When Applying For Private Health Insurance Honesty is the Best Policy.

In today’s ever changing health insurance landscape, many people find themselves either compelled due to a loss or reduction in health benefits, or by choice, to look for private heath insurance. But unlike employer based group health insurance plans that cannot reject an applicant due to medical histories, in many states, insurance companies can and do reject applicants based on medical history and lifestyle issues.

But what many consumers who may be shopping for private health insurance may not realize is that in a somewhat controversial policy insurance companies may also be allowed to issue such cancellations retroactively. If an insurance company finds out that you have not been forthright in answering medical history and lifestyle questions on the original application, a policy may be canceled long after it has been issued. They may not have to prove that the discrepancy was intentional or malicious, and you may be liable to pay back any money that was paid out in claims while the policy was in effect.

Insurance companies must take the information given on an application at face value. They have to; they simply cannot afford to investigate every applicant. Therefore there may be the temptation to fudge a little when it comes to weight or treatments for certain conditions. But don’t, doing so in an attempt to lower health insurance premiums may give you more than you bargained for.

Take the case of Steven Hailey currently before the California Courts. Steven was in an auto accident in 2001. He was severely injured and required extensive medical treatments that were paid for by Blue Shield of California with whom Steven had a private insurance policy for himself and his wife. While he was still recovering, and with almost $450,000.00 in accumulated medical bills, Blue Shield cancelled his policy because they found he had put his weight down on the application as 240 instead of 285, and did not disclose that he had been under treatment for hypertension. Blue Cross says they were within their rights to cancel Steven’s policy, and a lower court agreed. They ruled in favor of Blue Shield, and allowed them to garnish his wife’s wages to recoup 104,000.00 they paid out in claims. The case is currently being appealed.

Advocates admit that most of the time such errors in private health insurance applications are not malicious in intent, but merely mistakes due to confusing questions on applications. All the more reason why you should be sure you thoroughly understand a policy and the application before sending it to the company, and read the fine print regarding cancellation.