Exclusion Amendments in Indiana
Law Impacts Individual Policies
Beginning July 1, 2005, individual health insurance policies issued in Indiana may contain a waiver of coverage for a specified medical condition and any complications that arise from the specified condition. This is a practice common in many other states (including Illinois), but Indiana is proceeding cautiously, as the act is set to expire June 30, 2008.
The Indiana legislature wants some time to study the effectiveness of this practice before they extend it or refine it. So, there is uncertainty some form of this legislation will continue beyond June 30, 2008.
Limits on Condition-Specific Waivers
- The waiver period cannot exceed ten years.
- A health insurance policy cannot include more than two waivers per individual.
- Upon request, the insurance company must review the underwriting basis for the waiver one time per year.
- The waiver must be removed if the insurer determines evidence of insurability is satisfactory.
- Waivers may not apply to mental health conditions or to developmental disability.
- The applicant must sign off on applicable waivers before the health insurance policy containing waivers can be issued.
Doesn't Apply to All Insurance Companies
The law doesn't require an insurance company to implement this underwriting practice. In fact, Anthem Blue Cross and Blue Shield, the state's largest health insurer, is not issuing medical condition-specific waivers.
This means that for applicants with certain medical conditions (osteoarthritis and controlled hypertension are common examples) Anthem will not apply a coverage exclusion specific to the medical condition, but they will likely charge an additional premium over their "preferred" level. This is the same underwriting practice Anthem followed before the Indiana waiver law went into effect.
Is this Law Good for Indiana Residents?
Certain insurance associations strongly advocated this legislation, though Indiana's strong mental health lobby seems to have successfully defended its turf, as waivers cannot apply to mental health conditions or to developmental disabilities.
The general idea behind the legislation is that health insurance companies would be able to insure some people they would otherwise decline to insure. This would help address the problem of uninsured Indiana citizens and reduce the burden on the Indiana Comprehensive Health Insurance Association (ICHIA), which provides health insurance of last resort.
MedPlan Access is not so sure the waiver law is, on balance, a positive thing for Indiana residents. It means a very small percentage of people get insurance they could not otherwise obtain, and it means some people pay less for their health insurance. However, these people will tend to be enrolled in health insurance policies that don't cover the medical conditions posing the most immediate risk.
Time and study will tell if the waiver law tradeoffs produce a net positive outcome. Though, in our view, this legislation is not part of a comprehensive long-term health insurance solution for Indiana residents.
We're relieved that Anthem Blue Cross and Blue Shield has chosen not to adapt this underwriting practice in Indiana.
