Kids and Health Care: The Mechanics of a Claim
It is always good to understand how your claim will be paid.
For example, if you assigned benefits to the provider, the check will be sent to the provider. You will pay any deductibles and co-insurance. But if you did not assign benefits, the check will come to you and you will pay your providers the entire amount.
If your claim is denied, don't panic. Any company that denies a claim must submit an "explanation of benefits" letter to you. Read that letter carefully to find out the reason for the denial.
With traditional indemnity insurance, benefits are payable directly to you; generally, medical insurance policies provide reimbursement for covered expenses. This means the insurance company wants you to pay your bills first and then it will pay you.
There are other complicating issues.
After the insurance company receives notice of your claim -- either from you or from a doctor or hospital, it will usually furnish claims forms within a specified number of days. Most states require insurance companies to either process a claim, or at least tell you why it hasn't been processed, within 60 or 90 days. If it fails to do so, you may submit a written proof of the occurrence, character and extent of the loss either in the form of an official accident report or an affidavit.
So, whenever you submit a health insurance claim, you should do the following:
- Find out if your provider submits the claim or if you need to.
- If you need to do it, review the information to be sure it is complete and correct.
- File the claim as soon as you are billed by the provider.
- Send the claim to the correct address.
- Keep a copy of all documents for your records.
Since your health insurance policy is a legal contract, the insurance company is obligated to pay the described benefits for all covered expenses. If your insurer doesn't live up to its obligations, you have the right to sue. However -- in most states -- no legal action may be taken against the company prior to 60 days after proof of loss has been furnished, or more than three years after the date proof of loss is required to be furnished.
Of course, assuming that you'll sue your insurance company is a bad way to start the claim process. You shouldn't want this; it's not a cost-effective strategy, especially not for your kids. Despite the impressions you may have from John Grisham's legal fairy tales, lawsuits against insurance companies aren't dramatic windfalls; they're slow, grinding procedures. What you should want is to get your kids' medical expenses paid.
It's safe to assume that insurance companies will delay payments as long as they can without inviting lawsuits. But there are various things you can do to counter-balance this slow tendency:
- Don't accept a first offer -- or even a first denial -- by an insurance company as the final, unequivocal word.
- If the company doesn't respond quickly (within 60 days), ask for a formal explanation about its delay or denial.
- Reread your policy handbook or master policy (a master policy usually stays in the possession of benefits administrators for group plans; but anyone covered by a policy is allowed to see it -- or a copy -- on request).
- Check the policy's exclusions section. Exclusions identify types of losses that are not covered by the policy; they are the most common grounds on which insurance companies deny claims.
Exclusions are generally included to accomplish four broad purposes:
- to clarify intent of coverage;
- to remove coverages for losses that should be covered by other insurance;
- to remove coverage for losses that result from above-average risk factors that are not anticipated in rates and premiums (usually this coverage is available at an additional charge); and
- to remove coverage for catastrophic losses that are generally not insurable (although coverage may be available through special insurance pools or government programs).
Even if denial isn't your insurance company's ultimate goal, by playing the denial game it can achieve something almost as valuable to it -- a lengthy delay in paying the claim. The longer an insurance company can hold on to money, the better off it is.
But the law and, more importantly, the courts don't give insurance companies free rein to delay fair settlements as they please.
