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may be hazardous to your health insurance
|If you've had
even a mild bout of depression, you may find buying an individual
health insurance policy a very up-and-down experience. Here's how to
succeed in the process.
many years ago, you suffered mild depression when you
broke up with your significant other. You briefly sought mental health
you're happy and healthy, but you get a rude awakening when you try to
buy individual health insurance: One by one, your applications are
denied based on the six counseling sessions you had a decade ago, which
are permanently recorded in your medical history.
forgotten about your ex, so how can this seemingly insignificant
episode be coming back to haunt you? Are you really on your way to
becoming uninsured? Over
very well could be if your only choice is individual health insurance,
according to Karen Pollitz, a Georgetown University researcher who
co-authored a 2001 study on the individual health insurance market for
the Kaiser Family Foundation with Richard Sorian and Kathy Thomas.
insurers may deny you coverage based on your medical history if it
who've always had
group health insurance are completely unprepared when they're forced to
seek coverage in this (individual health insurance) market," says
Pollitz. "They think they're going to get the same coverage they had in
their jobs, except they'll just have to pay a little more money. It's
absolutely not like that at all. The
individual health insurance market is unpredictable, inconsistent and
of prescription drugs to treat anxiety, depression or a physical
condition, including Ativan, Klonipin, Paxil, Prozac, Serzone, Zoloft,
Xanax and Wellbutrin.
for anxiety, depression, grief
or an eating or sleep disorder. Even if you briefly sought counseling
as a way to cope with the Sept. 11 terrorist attacks, you could be
denied individual health insurance, according to researchers with
Georgetown's Health Privacy Project.
Deborah Peel has seen the unpredictability of the individual health
insurance market up close. Peel, president of the National Coalition of
Mental Health Professionals and Consumers, recalls a young graduate
student whose sleep apnea was treated with antidepressant medication.
When he was dropped from his parents' group health insurance plan due
to his age, he began applying for a policy in the individual market. He
was turned down several times because his medical records showed he had
taken an antidepressant, even though the medication was for a physical
rather than mental condition.
to see what kind of health insurance a hypothetical 56-year-old woman
who had just been widowed was able to get after being prescribed Prozac.
says all doctors should give their patients a "Miranda-like warning"
that anything they say or treatment they receive may wind up being
shared with a third-party payer (like an insurer). "Ethically, doctors
and all mental health professionals are responsible to disclose
anything that might possibly harm their patients, including the fact
that information they share with you might possibly be cause for an
insurance denial later on."
inconsistent and expensive
individual health insurance market in this country is relatively small.
In 1999, 16 million Americans (just 6.7% of the population under age
65) were covered by an individual health insurance policy, according to
the foundation. However, a number of everyday circumstances can force
an individual to seek personal health coverage, including: no longer
qualifying as a dependent on a parent's health plan; getting a job that
doesn't offer health insurance benefits; becoming self-employed;
retiring before age 65; and coming to the end of your health insurance
benefits under COBRA, the federal health insurance safety net for
families in the midst of crisis, such as unemployment, divorce or death.
of the biggest shocks you may encounter when moving from a group health
insurance policy to an individual policy is that the health insurer
will now consider only your age and personal medical history when
deciding whether to offer you a policy. (For more on buying individual
policies, click on the links at left.)
surprised to hear that it's impossible for a person with HIV to obtain
individual health insurance. But you may be stunned to learn that
someone with asthma may also get rejected (even though there are 17
million Americans with asthma), as well as someone who has received
treatment for any "mental/nervous disorder," whether that treatment was
for something as serious as schizophrenia or for something as mild as
counseling to help weight loss. And those who are offered an individual
health-insurance policy may find their coverage comes at a much higher
price and excludes any treatment for past or present medical conditions.
their study, "How accessible is individual health insurance for
consumers in less-than-perfect health?" Pollitz and her co-authors
found that 90% of the time, the less-healthy hypothetical health
insurance applicants in their study were unable to buy policies from
individual insurers at standard rates, while 37% of them were rejected
outright. Of the 63% who were accepted, most had benefit restrictions
placed on them (28%), premium surcharges (13%) or both (12%).
study says that even if you're in perfect health, you may face barriers
to getting a policy based on your age. The premiums for the study's
hypothetical healthy 62-year-old man were three to six times higher for
him than for their hypothetical healthy 24-year-old woman.
shock you may encounter when buying an individual health insurance
policy is that, for the most part, health insurance is not subject to
any kind of rate regulation. Only five states (Maine, New Hampshire,
New Jersey, New York and Vermont) guarantee you access to the
individual market at community-rated premiums that are not based on
your health status. These states also limit coverage exclusions that
insurers can impose because of your pre-existing conditions.
few consumers who seek individual health insurance have protection
through federal law. The Health Insurance Portability and
Accountability Act (HIPAA) requires insurers to sell a health insurance
policy without coverage limits to you if you have had at least 18
months of continuous coverage and are moving from one group health
insurance policy to another group policy. However, HIPAA does not limit
what health insurers can charge for such coverage. (For more on the
act, click on the link at left.)
And just why
health insurers so picky about who they choose to insure? According to
Thomas, the statistics tell the story: "The sickest 1% of your
policyholders can comprise between 40% to 50% of all your claims.
That's what makes health insurance such a risky business."
life insurers only have to pay out a death claim once, health insurers
may have to pay out numerous claims over many years for one sick
person. Individual insurers can't spread out that risk among groups of
many people the way group health insurers or self-insured employers do.
18.8 million adult Americans (9.5% of the total population) suffer from
some form of depression in any given year, according to the National
Institute of Mental Health. Statistics show that one in five of us will
experience a major episode of depression during our lives. Mental
health professionals and privacy advocates in no way want to suggest
that people who need mental health help should go untreated for fear
that they might be denied health insurance in the future. However,
there is evidence to suggest that some people are already putting off
treatment for fear of being penalized.
California Healthcare Foundation's 1999 survey on medical privacy and
confidentiality" survey, 15% of American adults say they have done
something "out of the ordinary" to keep their personal medical
information confidential. The steps they have taken to protect their
medical privacy include:
to child psychiatrist Dr. Barry Herman, an executive board member of
the National Coalition of Mental Health Professionals and Consumers,
many of his patients' parents, who he says tend to be well-educated and
financially stable, understand the possible ramifications of having
their child's treatment disclosed to a third party. "It's not at all
unusual for them to pay cash or ask for free samples of medication
[instead of a prescription]," says Herman. "They don't want a paper
out-of-pocket when they already have health insurance in order to avoid
seeking care to avoid disclosure to an employer.
inaccurate or incomplete information on a medical history form.
a doctor to not write down their health problem or to instead record a
less serious or embarrassing condition.
about the paper trail
you create when you
complete an application for individual health insurance? A standard
application will ask you more than 20 specific questions about your
medical history, going back 10 or more years. Not only are you asked to
disclose whether you have ever had any "symptoms of, diagnosis of, or
treatment or medication for" such obvious health problems as cancer,
diabetes, high blood pressure and HIV, but you must also inform the
insurer about any allergies, anxiety, benign cysts, breast
augmentation, depression, earaches or sexually transmitted diseases.
might be tempted to
lie, this is never
a good idea. Lying on your health insurance application is insurance
fraud and, if you get caught (no matter how long you've had the
insurance), the health insurer can cancel your policy. If you don't
think you can be easily caught, think again. Select individual and
small group health insurers now have access to medical information on
more than 16 million people contained in files warehoused by the
Medical Information Bureau (MIB).
provides more than 600
insurers with medical information from databases that serve as a
repository of information that insurers use to compare notes on
applicants -- and uncover those who've "lied" on their insurance
applications -- without having to contact one another directly. (See
"What your health, life and disability insurers know about you" at
can you do?
if it's already too late for you to pay cash for your antidepressants
or counseling sessions? Can you still get individual health insurance?
It's possible, say the KFF study authors, but it will probably take a
great deal of persistence and there are no guarantees. Even if you are
offered a policy, it will inevitably be more expensive than group
health insurance and it will no doubt limit or even exclude certain
The best you
can do is to fill
out any applications
for individual health insurance to the best of your ability and be
truthful. An experienced health insurance broker who knows the
underwriting criteria of several individual insurers may also be able
to increase your chances of acceptance.
your doctor to write a letter supporting your re-application,
particularly if you are no longer taking medication or receiving mental
health treatment. "When we did the study, we found that there aren't
any hard and fast underwriting rules," says Pollitz. "There's a great
deal of variability from insurer to insurer."
you are denied, you will have to answer "Yes" to the question that asks
you to disclose whether you -- or anyone to be covered under your
policy -- has ever had an application for life, disability or health
insurance "declined, postponed, rated up, modified or terminated."
a previous rejection sends up a big red flag to the insurer, Thomas
says that if you can provide medical records that show you're no longer
taking medication or attending counseling sessions (as well as a
doctor's letter supporting your case), you may sway the underwriter to
issue the policy.
health insurers have
to compete for
customers like everyone else, says Thomas, who was once a small-group
health insurance underwriter. "Millions of people have some kind of
past or present pre-existing condition, so not every individual insurer
can deny every single last one of them," she says.
learned from 'Emily'
is a hypothetical applicant in the 2001 Georgetown University study
that looks at how readily less-than-healthy consumers can obtain
individual health insurance.
Emily, 56, is a recent widow who has never
worked outside the home. She briefly obtained individual coverage with
an HMO in the state where she and her husband lived, but she moved back
to her hometown to be near old friends and must buy new health
who is 5 feet 4 inches tall and weighs 125 pounds, does not smoke.
Since her husband's death, she has been diagnosed with "situational
depression." Her former doctor has prescribed 20 mg. of Prozac a day.
Otherwise, Emily is in excellent health.
shopped Emily's hypothetical application to at least six health
insurers in eight regional markets (Tucson, Ariz; Fresno, Calif.;
Miami, Fla.; Corning, Iowa; Arlington Heights, Ill.; Winamac, Ind.;
Austin, Texas; and Richmond, Va.) and found that out of 60 requests for
individual health insurance:
Emily's offers ranged in price
from $1,920 to $10,992 annually.
- Emily was
rejected 14 times, or 23% of the time.
received 9 "clean offers," meaning there were no coverage limitations
or exclusions attached to her policies.
the 46 offers Emily received, 23 insurers limited benefits in some way,
such as excluding coverage for depression or for any mental/nervous
disorders and increased cost sharing for prescription drugs.
of Emily's offers imposed higher premiums, ranging from 20% to 50%
(including 16 that also imposed some other special coverage limits or