maximum aggregate benefit in NY health policy

[ravgil]

What is the name of your state? What is the name of your state? New York

This concerns a major medical indemnity health policy, which was issued to my wife eight years ago, and it is guaranteed renewable until the expiry date. the carrier is a NY corporation. The expiry date is the day before the earlier of the date the last covered person is eligible for Medicare or that person's 65Th birthday. My wife is 61, and has applied (in April) to SSA for disability benefits, based on cancer and heart disease.

The carrier invoiced for the quarter beginning July 1, 2002, we paid on time, and the payment was accepted. On July 29th, the carrier sent us a letter saying the $100,000 maximum aggregate benefit had been reached and the aggregate of annual restoration had been consumed as well. The letter said, "There are no additional benefits available by the policy."

When the last payment was solicited and accepted by the carrier, there only about $1100 remained of the maximum aggregate benefit. My wife had been submitting numerous large claims for cancer treatment for nearly two years, therefore it was patently obvious to the carrier that $1100 would not be sufficient to carry her through the quarter. Nevertheless, it gave no advance notice, and accepted the payment.

Because the carrier often paid claims months after they were submitted, there was no way we could track the maximum aggregate benefit ourselves.

The carrier gave us no notice of the near-depletion of the aggregate. As a result, my wife took several cat scans and MRIs in June, that the doctor had ordered. These could have been postponed until we got new coverage, had we been aware of the situation.

The carrier had received approximately $14,000 worth of claims for these scans by the end of June, and there was enough left in the aggregate to pay only one of them (which was $600). The carrier did not pay ANY of these claims and did not notify us they were not paying them. Had they done the latter, and given the reason, we would have been aware of the depletion of the aggregate and sought other coverage immediately.

Because we had not been notified of the problem, we incurred the obligation of several thousand dollars more, for additional MRIs needed for an ongoing treatment.

Even when the benefits ran out, about July 18, the carrier still did not notify us, for 11 more days.

The carrier paid only some small claims that came in, and ignored the abovementioned large claims, which it had received earlier. Our total obligation, because on non-notification, approaches $20,000.

Please forgive the lengthy preamble. My questions are:

1: Did the carrier have to give us advance notice that the aggregate was nearly exhausted?
2: Did the carrier have to give us notice immediately upon exhausing the funds?
3: Did the carrier have to inform us immediately that certain large claims would not and could not be paid?
4: Because the carrier had accepted payment for the quarter during which the aggregate ran out, is carrier obligated to provide full coverage until the end of the quarter we paid for?
5: Did the carrier show bad faith by not notifying us in advance of the depletion of the aggregate?
6: What does "guaranteed renewable" mean to us, at this point, with no cash benefit available?
7: Is the carrier obligated in any way to provide insurance to my wife or coverage until she can find another carrier?

Many Thanks,

Ravid

 

[CIAA]

dear Ravid, our thoughts and best wishes are with you and your wife as you deal with her illness and these difficult issues.

Unfortunately, I'm not sure much can be done about your insurance problem. The answer to your questions 1,2,& 7 should be contained within the terms and provisions of the policy contract, otherwise I do not believe any required obligation
existed.

#3-Typically companies must notify you within a reasonable time of their claims decisions. However, this time period is usually 30 to 60 days, depending on the state.

#4-By accepting premiums the company is obligated to contiue the coverage in force but doea not have to pay claims not owing according to its terms.

#5- it's very doubtful

#6- unless you requalify for benefits for a different condition or after a period of remission or non treatment (this should be in your policy)contiuing coverage may be of little or no value. However I would suggest a careful policy review before deciding.

 

[ravgil]

Dear CIAA: Many thanks for your good wishes and analysis. I discovered one thing (which I didn't mention in my previous post), that seemed to rock the insurance co. rep back on her heels, when I mentioned it today. (She said she has to ask her supervisor and will get an answer.):

The Maximum Aggregate Benefit provision says: "We will pay up to the Maximum Aggregate Benefit shown on page 3 for all medical benefits incurred during the lifetime of a covered person..."
Directly under the Maximum Aggregate Benefit provision, it says:

"EXTENSION OF BENEFITS--If a covered person is totally disabled on the date his or her coverage ends, we will pay benefits for an injury or sickness connected with the disability as long as the person remains totally and continuously disabled, but for no longer than to the end of the policy year in which coverage ends. However, any benefits payable under this policy will be reduced by the amount covered by Medicare."

Since my wife IS totally disabled, we btained a note today from my wife's doctor stating that she has been totally disabled for several months, continuously until the present, and is expected to remain so for at least a year. The reason for the disability is given as cancer and heart disease.

This "Extension of Benefits" provision directly precedes a provision that guarantees coverage for pregnancy, even if the coverage ends during the pregnancy. I'm thinking that both these provisions are required by Federal laws, though I'm not sure which laws. Am I right, and if so, do you know the law that mandates an extension if the covered person is disabled?

Am I correct in assuming this provision would apply in our situation?

Thanks again for all,

Ravid

 

[CIAA]

Ravid, without researching I'm not familiar with any statutory requirement of coverage extension, except for Group coverage.

In this case, it does not sound as if the provision applies YET (because coverage hasn't "ended") and I'm afraid that the Company is going to take the position that this provision is meant to apply only when coverage expires AND is still subject to the maximum benefit provision.

I know this isn't exactly what it says. So let's hypothetically assume you stop paying the premiums and the coverage "ends". Then you argue that since the provision is called "Extension of Benefits" and directly proceeds the "Maximum Benefit" provision, that you had reason to believe benefits would be extended beyond the maximum and that the rules of construction could reasonably lead to the belief that this section, the place of it and the way it is worded, was meant to be a modifier of the "Maximum Benefit" provision; that, by law, ambiguities are to be construed in favor of the insured and that since the policy does not specifically state that the "Extension of Benefits" provision is subject to the "Maximum Aggregate Provision" (note: I don't know this), an ambiguity exists.

The Company will fight this interpretation and also point out that the $20,000 was incured BEFORE the coverage ended.

So, you should find a local attorney to review your policy in its entirety and help you make decisions on exactly how to proceed and if such an argument might succeed.

 

[ravgil]

thanks so much for your thorough reply. Unless the carrier rules in our favor, I realize we have to have an attorney read the policy.

It does say, elsewhere in the policy, "When benefits of any one covered person, as specified in Part D of the Benefit Provisions [the Maximum Aggregate Benefit provision], are used up, the insurance on that person will end on the date on which the last loss occurs." I assume "insurance ending" is synonymous with "coverage ending"?

The representative told me that the last claim was paid on July 29, the date the notifying letter was sent to us.

Thanks so much for all the help.
Ravid