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Post date: April 28 2003

Health Plans To Reinstate Insurance Coverage For Seniors

Attorney General Spitzer today announced an agreement with two health insurance plans to reinstate the individual health insurance policies of their senior citizen members whose policies were improperly terminated.

Under the terms of the settlement, Health Insurance Plan of Greater New York (HIP) and Health Net of the Northeast (Health Net), will permit current and former members to reinstate policies terminated when the members reached age sixty-five and allegedly became eligible for Medicare.

"HIPAA and New York law are clear - plans cannot discriminate on the basis of age or Medicare entitlement in deciding to renew or terminate individual health insurance coverage," Spitzer said. "This agreement ensures that senior citizens have more choices when and if they become eligible for Medicare. Those with high prescription drug costs - - costs not covered under Medicare - - will be able to keep their individual policies to have coverage for such drugs. Others, such as recent immigrants who are not eligible for Medicare simply because they turn sixty-five, will be able to keep their individual plans, which provide them with critical coverage as they have no other insurance options."

Spitzer's Health Care Bureau began an investigation after a consumer complained that HIP had notified him that it planned to terminate his policy on his sixty-fifth birthday. The consumer had high brand-name prescription drug costs for cancer treatment, which would have quickly surpassed the $500 allowance for brand-name drugs under the Medicare Health Maintenance Organization that HIP encouraged him to join as a replacement for the terminated policy. A Health Net member lodged a similar complaint.

The Attorney General found that HIP and Health Net sent their senior citizen members a series of letters improperly stating that their coverage would terminate when they turned sixty-five and allegedly became eligible for Medicare. HIP terminated the policies of sixty-one members who refused to discontinue their coverage. While Health Net did not terminate any member's coverage based upon age or Medicare eligibility, it did threaten to do so, and sent similar misleading letters to its members. Additionally, both plans' insurance policies unlawfully provided that benefits would terminate upon Medicare eligibility at age sixty-five. HIP and Health Net members that terminated their coverage based upon the misleading letters and policy language could number in the thousands.

Robert Hayes, Executive Director of the Medicare Rights Center, said: "The Attorney General's action helps to ensure that seniors can retain access to prescription drug coverage through their individual policies. Of course, the best solution would be for Congress to place a comprehensive, affordable prescription drug benefit in Medicare, but until that happens the Attorney General has preserved important coverage choices for seniors by protecting their right to renew their policies."

The agreement provides reinstatement and other restitution choices to members based upon their needs and coverage they may have now:

  • All terminated seniors can choose to be reinstated prospectively in a HIP or Health Net individual insurance policy;
  • Immigrants and other seniors who are not Medicare-eligible and not enrolled in other individual policies may reinstate their HIP or Health Net policies retrospectively to the date any such policy was terminated;
  • Seniors who enrolled in other individual insurance policies may be reimbursed for premiums they paid for such replacement coverage in excess of the HIP or Health Net premiums they would have paid; and
  • Senior members who are Medicare-eligible and had high prescription drug costs after their plans were terminated may choose a retrospective prescription drug benefit rider, allowing them to seek payment for past bills that should have been paid by the plans.

HIP and Health Net are required to send notices to all affected senior citizen members informing them of their rights to reinstatement and other restitution, and to all of their members informing them of their rights under HIPAA and New York law to renew their individual health insurance policies.

HIP and Health Net will pay the Attorney General's Office $75,000 and $50,000, respectively, for the costs of the investigation. The Attorney General acknowledged the cooperation of both HIP and Health Net with the investigation and their extensive efforts to provide a fair and equitable resolution.

The case was handled by Assistant Attorney General Susan Kirchheimer under the supervision of Albany Section Chief Troy Oechsner and Health Care Bureau Chief Joe Baker.

Consumers may contact the Health Care Bureau's toll-free Health Care Helpline at (800) 771-7755 (option #3 on the automated voice menu).