eventually we got to the bottom of it and found Ian's original application. He now has coverage through his new employer.

Here's how you can take control

1. When you terminate coverage, save the HIPAA letter indicating you had credible coverage. It will help you save time and avoid frustration when you apply for health insurance later.

2. If you don't receive a letter within a month of termination, call your carrier or broker.

3. Make sure to keep a copy of your old insurance card. This paperwork should be kept until the new policy is secured and you have proof of your new coverage.

If we were the health insurance ambassadors

We'd make sure that all carriers were required to keep accurate records of all of their past customers for at least 3 years. I'd also be sure that all representatives working with customers be trained to handle situations where they would help find a solution and not be a barrier to the process.

In Ian's case, for example, the representative should have made a call to his previous employer and / or insurance broker to help him get the information he needed.

The painful truth

Many insurance companies are not friendly to customers who call in, and even fewer are willing to go the extra mile to help out a frustrated caller. Short of a total overhaul of the insurance company's corporate philosophy toward customer relations, consumers need to know they must be responsible for managing their benefits. Know what you are buying, ask a lot of questions, and hire a broker that you trust who will make those calls for you.

What's your health insurance nightmare? Send your tales of woe via email to Hope Katz Gibbs, our publicist and newsletter editor, at mailto:hope@inkandescentpr.com.