The Pitfalls of Snowbird Insurance

Winter 2008 CSANews Issue 69  |  Posted date : Dec 23, 2008.Back to list

As related by Paul Burdette, Lifetime CSA Member

Last year, my wife and I went away as usual to Florida for the winter. When I purchased our insurance, I disclosed that I had bone cancer and of course, was told that I would not be covered for the pre-existing condition, which I was comfortable with. Around the middle of February, I started having double vision. I called my ophthalmologist and he told me to go into emerg at the hospital and get checked out, as it could be vascular related. I called the number provided by my insurance and was told it was fine to go and I was covered. After being checked by the doctor, he wanted to do a CT scan on my head. I called from the hospital to the provider to check that I would be covered and was again told I was. After that, the doctor said they would need to do an MRI, so again I called and again I was assured I would be covered.

After the MRI, it was determined that I had two lesions in the back of the base of my skull that were causing the problem, and they wanted to do radiation on them. Again I called and was told no and they would fly my wife and I back to Toronto so I could get treated back at Sunnybrook Hospital, which we did and two weeks later we went back to Florida.

After we arrived home, I started getting bills from the assistance company, and they said "paid" on each one, but there was no cheque number shown, which I thought was for security reasons. A short time later, I started to receive bills from the hospital and the doctors. Upon making inquiries, I found out that the insurance company had refused to pay. I then inquired as to why and was told because it was a pre-existing condition. But I said I inquired each time as to whether I was covered and was told "yes." I felt that the procedures were exploratory until they found the cause. I was told to file a grievance, which I did, and of course they came back with the same answer. I know I was honest and up-front with my application and purposely checked to make sure I was covered each time. They had all my information, so why did they tell me I was covered? Because had I known I wasn't, I would not have gone through with it and just went back home to be checked out. So now I am out $4,590.00 from my pocket for their lies.

Is there any way that you know of that I can recover any of my expenses from the Ontario hospitalization plan? I hope others will learn from this, as there is a lot of honesty lacking in some of these insurance providers.

Paul Burdette, Alliston, ON

Some lessons can be hard to learn and there are several issues that confronted Mr. Burdette on his trip this year. The first issue arose even before his trip began. Many people believe that they are able to save money by "excluding" coverage for a condition they have, or have had, in the past. The money-saving part is correct, but all you are really doing is putting a very strong tool in the insurance company's hands – the Right of Claim Denial. The policy words usually go something like this…"No amount will be payable for any claim directly or indirectly related to (your condition)…" People often make the decision that they can live with this clause, not really understanding the full impact of these simple words. We, at Medipac, often see very large claims from other insurance programs, some in the many hundreds of thousands of dollars, in exactly these circumstances. Claims that were declined and for which the person, in turn, is asking for Medipac's help! Some were declined fairly, some were declined unfairly (in my opinion), and some were outrageous declines (also, in my opinion).

I want to give you some possible claim scenarios in Mr. Burdette's exact circumstance of having bone cancer:

1: Mr. Burdette's actual letter of decline was based on the investigation to determine the cause of symptoms. An in-depth workup can cost up to $50,000, by the way. Claim denied.

2: What happens if Mr. Burdette should fall and break his hip? Insurers can assume that the break would not have occurred if there were no bone cancer-caused weakness. Claim denied.

3: What happens if a cold turns into pneumonia, thus requiring hospitalization? Is his immune system weakened by the anti-cancer drugs which he is taking? Or by the chemotherapy that may have been necessary in the past? Claim denied.

4: How about a simple reoccurrence of the bone cancer itself? The symptoms flare up again, resulting in emergency hospitalization. Claim denied.

5: Did I mention a car accident? What caused the car accident? Did the driver black out due to the drugs that he was taking? Was the driver drowsy due to the immense bodily stress of dealing with the bone cancer? Were the injuries magnified by the cancer? Were the driver's reaction times slower than a normal person because...?

My point is that we do not really know what any individual insurance company will do in the above situations. Generally, the larger the claim, the more likely a denial. Unfair, I know, but claim investigations cost money and legal actions cost a great deal of money and that is part of the decision-making process in many claim denials.

Another lesson to consider is that Mr. Burdette stated that if he had known the claim would not be paid, he would have..."just went back home to be checked out." If you read almost any policy, you will find a clause that states that any tests, procedures and/or treatment that can be safely delayed until you return to Canada are not covered. This return-to-Canada timing means now, not at the end of your normal trip. This is another possible reason for claim denial.

Recommendation: always buy insurance that covers the medical conditions you have!

Pay those extra hard-earned dollars to take away a reason for possible denial of your claim.

The next lesson is to understand the role of your assistance company. We, at Medipac, started our own assistance company in 1997 because we were unhappy with the treatment and advice which our clients were getting during an emergency event, when they called our prior assistance companies. Clerks were answering the phone when someone was calling in with a possible heart attack or stroke. This was nuts! So, we hired critical care nurses, trauma nurses, emergency nurses and our own doctors. And they answer our phones.

The role of an assistance company is to assist you in a medical emergency and to guide you through foreign health-care systems. Their goal is to get you the best treatment plan and the best care that they possibly can.  And at a fair price, of course. But there is a disconnect here. This is medical insurance we are talking about! Determining coverage is not the job of an assistance company; this is the job of the claims payment department, often a separate company, and these jobs are often done in different places for that very reason. There is a valid fear among insurers that if you tell a client that they are not covered, in the middle of a claim, it will make the claim worse. I often suspect that clerks are placed on the emergency telephone lines to just say nice things and nurses are placed in the claims department to figure out ways to deny claims. That was a joke, I think.

To find out if your bills will be paid, you will normally have to speak to a claims person, usually at a different telephone number. And they will usually be non-committal until all records are received from your Canadian doctor.

Mr. Burdette was flown back to Canada to receive treatment. This assistance company was doing its job. When things get complicated, as they did in this situation, the best option for all parties is to return to Canada for treatment. The patient must be stable and medically cleared for transport, of course. This can also raise some fairly complicated issues. There are situations in which an assistance company will determine that there is no insurance coverage and they may demand money up front to fly you home. Medical air evacuation from parts of Africa can cost more than $100,000, and it routinely costs $15,000 and up in North America.; will that be cash or Chargex?!

Recommendation: if the assistance company wishes to bring you home, I would agree to go

Another factor is that some insurers are very reluctant to fly you home due to the perceived risk, especially when bank insurance coverage is involved. There have been very rare occasions over the years in which a patient has died on an air ambulance and the bad publicity can be a nightmare. Banks are sensitive to bad publicity, as are all companies, and they can be quite reluctant to air evacuate a patient. If you may not be covered due to a pre-existing condition and there is a reluctance to "fly you out," medical costs can escalate quickly due to delays and complications. In many cases, the assistance company also has the right to deny any costs incurred after they wanted you to return to Canada, so this is another reason to go.

Recommendation: get a pre-existing condition waiver and extension in writing

Mr. Burdette returned to the U.S. after his follow-up treatment in Canada. Was he actually covered for the rest of his trip? My guess is a resounding "No!" for lots of possible reasons. First, the episode in the U.S. will be treated as a pre-existing condition for any further emergencies. Second, the investigation and treatment in Canada will also be treated as a pre-existing condition. And most policies provide for immediate termination of the insurance policy on return to Canada for medical reasons. The chances of Mr. Burdette's policy providing any coverage after his emergency are slim to none. However, if a request is made to the insurance company to waive the (new) pre-existing conditions and to provide coverage for the balance of his trip, they may comply.

Recommendation: always get full copies of your bills before you leave the clinic or hospital, if possible

Mr. Burdette's bills were sent to him marked paid, and they may have been paid at one point. Once the insurer realized that there were pre-existing condition issues, they denied the claim and probably got their money back from the hospital. In fact, the money may not have been paid but instead, "credited" to the hospital's account and then reversed. There is also another possibility, as I thought that the bills were very, very low for the services received. Most assistance companies have special arrangements with various hospital groups and clinics, in the U.S. in particular. The bills may have been paid at a reduced rate by the insurance company, thinking that they had a valid contract for services at a lower rate than that billed. So it is possible that Mr. Burdette's bills were say $20,000, of which the insurer paid $15,000 under their contract with the hospital and the approximately $5,000 difference was the discount. The hospital possibly refused to honour the discount, which happens more often than you would expect, and "balance billed" Mr. Burdette for the unpaid amount. Without many more details, I cannot state for certain what happened, but these are everyday occurrences in the travel insurance business. How they are handled is the true measure of your insurance policy. If possible, always get full copies of your bills before you leave the clinic or hospital, even though the insurance company will be paying the bills directly to the provider. Say that it is for your doctor's records.

One last point...

An assistance company that has a contract to collect money from OHIP or another provincial health-care plan is required, by the contract, to collect any monies due, whether the claim is payable or not. Mr. Burdette should not have to collect any money from OHIP; that is the insurer's responsibility. In reality, the amount of money which the government pays is very, very low, averaging between five and eight per cent of most claims.

Thank you for your letter, Mr. Burdette; Medipac will be happy to assist you in any way we can. My last recommendation is too obvious to state, as I have said it all before.