This week it has become clear once again how important it is for people to set up auto-pay for their health insurance premiums, and then make sure they have money in that account. Three different clients of mine are going through issues this week because they did not get their check into the insurance carrier before the deadline.
Why does it matter?
Story 1
One couple is on a guaranteed-issue plan that was their only good option after COBRA coverage ran out. The husband has health issues that insurance carriers will not cover on regular individual health insurance. Because they went through the channel outlined by COBRA, they were able to get on a guaranteed-issue plan. What this means is that the insurance carrier is legally obligated to offer coverage due to their participation in the government’s COBRA plan. The couple has paid faithfully for years but did not get the check in last month before the last day of the month and was dropped from coverage. Now what? There is nothing else (of any quality) available on the market. Fortunately, they were able to call the insurance carrier and get it reinstated this time. But the insurance carrier is not obligated to reinstate, so what if they hadn’t? It could have spelled big trouble for this couple.
Story 2
Another family who doesn’t have the same kinds of health issues, called me today. They had the insurance on auto-pay but when the insurance carrier drew last month’s premium there wasn’t enough money in the account. The policy lapsed. The also were able to call and get it reinstated this time. If they hadn’t, they are not in the dire position the first couple could have been in, but rates have gone up since they signed up and they would have had to start over with a 12-month pre-existing clause and pay more per month.
Story 3
The third scenario is a five person group that got a little behind on their health insurance bill. They were cancelled. During this period though they had two employees leave the company. To be reinstated, the insurance carrier is asking ABC company to pay the equivalent of two months of coverage for all employees, included the ones that are gone. Then later any overage will be credited to ABC Company. They also are required to sign up for auto-pay for future payments. Now they have a cash flow issue that could affect their company in the next few months.
So, besides being a huge hassle, what’s the big deal? Insurance companies are not required to reinstate customers who lapse. Sometimes, insurance carriers will only do it once and may charge a service fee to reinstate. What if these people had a major health event during the lapse? It could mean bankruptcy. They also could be in a position where they have become no longer insurable. My suggestion is to always set up an auto-pay agreement for your health insurance from an account that will always have the funds in it. Another suggestion is to open all mail from your insurance carrier. This is too important to fool around with.
If you need the forms to set up an auto-pay (whether you are my client or not), let me know and I will do my best to get you what you need.
