Once again, we're delighted to present a post from our favorite anonymous guest blogger (whose most recent work, on Florida's newest health care initiative, can be found here and here). Our anonymous friend is well placed enough in the industry to offer us some unique insights.
In this post, AGB laments the games that are played by some of those who administer ERISA (aka "self-insured") plans:
Here is something to consider. We have seen a rash of material misrepresentation and “gamesmanship” lately resulting in substantial claims costs. In three cases, the administrator filled out all the individual apps (not disclosing any medical information) and just had the employees sign. In another, an app was sent in three days after an incident of care but was dated on the date of the incident. Of course 1 day after the same incident of care, they requested a change in waiting period, thus making this person eligible for benefits.
The question arises: what do we do with clients that are bad actors in these cases. The standard carrier here would adjust the rates to what they should have been underwritten at and make them retroactive, while continuing the policy. Is it time for carriers to start pursuing cases as worst case rather than best case? What is the disincentive for groups to do the same thing with the next carrier if the worst that will happen is that they have to pay what they should have paid in the first place? This affects premiums for all groups in the pool, thus negatively impacting other businesses that applied in good faith.
Ultimately it is the carrier’s decision, but is it time to start moving away from the slap on the wrist and start pursuing options that would be more punitive? Is it worth it or not? Any agent or broker that did this would have their appointment terminated and possibly reported to the department of insurance. What would be the next step for these administrators?
In this post, AGB laments the games that are played by some of those who administer ERISA (aka "self-insured") plans:
Here is something to consider. We have seen a rash of material misrepresentation and “gamesmanship” lately resulting in substantial claims costs. In three cases, the administrator filled out all the individual apps (not disclosing any medical information) and just had the employees sign. In another, an app was sent in three days after an incident of care but was dated on the date of the incident. Of course 1 day after the same incident of care, they requested a change in waiting period, thus making this person eligible for benefits.
The question arises: what do we do with clients that are bad actors in these cases. The standard carrier here would adjust the rates to what they should have been underwritten at and make them retroactive, while continuing the policy. Is it time for carriers to start pursuing cases as worst case rather than best case? What is the disincentive for groups to do the same thing with the next carrier if the worst that will happen is that they have to pay what they should have paid in the first place? This affects premiums for all groups in the pool, thus negatively impacting other businesses that applied in good faith.
Ultimately it is the carrier’s decision, but is it time to start moving away from the slap on the wrist and start pursuing options that would be more punitive? Is it worth it or not? Any agent or broker that did this would have their appointment terminated and possibly reported to the department of insurance. What would be the next step for these administrators?
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