Understanding the Reasons Why Group Insurance Claims are Denied
On the surface, a group insurance package makes a lot of sense. The employer and the insurance company create a plan based on the needs and budget of your company. Once the agreement is signed you and your employees pay the insurance company money to keep the policy active. It may seem simple, but insurance contracts are far from simple. There are many stipulations and obligations that must be fulfilled for claims to be approved. Here are some common reasons why Canadians have their group insurance claims denied. It’s always best to team up with an experienced insurance broker to help guide you through the process of setting up an employer-run group benefit plan and to explain the various elements in the policy that can be hard to understand and may cause future issues. The same holds true with an individual insurance policy.
Think about the stress that can occur with a denied claim for an essential medical procedure, a disability claim, dental work, or a drug. Employees pay into their employer operated benefit plans for years in many cases, they do so with the peace of mind that if an issue occurs they and the families will be protected.
A lot of times people think they’re coverage includes something that actually isn’t. There are almost no two group insurance policies that are the same. It’s important to read the fine print and understand the exclusions and coverage of your own plan. It’s common for an employer to revise or downgrade a group benefits package to save money, and they don’t know exactly what’s been cut until an accident, illness or death occurs. Speak to your insurance advisor before making any modifications to your plan, oftentimes a solution can be found that can save money without greatly hurting the range of coverage.
Anything can happen and it’s important to make sure that you group benefits package will have the ability to protect your employees with the best possible coverage. Working with a trusted insurance advisor is the best way to prevent negative experiences from happening. There are many different reasons why insurance claims are denied and your advisors will help you design a group benefit plan that lessens these risks for both today and tomorrow.
Insurance companies will sometimes deny claims due to a lack of ‘objective evidence’. There are certain illnesses out there such as migraines, fibromyalgia, chronic fatigue syndrome and other ailments that are hard to diagnose with traditional medical tools such as x-rays, MRI’s or other standardized tests. With a lack of concrete test results, insurance companies will sometimes deny claims for illnesses that are legally known to impact both one’s quality of life and hinder their ability to work but where the onus of proof is on the insured and their medical team.
Another common reason why insurance claims are denied are because of the policies relating to the disclosure of a pre-existing condition. A disability or illness is deemed pre-existing when the person suffers from the medical condition before becoming a member of the group insurance policy. Many company run plans only exclude a pre-existing condition if the employee becomes disabled within one year after becoming covered by the plan. This is a common reason why claims are denied by insurance companies and it’s important to educate your staff accordingly when they are going through the plan’s enrollment process.
Every long-term and short-term disability plan will have a long list of exclusions in the policy. For example, many insurance plans will not pay a benefit for a self-inflicted injury. Also, most plans will not cover an injury that resulted from the claimants involved in an illegal or criminal activity. Sometimes the list of exclusions can include the claimant using alcohol or drugs. Be sure to review your policies list of exclusions to have a strong understanding of the plan’s structure.
Typically, an employee’s application process for enrolling in a group benefit plan includes some form of a questionnaire. At the time this questionnaire may not seem important, but in the in the event of a claim the information submitted could determine is something is covered or not. Many claims are denied because the applicant did not properly disclose important medical information. An insurance company may have the right to deny a claim due to incorrect or missing documentation during the applicant’s application process, they may even be deemed to be misrepresenting themselves.
The process doesn’t end after enrolment; encourage staff to update their plan with any address, marital or parental updates. Having a process in place for an annual review is a great way to ensure everyone’s protected and paperwork is tight.
In addition, in my experience most claims are not denied, they’re delayed. This can happen due to doctor’s questionnaires not being completed. Remember an insurer could have millions of dollars in claim liability, they are obligated to underwrite your claim by their shareholders. In addition to these delays it’s also common for payments to be suspended. Once a claim is approved it doesn’t end there. The insured must continue to show at a regular interval that they still meet the criteria of the claim in the case of disability. If an insured stops taking treatment and thus are not improving an insurer has every right to stop payment until the insured begins treatment again. The insurer is only obligated to pay if the insured is making every possible attempt to return to health and to active work.
Another misunderstood issue with disability is own occupation and ability to work. Sometimes and employee can work but can’t complete a full day. Many group policies require total disability so they may not pay. It’s important to understand what your coverage is. Group type coverage typically underwrites more at time of claim and individual policies have larger emphasis at time of underwriting. Talk to a knowledgeable advisor to find out what is right for you and if you need a level of private coverage to “top up” your group benefits.
It’s important to understand that an insurance policy is a legally binding document with many elements. Submitting a claim and being denied can be a very stressful, expensive and dangerous situation for your staff. Neither you nor your employees want to see a claim denied, but it clearly happens every day. There are many factors that determine if a claim is approved or denied. It’s important that both you and your staff have a strong understanding of the inner-workings of your group benefits plan. As an employee, you want the best coverage and protection for your employees and the importance of partnering with a Toronto insurance advisor can really not be understated. They are there to protect you and your team from scary worst-case scenarios and will work to design and implement an insurance plan that works with your company’s unique needs and goals.