What is conditionally renewable?
In some cases, the insurance company may not cancel your individual health plan, but may elect to stop offering that plan to new members and raise the rates for all those choosing to remain on the plan. This usually occurs when the plan you are on is not conditionally renewable. In this case, the insurance company is obligated to continue providing you with the same level of coverage that you originally purchased and may not reduce benefits. When you are covered under a plan that is no longer offered by the insurance company, these are referred to as “Old Portfolio” plans and are often subject to greater rate increases than plans that are currently being marketed to new prospective members. Many large group health plans are written with a conditionally renewable clause that allows the insurance company to decide if they want to renew the group plan at the time of open enrollment, which occurs once per year. If the group has had many claims and the insurance company has suffered a loss as a result of insurance that group, they may elect to offer a substantial rate increase or decline to further insure that group. With large group health insurance, the insurance company may cancel just that one group and are not required to cancel all other groups insured under that same plan. 1 CommentLeave a comment |
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What is conditionally renewable?
If you purchase a health plan that is “conditionally renewable” the insurance company from which you have purchased this coverage may elect to cancel the policy for various reasons. If your individual policy is cancelled by the insurance company, they may not single you out based on your personal claims history. They must cancel the policy to all persons insured under that same plan. From time to time an insurance company may decide to reduce the benefit levels on one or more of the health plans that they offer. When they do this, they are essentially canceling your previous policy and issuing you new coverage under the modified terms. As the insured member, you have the right to not accept these changes and withdraw from the new plan.
I have recently come into contact for such a health care plan that is ‘conditionally renewable’ where the policy will automatically renew until the applicant reaches a certain age. I forgot what the cutoff age was exactly for this type of insurance. My father is covered under such a health care plan and I find it sad that it is so easy to discriminate otherwise healthy individuals just because they reach a certain age. Of course he always has the option of Medicare but I am not sure if that will be the same quality as he has been receiving until now. I guess it makes sense from a business perspective that the insurance companies want to make sure that they limit exposure to high risk group but still it doesn’t seem quite right. If my father wants to stay on the plan it includes much higher premium which will be rising every year.
Comment by Vergie — June 2, 2009 @ 7:36 am