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Why Your Health Insurance Plan Doesn't Always Pay the Bill

Denied Stamp

People purchase insurance to protect themselves against the loss caused by an unexpected event. The possibility that such an occurrence could happen is referred to as "risk". The higher the risk, the higher the insurance premium. An uninsurable condition exists when the insurance company believes that payment at some point in the future is highly likely, that said payment would be excessive, and that it would cut into the company profit.

To the company—it's just business

While some non-profit organizations that provide medical care do exist, the vast majority of insurance companies operate for the purpose of making a profit for the shareholders and not of actually protecting the group members. There is always some level of risk that a loss could occur though—a house could catch fire, a person could have a heart attack, a distracted motorist could sideswipe your car. The basic concept is that if a loss should occur, all the members will help pay for restoration to the condition prior to the loss.

Covering certain situations is just bad business

From an individual perspective, you pay a premium to an insurance company because you want the peace of mind that if the unthinkable does happen, the bill will be paid. However, if you have any pre-existing conditions—which according to statistics strongly indicate that you will indeed have such an event at some point, the insurance company will not take you. From their perspective, it is virtually certain that at some point they will have to pay a claim for you, and that claim is likely to exceed your premium—meaning the company makes no profit on what you have paid.

In order for an event to qualify for true insurance, it must meet certain criteria: it must not have been under the control of or caused by the actions of the insured; it must be unexpected (meaning a condition almost certain to lead to the event could not have existed prior to the purchase of coverage); and it must be covered (subject to deductibles, copayments, or co-insurance) by the terms of the policy.

These basic requirements of insurance coverage mean that certain things are likely to be excluded unless an individual purchases a rider to cover them.

Here are the things insurance will NOT pay for, not even with a rider;

  • Suicide in the first two years of owning the policy. When a person commits suicide in the first two years, the company suspects that the insurance was purchased with a planned death in mind.
  • Death caused by an act of war. This one can be tricky. Some companies will not pay if a death was directly caused by an act of war—such as a soldier shot on duty—but will pay if that same individual was killed in an automobile accident. Other companies will not pay at all if a service person dies while a member of the military.
  • Self-inflicted injuries

  • Cosmetic surgery; weight loss surgical procedures are classed as cosmetic surgery. Insurance will generally not pay unless the individual's life depends on having the surgery.
  • Treatment for substance abuse, including use of tobacco; a few companies have bent on this one in recent years as substance addiction is regarded by many organizations as an "illness."

The things insurance won't pay for seem fairly obvious. Less obvious, however, are the events that insurance companies don't "like" to pay for, but will if the insured purchases extra riders.

Here are the events that traditional insurance PREFERS not to cover;

  • Pregnancy; regarded as a planned event that could be controlled by the insured. If you plan to have children, you usually need an extra rider to pay for care during pregnancy.
  • Preventive tests; lobbying groups have been successful in getting insurance to pay for PAP smears, mammograms, and colonoscopies. Bone scans,  PSA tests, and routine physicals are still not covered unless they are part of a diagnosis for disease or illness.
  • Dental care unless you purchase a separate rider. Dental care even under an HMO is frustrating to most people simply because cleanings, checkups and x-rays, and even extractions are covered at a much higher percentage than a root-canal or orthodontic care. And regardless of what the insurance pays, you have to pay the entire remaining amount charged by the dentist. That's because the American Dental Association has never agreed to participate in any insurance plan. That is, if they accept your insurance, they will take whatever is paid and deduct that amount from your bill. However, while an MD or hospital has to "write off" the amount over the allowable charge set by "usual and customary" tables, no dentist will give you the same consideration. Thus, the entire bill is paid either by you entirely, or by a combination of insurance payment and your own pocket.
  • Vision: You can purchase a rider that will give you discounts on eye-glasses and on the exam. However, you will have to pay any remaining amount. If you only get new glasses or contacts once every three or four years, the premium for the vision care may not be worth the benefit.
  • Hearing: Insurance companies may pay for a hearing test, but many will pay only a small amount or nothing at all for hearing aids.

Additional claims that may be denied:

  • In addition to the above list, many companies refuse to pay for emergency room care unless a life is in danger. Care given in an emergency room may require prior authorization.
  • Elective surgeries: You may think that a particular surgery was absolutely necessary in order to provide relief or a cure from a condition. However, if that surgery is not related to a life threatening condition or certified by a doctor as your only alternative for quality of life, expect the company to give you a hard time.
  • "Alternative" treatments: More than 60% of Americans seek out so-called alternative treatments. Many are tired of the endless routine of prescription drugs that treat symptoms but never actually result in a cure, while others simply do not wish to undergo dangerous surgeries or procedures that often themselves result in death. Alternative treatments that your insurance will not pay for include acupuncture, chelation therapy, alternative cancer treatments, and chiropractic treatment for anything other than spinal manipulation.  It's worth noting that the American Chiropractic Association fought for years to force insurance companies to pay for manipulation, but that is all that is covered. If the chiropractor performs any other kind of therapy, it will not be covered even though that same therapy may be paid for if performed in a physical therapy division of a hospital.