Anthem Blue Cross, Serencsa and Feller-Freed - My Position

As I have mentioned in past blogs, sometimes I feel I need to address certain issues with regard to health insurance due to activity by phone and e-mail. I want to address my position with regard to both Serencsa and Feller-Freed options for Anthem Blue Cross subscribers. This is mainly directed at those Anthem Blue Cross subscribers who are not my current clients and are seeking assistance in changing to lower-cost coverage while being eligible for either Serencsa, Feller-Freed, or both..

Both Serencsa and Feller-Freed provide opportunities for plan changes within Anthem to lower cost coverage (if that is desired) WITHOUT any medical underwriting. Additionally, both Serencsa and Feller-Freed options are on the table until at least January 1, 2014 which means there will be multiple options to make the one-time plan change due to rate increases between now and 2014.

It appears that there are quite a few Anthem Blue Cross subscribers who do not understand their options under Serencsa and Feller-Freed and seem quite willing to give up those options for reasons that make little sense.

To be clear, both Serencsa and Feller-Freed provide plan change options and the ability to move to lower-cost coverage in a variety of 'open' Anthem Blue Cross health plans (plans currently sold to the public) with no medical questions asked. Since there are lower-cost health plans available to move to, it makes very little sense to look at changing insurance carriers in an attempt to lower rates and put oneself through medical underwriting and a new 2-year contestability period. I have a hard time finding a significant reason, in the current California individual & family health market, where it would make more sense to change insurance carriers than to exercise Serencsa or Feller-Freed rights with Anthem Blue Cross.

Once a person elects that change to another insurer, the protection and change options under Serencsa and Feller-Freed are lost forever. They can never be recovered.

I fully expect that at some point someone (or maybe a whole bunch of someones) is going to make that kind of change and later realize what they gave up (probably the first time the other carrier cranks up premiums with a rate increase and offers no guaranteed-issue change option), and that is when the fireworks are going to start.

I am not willing nor interested in assisting any Anthem Blue Cross subscriber who has un-exercised Serencsa or Feller-Freed protection in trying to buy health insurance from another insurance carrier just to try get a lower premium. I feel that this creates a legal exposure and at some point agents making these kinds of changes may face legal and E&O repercussions.

Sorry, but I don't do business that way. I will not take away a class-action entitlement benefit just to make a buck.

Good luck and God bless.

Dave
www.an-insurance.com

California Child-Only Health Insurance Refresher

Apparently there is a great deal of confusion with regard to child-only individual health insurance policies in California. I thought it would be a good idea to review it here.

Under SB 2244, all children in California under age 19 are eligible to purchase a child-only health insurance plan and they cannot be denied coverage for pre-existing conditions.

It is very important to understand that there is no guaranteed-issue application nor pricing level for children as a direct purchase. Children under 19 applying for individual health coverage must apply for underwritten coverage just like everyone else. If the insurance carrier determines that the child is an acceptable risk then they will issue coverage at the appropriate rating level relative to the risk.

Only if the child is DECLINED for coverage through underwriting do the guaranteed-issue rules come into play. It's not like HIPAA or Major Risk (PCIP or MRMIP) with direct guaranteed-issue pricing and application. Children MUST be underwritten first and declined for coverage before any rules about guaranteed-issue coverage are on the table.

IF the child is declined for coverage through medical underwriting, then the guaranteed-issue rate provisions are utilized to issue coverage on the child.

The rates for declined children who are issued under the child-only guaranteed-issue rules are as follows:

1. Late Enrollee - if a child is considered a late enrollee then the guaranteed-issue rate for that child after a denial from underwriting would be set at approximately double (2X) the standard premium for the plan

2. Not a Late Enrollee - if child is not considered to have late enrollee status and is not in birth month, then the guaranteed-issue rate for the child after denial from underwriting can range from about 350% to 450% above the standard premium for the plan

3. Surcharge - if the child has any gap in coverage between the date of last creditable coverage and the application submission date of the new coverage, the carrier will access a 20% surcharge for one full year above whatever premium rate applies to the child.

I hope this helps to clear up the confusion regarding this issue. Children in California under age 19 are guaranteed-issue in the sense that they cannot be denied coverage. However, the cannot just apply for guaranteed-issue coverage and skip the medical underwriting process. Guaranteed-issue for children in California only applies to children who are denied coverage through medical underwriting.

Dave
www.an-insurance.com