Ways Health Insurance Companies Can Mess With You

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Shopping for a health insurance policy can be a daunting task, made even more difficult by the great variety of types of health insurance coverages that are available and by the desire of all insurers and their agents to get your business. This desire to get your business can cause insurers and their sales representatives to overstate or mischaracterize the true nature and benefits of the insurance coverage you are purchasing. This, of course, makes your job even more difficult.

The following are some of the ways in which insurers and their sales agents cause you to make a wrong decision:

  1. Delivering a policy containing the words “Approved by the [name of state] Department of Insurance,” or words of a similar meaning. For an insurance policy to be sold, it must be reviewed and approved by the state insurance department. So there is nothing unique about it being approved by the insurance department. In fact, there is something wrong if it is not. But these words make it sound like the insurance department is endorsing that particular policy. That is misleading.
  2. Distributing a written document misrepresenting, with respect to a policy issued or to be issued, the terms, benefits or advantages of the policy. This can be done by overstating the scope, type, amount or length of coverage. For example, an agent or written material from the insurer may allow you to think the policy you are considering is all-encompassing when in truth there are significant limitations, exceptions and reductions in benefits. Every policy has limitations. You need to know what these limitations are in the policy you are purchasing. Do not rely on the agent’s word or on marketing or supplementary materials. Read your policy and then ask the insurer representative (field agent or home office) to point out where in the policy the wording is that provides the coverage of interest to you.
  3. Using a name or title of a policy or a class of policies that misrepresents the true nature of the policy or class of policies. A marketing name such as “Benefit Builder” or “Security Blanket” might lead you to think this insurance will protect you from all medical expenses or that it operates as an investment for your financial advantage. There is no health insurance policy that covers all medical expenses. They all have limits. None of them can properly be viewed as providing you with financial security. For a premium, they merely provide coverage for some portion of your medical expenses.
  4. Making statements to you to encourage you to allow existing insurance to lapse or to forfeit or surrender the existing insurance. Never let an agent convince you to let your existing health insurance lapse before your new insurance coverage begins. You could have a catastrophic injury or illness that occurs during the lapse in coverage and you would not be covered under either policy. Be very wary of any agent who is pushing you to discontinue your existing insurance if there is any doubt about when your new coverage will begin. In fact, you should allow some overlap so that you have time to actually read your new policy (not the advertising or supplementary material, but the actual legal contract) to make sure it is going to provide the coverage you thought you were buying. The new policy has a free-look period during which you can return it at no cost to you if you discover, upon reading it, that it is not what you thought it was going to be.
  5. Making ads containing untrue, deceptive, or misleading statements regarding the business of insurance or a person conducting the business of insurance. Insurance company advertising is regulated by state insurance departments, but it is often after the fact. Insurance policies are required to be filed, reviewed and approved by state insurance departments before they can be sold. Generally, however, insurance companies do not need to file advertising with the insurance department for review before it is used. Thus, there is the risk that an insurer (or, more often, an agent) may, intentionally or unintentionally, provide you with advertising material that is inaccurate or misleading. A good general rule as a consumer is to never rely on the advertising material. Rely on the insurance policy (the legal contract) that has been filed and approved by the state insurance department.

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