The Insurance Intelligencer -- No Happy Dance for Elizabeth

[Justin]

The Insurance Intelligencer
10/18/09

No Happy Dance for Elizabeth

This week, I lost an appeal. I want you to know who defeated the mighty Insurance Warrior, so that you can run like the wind from this indomitable beast.

The Insurance Warrior was defeated by ... drum roll please ... a self-funded plan.

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For years, I have been warning you about self-funded plans. Do you even know if you have one? If you work for a large company -- chances are that you do.

In a self-funded plan, YOU HAVE NO INSURANCE. How is this possible? In a self-funded plan -- regardless of what coverage the plan documents say you have -- your employer has sole and absolute power to over-ride the insurance company, and interpret the plan as they see fit.

Your employer is not an insurance company. Therefore, if you are covered by a self-funded plan ... you cannot speak to the Insurance Commissioner, and you are not protected by state insurance law. Let's say that your state has certain minimum requirements for health care: Insurers have to provide mammograms, a certain level of prenatal care, etc.

Your self-funded plan does not have to do anything. State rules and regulations do not apply. In a self-funded plan, your insurer is free to provide sub-standard care as defined by state law -- because your employer is not an insurance company.

"But I HAVE an insurance company, " You say, "It is self-funded, and the insurer is Acme Blue Cross Blue Shield." Joke's on you. The minute that a health insurer enters into a self-funded plan, it instantly becomes "not-an-insurance-company." Your Acme BC/BS is now, magically, a "third-party administrator."

Instead of being governed by state law, self-funded plans fall under ERISA. That would be federal law, good luck appealing to them. ERISA was designed to regulate employee pension plans. Sneaking self-funded plans into ERISA was the world's biggest gift to health insurers.


Take your employer to court?

In your self-funded plan ... there is no insurance company. You have no insurance. All you are left with is the whim of your employer. After your employer denies your treatment, your only option is to hire an attorney, and take your employer to court. There are, however, major disincentives to doing so:

• Do you really want to fight your employer in court, after spending a year fighting cancer? Most people will never take their employer to court. Employers and insurers know this.
• In an ERISA case, the court is not allowed to award damages. If you win your case, all you get is payment for the treatment that they should have paid for to begin with.
• In an ERISA case, the court is not allowed to let you recover attorney's fees. You will have to pay them, even if you win.
• Sound like the deck is completely stacked against you in a self-funded plan? It is.

I have heard of two cases where the employer denied because, "You have a higher salary than most of our managers. If we pay for your cancer surgery, the other employees would be jealous."

They can say whatever they want, they can deny for any reason they choose. You have no protection, you have no recourse, there is nothing you can do about it. It is a self-funded plan.


Elizabeth's employer spits in my eye

Last week, I fought a fierce appeal for Elizabeth from Boston. She needed the same lifesaving surgery that I received four years ago. Her surgery is scheduled for October 20.

It is a self-funded plan: Philips Healthcare is the employeer, with Empire Blue Cross Blue Shield as the "insurer."

I deployed my usual strategies, and prepared and delivered my usual masterpiece of persuasive expository prose. In response to my appeal document, the president/CEO of Empire BC/BS contacted Elizabeth personally, and hooked her up with a decision-maker who could move her case along.

By Thursday afternoon, Empire BC/BS had approved the treatment. They promised to have a single-case contract ready for signature and on Dr. Sugarbaker's desk by 40 p.m.

At 20 p.m. on Thursday, Philips intervened. They said, in effect, "We don't care if the insurer approved. We aren't paying."

Yes, they can do that. And so can your employer. Pay heed to the fine print in your plan documents:

Philips, as the Plan Administrator, shall have the exclusive right, power, and authority, in its sole and absolute discretion, to administer, apply and interpret the plan and any other plan documents and to decide all matters arising in connection with the operation or administration of the plan.

Sound like your employer has divine power over your life and death? They do.

Run, run like the wind from self-funded plans.

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Know anyone who is fighting an appeal?

Steer them to my new CD, The Sample Appeal.

The Insurance Warrior

Happy and peaceful Insurance Warrior-ing,

Laurie Todd
Health Insurance Help
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[Katie]

I'm on the mailing list for this website, and got this email last night. I was actually quite taken aback with it, as so many here seem to have this sort of coverage. The implications she mentioned about suing your employer for coverage just sent shivers down my back.

I guess I'll still take our system over the problems that this one offers. I sincerely hope that no one here is caught up in a nightmare like this.

[Cindylou]

Pretty nuts, huh, Katie? I am one of the one's she is referring to with the response of "your husband is an executive and already makes a substantial salary. You can pay for it yourself. It wouldn't be fair to the other managers." (when I was denied for my 3 lumbar artificial discs) Now, in this down economy, we are being forced to sell our house to stay afloat. If we still had that $75,000 in our savings that we used to pay for my surgery, we wouldn't be in this predicament. Will we survive? Hell yeah. I am not a giver upper. And yes, we are with a self-funded company.

[Terry Newton]

WoW! Pretty nifty stuff here. Sounds like a little health reform needed now to intervene. Of course the deck is still stacked against us. We elect these people to represent us and they will represent a corporation that pays for their loyalty with jobs when they get out of office.

This is a frightening case here. Profits before people.

[Katie]

Cindylou, I am so sorry that this is the predicament that you and your husband are in right now. But as you said, you are a fighter and will come out on top of things.

I think that is what I like most about you...the stick-to-it-ness Maybe we need to set up a little commune up here Time to join forces!