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Life in the Trenches of the Health Insurance Business: Part 2 in a Series

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When you leave a job and lose or change your coverage, it’s essential that you have proof of your previous coverage. You will be covered under the Health Insurance Portability and Accountability Act (HIPAA) that was enacted by Congress in 1996, but you must have proof – a letter from your previous insurance agency and a copy of your insurance card. If you don’t keep track of this important information, frustration and complications can result. Consider the following dilemma.

The situation

Our client, Ian – who worked for a nonprofit in Washington, D.C. from December 2007 through the end of June 2008 – never thought about tracking the insurance he had from his employer and was surprised when he was required to provide his new insurer with proof of coverage. When he took another job in 2009 and applied for health insurance coverage, he called his old insurance company only to find there was no record of his previous coverage – and that’s when he called us.

Ian is not alone. When we receive applications for new hires, most people fail to complete this section. Without proof of prior coverage, and if you are applying for coverage with a PPO, it is assumed you have a pre-existing condition. This usually results in a waiting period, which might become a barrier to getting insurance, especially if you have a pre-existing limitation.

If you don’t have proof of coverage and select an HMO, you are not subject to a waiting period – but only if you enroll in a timely fashion. Be aware that there are employers who do not offer an HMO – and again, you would be considered as having a pre-existing limitation.

Also, if you fail to complete the application in full and you have a “qualifying event,” it could result in not being able get into the plan you desire.

A qualifying event includes death, divorce, legal separation of the employee, termination from employment for a reason other than gross misconduct, reduction in working hours, and the change in the status of a child who ceases to be classified as a dependent under the terms of the plan. Of course, an employee is entitled to notice of the right to continuation after a qualifying event occurs.

In Ian’s case, we called his previous employer, who put us in touch with their broker. Eventually, we got to the bottom of it and found Ian’s original application. He now has coverage through his new employer.

Here’s how you can take control

  1. When you terminate coverage, save the HIPAA letter indicating you had credible coverage. It will help you save time and avoid frustration when you apply for health insurance later.
  2. If you don’t receive a letter within a month of termination, call your carrier or broker.
  3. Make sure to keep a copy of your old insurance card. This paperwork should be kept until the new policy is secured and you have proof of your new coverage.

If we were the health insurance ambassadors

We’d make sure that all carriers were required to keep accurate records of all of their past customers for at least three years. I’d also be sure that all representatives working with customers be trained to handle situations where they would help find a solution and not be a barrier to the process.

In Ian’s case, for example, the representative should have made a call to his previous employer and/or insurance broker to help him get the information he needed.

The painful truth

Many insurance companies are not friendly to customers who call in, and even fewer are willing to go the extra mile to help out a frustrated caller. Short of a total overhaul of the insurance company’s corporate philosophy toward customer relations, consumers need to know they must be responsible for managing their benefits. Know what you are buying, ask a lot of questions, and hire a broker who you trust who will make those calls for you.

Want more? Read Part 1: Maternity Coverage and Part 3: High Costs, Low Benefits on

Stephanie Cohen and Scott Golden are the co-owners of the health care benefits firm Golden & Cohen. Cohen can be reached at [email protected]. Golden can be reached at [email protected].