Tuesday, April 18, 2006

Retro Underwriting

This has nothing to do with underwriters wearing Madras shirts with pocket protectors. Retrospective underwriting, or retro underwriting, is the practice utilized by some health insurance carriers to cancel coverage and rescind back to the effective date.

This usually occurs following a claim of some significance when an audit of the underwriting file is ordered. Consider this a post-mortem on an underwriting decision made as far back as 2 year ago.

The scenario could go something like this.

You complete an application for health insurance and submit it to a carrier, we will call them Indigo Cross Health Insurance Company. In the litany of questions is one of note.

Have you ever been diagnosed, treated for or consulted with a medical professional for any of the following:

Blah, blah, blah, cancer, blah, blah.

Have you ever experienced any of the following:

Unexplained fever, swollen glands, abdominal, back or pelvic pain, . . . .

Your answer to all of the questions is “no”

The policy is issued.

Three months later you go to the doctor complaining of a pain in your gut that won’t go away.

How long have these symptoms persisted?

Off and on, maybe 4 or 5 months, but they are more painful now.

Tests are performed and the diagnosis comes back. You have colon cancer.

Then you get a letter from your carrier, denying your claim and rescinding coverage back to the effective date.

You have just entered the world of retro underwriting. In addition to dealing with the diagnosis, you now have to wonder how you will pay for your care.

Like it or not, the carrier has not only denied your claim, but cancelled coverage based on what is considered to be a false application. You misrepresented the facts by failing to mention an undiagnosed pain.

This was coupled with the admission, as reflected in the doctors notes, that this pain existed prior to the date of your application.

Is this practice fair? Yes, and no. It can be argued both ways.

Is this something to consider the next time you submit an application for insurance?

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