In A Dispute, Know How Your Plan Is Regulated
What do you do when your insurance company makes a decision that adversely affects you? It may be time to file an appeal. To prepare for this process, you should find out how your plan is regulated. You can watch our video at healthcarenavigation.com/videos to listen to the information on this topic. This topic involves commercial plans, not Medicare.
Individual Plans and small group Plans are fully-insured and regulated by a state insurance department. Fully-insured Plans receive premium dollars and in turn fully accept the risk to meet the benefit obligations defined in the Plan documents. Self-insured Plans are regulated under Federal legislation referred to as ERISA, Employment Retirement Security Act of 1974. Self-insured Plans are typically offered by large employers. The employer pays their employee’s claims from their own funds, i.e., they self-insure, and hire insurance companies to provide the network and process the claims for them. This is referred to as an Administrative Services Only (ASO) relationship.
So, other than being of interest to those who regulate insurance products, why does this matter? It matters because your rights in a dispute with your insurer vary depending on how that product is regulated.
Almost everyone, regardless of whether the Plan is fully-insured or self-insured, will have a first level appeal process which involves forwarding documents to the insurer and asking them to reconsider their decision.
If the insurer agrees with you, the initial determination is “overturned” and there is no further action for you to take. You won! If one is unsuccessful at the first level, then there is typically an opportunity for an external review of the complaint by a company your insurer contracts with for this purpose. It is once the second level of appeal is unsuccessful that the difference between fully-insured and self-insured plans usually makes itself known. The individual who is covered by a fully-insured Plan has the right to bring their grievance to the State Insurance Department, the entity that regulates the Plan. The State Insurance Department then reviews the consumer’s complaint and investigates the actions of the insurer.
An individual covered by a self-insured Plan who is unsuccessful at the first and second stages of an appeal does not have the option of the state Insurance Department intervening on their behalf since the State does not regulate their plan. They can bring the matter to the U.S. Department of Labor who will investigate. But before you go there, you should know that sometimes Human Resources in a large self-insured company can help resolve disputes on behalf of their employees before getting to this level of appeal. After all, it really is the employer you are seeking payment from. However, benefit administrators must be consistent with Plan documents and some employees will choose to not involve Human Resources in their private medical affairs.
Anyone can file a lawsuit after exhausting all sources of appeal but that is a resource-consuming last resort.
An appeal must follow the insurer’s procedure precisely. Find the specific information on your Appeal rights on your portal, in your Plan documents, or from Human Resources, if applicable. You can also call customer service at your insurance company for help locating this information. If you are insured by a large employer and you don’t know if the Plan is fully-funded or self-funded, ask someone in your Benefits Department to clarify this for you.
We have filed successful appeals on behalf of clients for many years but we believe most disputes are avoidable. Please become familiar with your Plan, your network and the rules and you will minimize disputes.
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