Thursday, March 08, 2007


Hello boys & girls. Today we are going to take a look at the grown up world and learn a new word.

Can you say "indemnify"?

So what does this word mean?

Let's look at what Mr. Dictionary has to say about indemnify.

"protection against future loss"

Note the word FUTURE in the definition.

"An agreement wherein one party financially protects another against an anticipated loss"

Note the word ANTICIPATED. This means something that may happen in the FUTURE.

So what does all this have to do with insurance?

Insurance is an INDEMNIFICATION policy. The contract agrees to INDEMNIFY the insured party should a loss occur in the FUTURE.

Let's see how this works in real life.

Readling, a 50-year-old real estate agent, is one of nearly 47 million Americans with no health insurance.

Let's back up just a moment and see how this happened.

As an independent contractor with a Century 21 real estate brokerage, Readling had bought insurance on her own — a temporary extension of coverage from a prior job.

A temporary extension. Was this COBRA, or was it STM (short term medical)?

The article does not state.

STM's are helpful to bridge a gap when you KNOW you have GUARANTEED coverage coming in a few months. It is not a long term solution.

But she was unable to renew it after she had surgery for breast cancer in 2005.

The cancer probably had nothing to do with the renewal, as many STM's will allow you to reapply but they will not cover any pre-existing conditions. There are a few that will not allow you to reapply if you have made a claim during the prior policy term.

Most insurers would not offer her coverage, she said, and one carrier quoted a price of $2,300 a month for coverage with a deductible of $5,000 a year.

Frankly, I am surprised anyone made an offer. If she had the opportunity to pick up full coverage she should have taken it.

To collect unpaid medical bills, health care providers often obtain judgments against a patient's spouse, as well as the patient, and file liens against their homes.

This is something many folks, even those with the funds & good health, seem to ignore. Without insurance you can still receive treatment but you will still have to pay. The way you pay is with your assets and forfeiting a portion of your wages should your medical creditors decide to pursue garnishment.

She said she had never voluntarily allowed her insurance to lapse and could not understand why she was being refused coverage.

She was refused coverage because she failed to QUALIFY for insurance. As a friend says, you pay for insurance with your dollars but you buy it (qualify for it) with your good health.

The only guaranteed continuity of coverage is from one employer plan to another. Beyond that, about three fourths of the states have a risk pool where someone who is otherwise uninsurable can obtain coverage on a guaranteed basis. All states have HIPAA compliance laws in place that allow someone coming off a group plan to purchase coverage once their COBRA expires.

Barbara Morales Burke, the chief deputy insurance commissioner of North Carolina, said state law did not guarantee the availability of health insurance for everyone. "Most insurers decline to issue policies to those individuals whom they deem to be too risky because of their medical history," Morales Burke said. Blue Cross and Blue Shield of North Carolina will sell to anyone, regardless of the person's medical condition, she added, but the premiums may be very high for people who have had serious illnesses.

So there is an option. In many states Blue is the carrier of last resort, so she is not completely without options.

Working with her doctors, Readling raced to get as many tests as possible before her coverage expired. She recalled her anxiety in the final months: "It's like a freight train coming at you, and it's going to get you. And there was nothing I could do."

Actually, there was.

The permanent coverage needed could have been purchased in advance of the need. That is what an indemnification contract does.

It pays for losses that may occur in the future.
blog comments powered by Disqus