Questions & Answers: Learn From Others Mistakes & Questions

Q: I have Medicare and a Medicare supplement policy. My Medicare supplement company processed a claim incorrectly. I am so angry with them that I would like to withhold paying the premium until they straighten out this problem. What will happen if I do this?

A: While we sympathize with the frustration that can arise from claims being processed incorrectly, a course of action as you suggest will only compound your problems. If you fail to pay the premium the policy will terminate, and you may not be able to have it reinstated. Your only recourse then will be to apply for a new Medicare supplement with another company that may or may not issue you a policy depending on your medical history. Furthermore, your choices of plans may be limited now in what you can purchase. v It is important to understand that premium billing is one division of an insurance company, and the claims department is another division of the company. You must pay the premium and then take the necessary steps to get the claim corrected. By withholding the premium you are only causing more problems for yourself.

Q: I own a small business and since the September 11 disaster, my business has slowed down dramatically. I have not been able to pay the health insurance premium for the past three months. I just received a letter from my insurer that they are terminating the policy. Can they do this?

A: Yes! It is very, very important that you get the money from somewhere to pay health insurance premiums on time each month. If you are late paying a credit card bill you will face finance charges, but if you are late with a health insurance premium they can terminate the policy. Some companies might be a little bit more patient than others but if you go beyond two months, the chances are very good that your coverage will be terminated. In this situation the first step is to beg for mercy, and write a letter explaining the situation, and ask to be reinstated. If they will not reinstate you, seek coverage with another carrier and make it a top priority to pay the premium on time each month.

Q: I am 60 years old and I need individual health insurance. My husband is over 65 and has a Medicare supplement from AARP that we have been very happy with. I get literature from AARP all the time - can I purchase a plan from them for me?

A: You cannot buy a comprehensive major medical policy from AARP because they do not sell them. What you need at this point is a good comprehensive major medical plan to cover you until you are eligible for Medicare. AARP offers long-term care insurance, Medicare supplements, and in-hospital indemnity policies. An in-hospital policy is very very limited and pays you a fixed amount per day for each day you are in the hospital. Usually the most you can collect is $120 per day. The average hospital stay now is close to $1000 per day. An in-hospital policy is not intended to pay the hospital bill; rather, it provides you with additional money to pay some of the other expenses related to a hospital stay. What is most important is obtaining the proper coverage for each stage of your life.

Q: I will be 65 in nine months and I do not have health insurance right now. A Medicare supplement is so much cheaper than individual health insurance so why should I purchase health insurance now? I would much rather wait until I am 65 and then just pay for a Medicare supplement.

A: If you do not purchase health insurance now, you are leaving yourself at great financial risk. You simply do not know what you are going to wake up with and even though you have been perfectly healthy for the last 64 and a half years, we just have no way of knowing when illness or injury will strike. Paying a premium for a policy with a high deductible and giving yourself some protection makes far more sense than not having any coverage whatsoever. Keep in mind that as we get older we tend to develop more health problems. Plus, if you have such a gap in coverage you will have a waiting period for pre-existing conditions.

Irene Card & Betsy Chandler share the responsibilities of running Medical Insurance Claims, Inc. a health insurance services company . If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, or visit our contact page.