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Prozac 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.

 By Insure.com

Imagine that many years ago, you suffered mild depression when you broke up with your significant other. You briefly sought mental health help.

Now 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.

You've all but 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

You 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.

Individual insurers may deny you coverage based on your medical history if it includes:
  • Use of prescription drugs to treat anxiety, depression or a physical condition, including Ativan, Klonipin, Paxil, Prozac, Serzone, Zoloft, Xanax and Wellbutrin.
  • Counseling 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.
"People 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 expensive."

Dr. 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.



Lessons from 'Emily'
Click here 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.


Peel 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."

Unpredictable, inconsistent and expensive
The 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.

One 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.)

You might not be 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.

In 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%).

Kaiser's 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.

Another 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.

Very 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 are individual 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."

While 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.

Impact on consumers
Approximately 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.

According to the 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:
  • Paying out-of-pocket when they already have health insurance in order to avoid disclosure.
  • Not seeking care to avoid disclosure to an employer.
  • Giving inaccurate or incomplete information on a medical history form.
  • Asking a doctor to not write down their health problem or to instead record a less serious or embarrassing condition.
According 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 trail."

But what 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.

While you 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).

The 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 left.)

What can you do?
What 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 coverages.

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.

If you're denied, ask 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."

Additionally, once 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."

Although 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.

Individual 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.

Lessons learned from 'Emily'
"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.

According to study authors, 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 insurance there.

Emily, 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.

The study authors 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 was rejected 14 times, or 23% of the time.
  • Emily received 9 "clean offers," meaning there were no coverage limitations or exclusions attached to her policies.
  • Of 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.
  • 30 of Emily's offers imposed higher premiums, ranging from 20% to 50% (including 16 that also imposed some other special coverage limits or restrictions).
Emily's offers ranged in price from $1,920 to $10,992 annually.

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