Dropped From Health Insurance Without Warning: Was It Legal?

Dropped From Health Insurance Without Warning: Was It Legal?

Caitlin and Corey Gaffer know they made a mistake.

Anyone could have done the same thing, the Minneapolis couple says. Still, they can’t believe it cost them their health insurance coverage just as Caitlin was in the middle of pregnancy with their first child.

“I was like ‘What?’ There’s no way that’s possible,” said Caitlin, 31, of her reaction to the letter she opened in early October telling them the coverage they had for nearly two years had been canceled. It cited nonpayment of their premium as the reason.

Except they had paid the bill, they thought.

The Gaffers’ snafu — and their marathon battle to correct the error with insurer HealthPartners — is featured in the podcast “An Arm and a Leg,” which launches its second season this week and is co-produced by Kaiser Health News.

Like the Gaffers, tens of thousands of Americans each year — exact counts aren’t available — are dropped by their insurers over payment issues, sometimes with little or no prior warning from their insurers.

The question is: Can insurers cancel people with little or no notice? The answer is yes … and no. Like so many issues in American health care, it is surprisingly complicated.

This is one problem the Affordable Care Act was designed to fix. Certainly, safeguards were put in place. Insurers can’t cancel people when they fall ill, for example. But the protections for being dropped for a missed payment are uneven. Consumers who get an ACA subsidy have more protection than those who don’t.

The Gaffers didn’t qualify for a subsidy. So they were subject to state law. Minnesota’s law requires insurers to provide at least 30 days’ notice before canceling, said Scott Smith, spokesman for the state Department of Health, which regulates HMOs. However, an administrative rule seems to undercut that requirement.

Misfired Payments

The problem for the Gaffers started in early September. They changed checking accounts and had to set up all new online payments. When they made their monthly $730 health insurance premium payment, they mistakenly sent it to a hospital owned by HealthPartners rather than the health plan itself. The hospital didn’t let the health plan know it had a payment from the Gaffers. Compounding the problem, the couple sent their October payment a couple of weeks later to the correct place but had insufficient funds to cover the amount.

The Gaffers got a letter from HealthPartners dated Oct. 8 canceling coverage back to mid-September. Caitlin was six months pregnant.

“It was a busy time in our life,” said Corey, 32, who runs an architectural photography studio. “We made these two little mistakes, but were never given any notice that we were making mistakes until after the fact.”

Why didn’t the hospital and health plan communicate about the misdirected payment? After all, they are part of the same system and that could have avoided the problem altogether.

HealthPartners spokeswoman Rebecca Johnson said its hospitals are supposed to notify the health plan if they receive premium payments in error, but said that “even though we have this process, we are not always notified of this or not notified in a timely fashion.”

As far as a past-due notice to the Gaffers, Johnson said HealthPartners’ policy at the time was to include information on monthly statements about outstanding balances.

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