Cancelling Your Policy

According to CNN and the NPR podcast on This American Life, health insurance companies have saved over $300,000,000 in the last 5 years by rescinding policies purchased by their sickest customers. That is a huge savings to the insurance industry and a cruel burden to the ex post facto uninsured consumer.

By waiting until after a claim is presented to do its underwriting the insurance company collects premium and avoids declining to sell policies to individuals who turn out not to need them. If the individual develops a condition that is likely to result in large medical costs the insurance companies scour the customer’s medical records to see if there is any basis for contending that the customer had a medical condition that materially affected the customer’s health. Even if the customer did not know of the condition and the failure to disclose was completely innocent the insurer will frequently deny the claim.

This is unfair to the customer on several levels. Most important, if the insurance company had said it would not provide coverage in the first place the customer could have looked elsewhere. If your insurer rescinds your policy after you get sick, call your lawyer.