HEALTH INSURANCE

Canceling Health Insurance Policies

A California court has ruled that insurance companies must do more to verify the accuracy of applications for health insurance before issuing a policy, the LA Times reports. The court also ruled that an insurance company cannot cancel a policy unless the company can prove that a patient willfully misrepresented his or her health or that the company investigated the patient before issuing the policy. The ruling came in a case where Blue Shield of California rescinded the policy of a patient after authorizing more than $450,000 in medical care after a car accident. Blue Shield claims that the patient left information such as a recent emergency room visit off of the application. The court, however, found that the form “although understandable upon close examination and reflection, is no model of clarity,” in ruling for the patient. In December, the state’s insurance commissioner said he would fine Blue Shield for dropping hundreds of statewide policies.

Companies Can Alter Retiree Health Benefits

The Equal Employment Opportunity Commission (EEOC) issued a new rule that allows employers who provide retiree health benefits to continue the practice of coordinating those benefits with Medicare, the New York Times reports. The ruling came in response to a previous federal court ruling that found that employers must provide the same benefits to retired employees as they do to current employees. For example, some employers will provide supplemental benefits to Medicare or provide “bridge” insurance benefits to younger retirees until they reach Medicare eligibility. The court ruled in Erie County Retirees Association v. County of Erie, 220 F.3d 193 (3d Cir. 2000) that these practices violate the Age Discrimination in Employment Act. The EEOC issued its ruling in response to concerns from unions and other groups that forcing companies to provide for retirees in the same way as employees would likely lead to most companies simply dropping retiree benefits as their costs increase.

Bay State to Raise Penalties

The Massachusetts Department of Revenue is planning to quadruple the penalties for Bay State residents who can afford to buy health insurance but choose not too. The Department plans to raise the penalty to $912 per year from $219 in the hopes of forcing more people to buy into a plan. Those without insurance earning less than 150 percent of the federal poverty level would not face the fines. So far, approximately 290,000 Bay Staters have signed up for health insurance since the first penalties went into effect in July, 2007. Estimates for the number of uninsured in the state range from 400,000 to upwards of 650,000. Estimates for how many people will be affected by the new fine will become available after residents file their 2007 tax returns.

PRESCRIPTION DRUGS

Drug Discounts

Florida Governor Charlie Crist recently announced a prescription drug program for residents earning less than 300 percent of the federal poverty level, allowing them to purchase prescription medications at up to 30 percent off the retail price. For residents over 60 years of age, the income requirement will not apply if they have no other prescription drug coverage. Seniors with Medicare Part D are also eligible to participate in the program to help defray their drug costs once they reach the so-called “doughnut hole” in coverage. Eligible participants will receive a card and, after paying a $1.50 activation fee, will receive the discounts at participating pharmacies. The state will pool unrelated groups of people in order to negotiate discounts on drugs. The program is modeled after a similar one launched recently in Ohio, which claims that those using the discount cards have saved 34 percent on prescriptions.