Why was that Insurance Claim Declined?

The most common customer service questions we address are:
“Is this covered?” and “Why wasn’t this covered?”

All benefit plan carriers produce employee handbooks to inform employees of what their plans cover. ASSOCIUM clients receive booklets prepared either by the carriers or in-house. Most booklets are barely adequate (some are better than others) but none can go into enough detail to answer any and all questions. The handbook would have to be as thick as a phone book (you may remember those).

Unfortunately, the more frequently asked question is “Why wasn’t this covered?”. A question that comes after an employee has had their insurance claim declined. This usually comes in an Explanation of Benefits note listing what was and wasn’t covered from the most recent submission. Sometimes the reasons are simply due to the general plan rules:

  1. The claimant has already claimed the annual maximum allowable for a specific benefit or, in some cases, an overall plan maximum
  2. The benefit (vision, for example) was claimed before its anniversary date.

Plans can have one of two anniversary dates. Most will have a January 1 date for when maximums or deductibles renew. This is the easiest to track. Some, however, set that date as the anniversary of when the plan became effective. If the plan began in October then the maximums and deductibles would reset each October. Employees should make sure of that date – timing can make a huge difference.

Some benefits, such as Vision, audio and, sometimes, orthotic inserts, will renew after a specified period. Vision, for example, is generally every 24 months. That means that a claim cannot be submitted any sooner than 24 months from the previous claim.

Other claims have specific reasons for being declined. “Not covered under the plan” is a common reason. Employers establish plan designs with the carriers depending upon what they can afford. Limits on or the breadth of the offering are ultimately communicated in the booklet however, often employee expectations are different. For example, we have received concerns about acupuncture claims being declined when acupuncture was never covered in the first place.

What is potentially available in a benefit plan is actually determined by the Canada Revenue Agency. Rules around what may or may not be included can be blamed on CRA. For example, over the counter drugs are not allowed. Neither are health club memberships, off-the-shelf orthopedic shoes or psychotherapists. As much as an employer may want to offer these kinds of benefits, the carrier’s hands are tied by CRA.

Another common reason for decline is for compound medications, usually a cream that is prepared by a pharmacist. CRA requires that a medication such as that contain an acceptable amount of a medication with a DIN (drug identification number) to qualify. For example, a sun block with hydrocortisone content may not have enough hydrocortisone to qualify as a medication under CRA rules.

Other reasons for decline, addressed in past newsletters can include claims paid in cash with no proof that money has actually been exchanged or when a particular practitioner has been ‘blacklisted’ by the insurer. As frustrating as this can be, these criteria are designed to protect your plan as well as the employees.

As always, the best way to avoid surprise and frustration is for employees to read and understand the employee handbook or contact the insurer in advance for large claims or when there is a new provider so they can plan accordingly.

Life and Disability Claims

Declines of life or disability claims are usually very specific to the claimants’ circumstances.

A claim made for an issue arising during the probationary period or six month previously will be declined because the employee will not have been eligible at the time the illness, injury or death occurred. Pre-existing conditions are usually defined according to when the employee did, or should have received treatment. For example, a new employee in treatment for cancer at the time they are hired cannot claim LTD, once eligible for benefits, for that cancer. If, on the other hand, they are injured or suffer an unrelated illness, they can be approved for LTD.

In our experience, not submitting sufficient medical information to satisfy the insurance company often leads to a decline in short or long term disability. This can be due to the attending physician not providing the required information for an insurer to make a determination. The more information provided, the easier it is for the insurer to approve. This can be very frustrating for everyone, especially an employee dealing with a health issue. We always encourage employees to contact us to assist in the process if it isn’t going as smoothly as it should.

Again, understanding the plan design and the plan rules makes it easier for employees to ensure that claims are paid. A little work in advance can save grief in the long run. As always, ASSOCIUM is available to assist when an employee is not satisfied with the outcome of a claim.

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ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.