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4 reasons your health insurance needs a checkup

If you have an individual health insurance policy that was issued before March 23, some of the new health reforms may not apply to you.

By Stacy Johnson Oct 25, 2010 6:04PM

This post comes from Stacy Johnson at partner site Money Talks News.


Major employers that provide health care for employees have human resources departments that hopefully are making sure workers are taking advantage of the new reforms. But according to the U.S. Department of Health and Human Services, 17 million people pay for their own health coverage in the individual health insurance market.


If you're one of them, it's definitely time to give your policy a checkup.


Take a look at the following video, then meet me on the other side for more.

Here's a closer look at how coverage has recently changed:


Children with pre-existing conditions. Insurance companies  can no longer deny coverage to children under the age of 19 who have a pre-existing medical condition such as asthma or diabetes. So if you have a child in that category, this will help immensely -- if you can find coverage at an affordable price.

Free preventive care. For any plan issued on or after Sept. 23, preventive tests are free -- no co-payment, co-insurance, or deductible. Examples of preventive care, from the website:

  • Blood pressure, diabetes, and cholesterol tests.
  • Many cancer screenings, including mammograms and colonoscopies.
  • Counseling on such topics as quitting smoking, losing weight, eating healthfully, treating depression, and reducing alcohol use.
  • Routine vaccinations against diseases such as measles, polio, or meningitis.
  • Flu and pneumonia shots.
  • Counseling, screening, and vaccines to ensure healthy pregnancies.
  • Regular well-baby and well-child visits, from birth to age 21.

This new provision applies to people in both job-related and individual health insurance policies created after March 23 -- but not until the plan begins a new "plan year" or "policy year" on or after Sept. 23.


Take note: Individual health insurance plans that went into effect before March 23 -- the date President Obama signed health care reform into law -- are largely "grandfathered" and don't have to provide free preventive care. And plans can remain grandfathered indefinitely, provided the insurance company doesn't make major modifications that would either increase your out-of-pocket cost or reduce your benefits.


So, find out if your policy is grandfathered. If it is, and you want this benefit, your only option may be to cancel your existing coverage and get a new plan. Try our health insurance search tool here.


Lifetime limits. High deductibles are one way to lower health insurance costs, but not the only way. Some individual plans have offered lower premiums in exchange for low "lifetime limits." A lifetime limit is, as the name implies, a limit on what the insurance company will pay over your lifetime -- if you become seriously ill and reach your limit, your plan stops paying. However, as of Sept. 23, lifetime limits are gone for all plans.


In addition to lifetime limits, some policies also have annual caps -- a maximum the policy will pay every year. Plans in place prior to Sept. 23 with grandfather status can continue with annual caps, but the minimum cap for 2010 is $750,000 per person. Annual caps will increase every year until 2014, when they're gone forever.


Keeping your coverage. On Sept. 23, rescissions became illegal. "Rescission" is an innocuous word for a horrendous practice: insurers denying coverage after you get sick by citing a small mistake on your original application. For instance, as I mentioned in the video, if you did something as innocent as forgetting to mention you had your wisdom teeth removed, your insurer could theoretically cancel your entire policy -- including not paying medical bills you've already incurred.


The new rules still allow insurers to cancel your coverage if they can prove you made a "deliberate misrepresentation," but the burden of proof is on them -- and you get 30 days to appeal. This provision applies to every health plan, employer-sponsored and individual, but only for plan years or policy years that begin on or after Sept. 23.


Bottom line? Particularly for individual policyholders, it's time for an insurance checkup. You need to find out if your current policy is grandfathered, when it renews and when your plan year begins. And if your plan is grandfathered and you'd like to take advantage of some of these new rights, it may be time to go shopping -- often not a bad idea anyway. But if you do change, remember the cardinal rule when it comes to any kind of insurance: Never cancel any policy until you're absolutely certain that your new policy is in force.


If the rules regarding grandfathering seem confusing, here it is boiled down from's FAQ page:


Things that affect all plans, grandfathered and otherwise, for plan years beginning on or after Sept. 23:

  • No lifetime limits.
  • No rescissions of coverage when people get sick and have previously made an unintentional mistake on their application.
  • Extension of parents' coverage to young adults under 26 years of age.

Additional things you'll gain by dropping a grandfathered plan and getting a plan issued after Sept. 23:

  • Free preventive services.
  • Additional patient protections such as guaranteed access to OB-GYNs without prior referral and the ability to name a pediatrician as your child's primary care provider.

Still confused? Here's a simple, three-part prescription that will definitely make you feel better:

  • First, learn more about changes in health insurance by checking out this page of
  • Next, call your insurance provider and talk to them -- definitely ask if your plan has been grandfathered.
  • Finally, if you have any other questions, call your state's department of insurance. There's a list of them here.

More from Money Talks News and MSN Money:



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