Can your health insurer drop you without notice?
We’ve all heard the horror stories. You go about your business, confident in the knowledge that your health insurance has got your back – then you get a nasty shock when you hear that your health insurance policy has been cancelled and you’re no longer covered.
But is it true that your health insurance provider can drop you without notice? Is it legal, and in what circumstances are they allowed to terminate your cover before it’s done? Is there anything you can do? Find the answers below in this guide.
- Your health insurance provider can drop you if you give them fraudulent or false information, if you are not paying your premiums, or if you leave your employer who is paying for your health insurance.
- Your health insurance provider is NOT legally allowed to drop you over mistakes in your application, because you have a pre-existing condition, or for making too many claims.
- If you are about to be legally dropped by your insurance provider, they must give you at least 30 days notice to appeal the decision.
- 1 Can your health insurance provider drop you without notice?
- 2 Yes, your insurance provider may drop you if…
- 3 No, you cannot be dropped if…
- 4 If your health insurance provider dropped you, what do you do?
Can your health insurance provider drop you without notice?
Let’s get right to the point – can your health insurance provider drop you without notice? The short answer is, yes, and no.
There are some instances where your insurance provider is legally allowed to terminate your cover before your contract is over. But, you should also be aware of the reasons you cannot be dropped, so you can immediately file an appeal and prevent your cover from being terminated.
Yes, your insurance provider may drop you if…
Your health insurance provider may be legally allowed to drop you for the following reasons:
1. You committed health insurance fraud
Committing health insurance fraud is the most serious cause for your health insurance provider to drop you. Health insurance fraud is defined as willful deception of a health insurance company using false information in order to obtain financial gain.
Some examples of patient or individual health insurance fraud are:
- Falsifying or not disclosing the real extent or nature of a condition in order to receive higher benefits during claiming
- Allowing someone else to use your identity and health insurance membership in order to avail of health care benefits
Insurance fraud is Illegal, and it costs the insurance industry more than $2 billion every year. Depending on the circumstances of the fraud and amount of money involved, you could face penalties ranging from fines to actual jail time.
2. You don’t pay your premiums
This reason is perhaps the most obvious. Signing up for health insurance means that you are entering into a business transaction with your insurance provider, in which they will provide you with coverage in exchange for you paying regularly for their services. It follows that if you don’t hold up your end of the deal, your health insurance provider is not obligated to keep providing you with coverage. They must provide you with reasonable written notice before cancelling your membership.
To avoid this, make sure that you make your payments on time consistently. If you are facing financial troubles and are unable to pay for your monthly premiums, contact your health provider as soon as possible and see if it is possible to suspend your cover until you are able to pay for your premiums again. (Tip: If you are currently shopping around for health insurance, best pick a provider that offers this option.)
You may temporarily not be able to claim benefits while your account is suspended, but this will be better than being dropped by your provider entirely and having to apply for new cover elsewhere.
3. You leave your employer
Your employer may offer a corporate health insurance scheme as part of your employee benefits. While this usually means access to discounted rates, it could even be paid in part by your employer. This means that if you resign from your job or are let go by your employer, it could affect your discounted rates or policy.
If you are anticipating cutting ties with your employer and would like to continue your existing cover, speak to one of your insurance provider’s qualified insurance experts. They can discuss options such as shifting from being under a corporate insurance scheme to being an individual policyholder, or simply taking out new cover entirely.
No, you cannot be dropped if…
However, your health insurance provider may not be legally allowed to drop you for the following reasons:
1. You had mistakes on your application
There’s a world of difference between intentionally lying on your insurance application and simply making an honest mistake while filling it out.
As we discussed above, deliberately lying on your application is fraud. Your insurer is entitled to cease coverage or deny a claim if you’ve been dishonest.
However, health insurance providers are not likely to take away your coverage due to an honest mistake or a technicality; they are obliged to look more critically into anomalies in your information to determine whether these have any real bearing on the “risk” you pose the company.
Nevertheless, avoid this problem by going over your application with a qualified health insurance professional to ensure all your information is accurate before submitting your application.
2. You have a pre-existing condition
Imagine getting health insurance to assist you with finances if you ever get sick, then finding out you are sick and being told your provider will no longer cover you because of your illness. According to Australian law, private health insurance providers are not allowed to drop you due to pre-existing medical conditions.
A pre-existing medical condition is defined by the Private Health Insurance Ombudsman as a chronic ailment, illness or disorder that has existed at least six months prior to purchasing your health insurance policy. The law says that you may not be refused access to private health cover because you have a pre-existing condition, nor can your health insurance provider raise your premiums because of it.
However, business is still business. So if you currently have a pre-existing condition and you’re just about to take out health cover, your health insurance provider may impose a 12-month waiting period before you may claim your benefits for that condition.
3. You take out too many claims
Your health cover may have benefit limits in place, which indicate the maximum you can claim for a particular service or treatment. It is not usually based on how many times a year you file for a claim, but on the total amount claimed.
This is usually an annual benefit limit that resets each year, though some types of treatment—for example, orthodontics—may have a lifetime limit capping how much you can claim for a service.
These limits should be spelled out in your policy’s terms and conditions. Regardless of these limits, your insurer cannot drop you without notice because you’ve made too many claims; if you reach the limit any subsequent claims for the named treatment will be denied and you’ll have to pay out of pocket.
If your health insurance provider dropped you, what do you do?
Now that you know the proper reasons for which your health insurance provider can or cannot drop you, you will be more equipped to lodge a complaint if you need to.
If your health insurance provider claims it has grounds to drop you, they must give you ample time to investigate the matter, file an appeal, and make preparations to get new coverage. To accomplish this, your provider must give you at least 30 days’ notice before terminating your coverage.
Australian law dictates that to resolve disputes, insurance companies must have two channels available to investigate complaints:
- an internal complaints process, in which you ask your health insurance provider to make a thorough and fair review of your case, and
- an external complaints process, in which you ask an independent dispute resolution team to investigate and review your case (such as the PHIO). If the external reviewer rules that you were wrongly dropped, the company must continue to provide you the payments and services agreed-upon in your plan.
To learn more about health insurance, visit [HIC URL], or view our comparison tool to know more about the health insurance providers available to you.
Disclaimer: The above information is correct and current at the time of publication
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