AB 1945 (amendment to Section 10384 of the Insurance Code) recently passed in the State of California in light of all the recent publicity from insurance policy rescission’s. This Bill “prohibits a health care service plan or health insurer from engaging in post claims underwriting, defined to mean the rescinding, canceling, or limiting of a plan contract or policy due to the plan’s or insurer’s failure to complete medical underwriting and resolve all reasonable questions relative to an application for health care coverage before issuing the plan contract or policy“.
Insurance companies are still able to retro-review policies for omission of pertinent health information. However, in order to follow through and rescind a policy, the insurance carriers must first seek approval from the Department of Managed Health Care or the Commissioner of the California Department of Insurance. This bill is intended to protect the individual in question from a biased review of their case.
There are, of course, pros and cons to this bill. Those in favor state that this bill will provide protection to patients by means of regulators who will independently scrutinize policy rescission’s, and ultimately develop a standardized application that health plans and health insurers must use. Those against state, amongst other things, that uniform applications do not guarantee success and that the rescission rate is only at about 1/10th of all individual policies.
Tags: individual health, underwriting
