Health Insurance and Insurance Policy Exclusions
Health insurance is a type of insurance that covers the cost of an insured person’s medical and surgical expenses in case of illness.[1] The insured’s health insurance coverage applies to any disability or disease arising from a specific condition.[2]
Health insurance policies, of course, have limitations. First, almost every health insurance policy excludes some diseases, injuries and treatments from coverage. An exclusion is a healthcare service that isn’t included in coverage. For example, HealthPocket, a technology company that compares and ranks health plans for users, found that the most common insurance exclusions are cosmetic surgery, adult dental services, acupuncture and weight loss services.[3]
Second, health insurance policies typically exclude some health benefits for employees eligible for workers’ compensation. When workers’ compensation insurance covers an employee’s injury (which occurs when injuries happen in the scope of employment), the health insurer typically won’t reimburse him for medical expenses.[4]
Dental care is not usually covered under health insurance plans and so people often purchase separate dental insurance plans. Some state statutes, however, require insurers to provide coverage for certain dental procedures and treatments, such as oral surgery or orthodontic treatment of TMJ syndrome, a disorder of the joints caused by misalignment of the jaws. This is because the syndrome is a medical problem rather than a dental problem.[5]
Finally, health insurance coverage does not typically extend to injuries sustained during the commission of illegal acts. This exclusion appears frequently in litigation after a drunk driving accident. A federal appeals court considered one case involving a motorcyclist who crashed into an automobile while legally intoxicated. His health insurer denied coverage based on a provision that excludes coverage for injuries resulting from the commission of any illegal act. Although the motorcyclist’s blood-alcohol level was above the legal limit, an officer cited him for inattentive driving punishable by civil forfeiture rather than drunk driving.
Still, the reviewing court sided with the insurance company, finding that it didn’t have to cover his medical bills. Although he was not charged with drunk driving, it was still shown that at the time of his injury, he was taking part in that illegal act, which was excluded by the policy.[6]
State and Federal Regulation of Health Insurance Policies
In 2016, a study found that the top three sources, from which Americans acquire health insurance coverage are, in order of volume, their employer, Medicare and Medicaid. Over 153 million Americans are insured as part of an employer’s group health plan.[7] Most private sector health plans are covered by the federal Employee Retirement Income Security Act, which sets the minimum standards for these health plans to protect enrollees. More than 55 million Americans have health insurance through Medicare, a federal insurance program that covers virtually all Americans aged 65 and older.[8] Around 49 million low-income, disabled, and elderly Americans are insured through Medicaid, a program funded jointly by states and the federal government but administered by states according to federal requirements.”[9]
All of these are regulated by federal law, with the regulations differing between private plans and plans under Medicare, Medicaid and ERISA. In addition, every state regulates the health insurance industry. Mandated health benefit laws require insurance companies to provide certain kinds of health benefits to cover specified illnesses or procedures. State laws also regulate coverage of certain treatments, services, and providers.
Federal laws governing health insurance coverage include the Health Insurance Portability and Accountability Act, known as HIPAA, which does the following:[10]
- It protects the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs.
- It mandates industry-wide standards for health care information on electronic billing and other processes.
- It requires the protection and confidential handling of protected health information.
The Patient Protection and Affordable Care Act imposes requirements for health insurers. It provides for “essential health benefits,” a set of 10 categories of services health insurance plans must cover. These essential health benefits include emergency services, hospitalization, mental health services, prescription drug offerings and preventive medicine.[11]
Diseases and Health Conditions Covered by an Insurance Policy
Disputes between a health insurer and policy holder may arise regarding certain illnesses and conditions. Some of the commonly contested illnesses and conditions include alcoholism and drug use, mental disorders, and autism. For some diseases and conditions, some state legislatures have passed laws mandating coverage.
Should a dispute regarding coverage arise, an insured may seek remedies in the courts. The question typically surrounds what is considered a “disease” or “illness” under a health insurance or hospitalization insurance policy. For example, Washington’s statute on mandated coverage requires health insurers to cover breast reconstruction following a mastectomy that results from a disease, illness or injury. In construing this law, a Washington court held that a rupture of a silicone gel implant in the insured’s left breast and migration of silicone gel that caused silicone granulomas to form was considered a “disease, illness, or injury” under the Washington statute. The migration of silicone and potential for continued migration impaired the woman’s normal physiological functioning, so the health insurer had to cover the patient’s treatment.[12]
Substance Abuse
Substance abuse disorders were traditionally not covered by health insurance.[13] However, over the course of the late twentieth century, the medical community gradually accepted addiction to alcohol or drugs as a “disease.” Now, alcoholism treatments such as detox and outpatient counseling are covered by most insurance policies. Additionally, although a health insurance policy may exclude coverage for the treatment of alcohol abuse or chemical dependency, one New York court held that an exclusion for the treatment of alcoholism would not bar coverage for medical conditions, such as cirrhosis of the liver, that developed due to frequent alcohol use.[14]
HIV/AIDS
After the disease’s discovery in the 1980s, health insurers often excluded treatment related to human immunodeficiency virus infection and acquired immune deficiency syndrome (HIV/AIDS). With the passing of the Affordable Care Act, however, a health insurer can no longer refuse to provide insurance coverage to those suffering from HIV/AIDS or charge such a person a higher rate for coverage.[15]
Mental Health Conditions
The Affordable Care Act dictated that health services for mental disorders comprise one category of essential health benefits that must be covered under a health plan.
Many states have also passed statutes requiring coverage for various mental health services and decisions reached by the highest courts of several states have reinforced these laws among various applications. In 2014, for example, the Washington Supreme Court held that neurodevelopmental therapies for children age six and under were “mental health services” for which insurance coverage was mandatory under the Washington state statute. Since the therapies were determined to be medically necessary to treat mental disorders recognized under American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders, the state supreme court held that the Washington statute required health insurers to cover the mental health services.[16]
Autism spectrum disorder is another medical condition that has come into the purview of public consciousness. One of the fastest growing developmental disabilities in the United States today, it affects a significant number of children and adults. Historically, the financial cost of providing treatment for those with autism has been borne by individuals and families because autism affects each person at a different level of severity and because many different symptomatic permutations are possible, making treatment difficult and costly.[17] Insurance companies designated autism as a diagnostic exclusion, which means that the plan won’t cover any services rendered explicitly for the treatment of autism. So, many health insurance policies did not cover treatment for autism until most states reformed their approaches to require it. As of 2017, 46 states and the District of Columbia have laws that require insurance coverage of autism services.[18]
Medical Treatments Covered by an Insurance Policy
As with exclusions in policies for particular diseases and conditions, health insurance policies also won’t cover the costs of certain medical treatments. For example, treatments for cosmetic surgery, fertility, experimental procedures, chiropractic services, and massage therapy are sometimes excluded. Let’s look at these more closely.
Cosmetic Surgery
Most health insurance policies won’t cover the costs of purely elective cosmetic surgery or treatment which is primarily intended to improve one’s appearance.
A court may sometimes face a question of whether a cosmetic procedure is elective or medically necessary. In one case, a New York court considered whether a bilateral mastectomy for a male adolescent with gynecomastia, or enlarged breast tissue, was medically necessary or cosmetic. The child’s avoidance of many normal adolescent activities, such as swimming or playing sports to avoid embarrassment and ridicule caused by gynecomastia constituted a functional defect within the meaning of the health insurance policy that covered him. Thus, the court held that his policy must cover the costs of his medical procedure. It reasoned that the procedure was medically necessary to eliminate the adolescent’s anomaly and impaired functioning due to his physical condition.[19]
Contraceptives
Coverage for contraceptives and preventive care for women has been the subject of much debate. The Affordable Care Act sets forth certain requirements concerning coverage for contraceptives. Generally, this law requires employers with fifty or more full-time employees to offer a group health plan or group health insurance coverage that provides “minimum essential coverage.” Minimum essential coverage includes the requirement that an employer’s group health plan furnish employees with health insurance coverage, including health care related to reproduction, from birth-control pills to pregnancy screening.[20]
However, the law and its implementing regulations create a religious exemption from the contraceptive coverage mandate. The religious exemption applies to religious employers, including churches, their integrated auxiliaries, conventions or associations of churches and exclusively religious activities of any religious order. In Burwell v. Hobby Lobby Stores Inc., the Supreme Court held that the Affordable Care Act’s contraceptive mandate requiring employers to provide coverage for FDA-approved contraceptive devices violated the First Amendment’s freedom of religion clause and the Religious Freedom Restoration Act as applied to closely-held corporations with sincere religious objections.[21] Coverage for contraceptives and preventive care under the Affordable Care Act and exclusions in health insurance policies continue to be debated in Congress and litigated in courts.
Fertility Treatments
As with contraceptives, there are debates surrounding coverage for fertility treatments. Many policies have specific language covering or excluding fertility treatments, such as artificial insemination procedures. Whether artificial insemination procedures or other infertility treatments are covered by health insurance generally depends on three factors:
1) the language of the insurance policy;
2) the cause of the insured’s infertility; and
3) the nature of the treatment performed.[22]
A federal court in New York held that an employee health insurance plan that denied coverage for surgical impregnation procedures and related expenses did not discriminate against females in violation of Title VII of the Civil Rights Act. The court recognized that men were subject to same coverage restrictions as women, and male employees were precluded from receiving infertility-related benefits for treatments performed on their wives.[23] As a result, many couples seeking fertility treatments must pay out-of-pocket for these services.
Experimental and Alternative Medical Procedures
Health insurance contracts also typically limit coverage for certain experimental procedures. Various health insurance companies may define “investigational” or “experimental” differently. Courts consider the language of the policy itself along with applicable state and federal laws.
Commonly, a procedure is experimental and excluded from coverage under a health insurance policy when there is a shortage of experience with the procedure or where there are ongoing clinical studies being conducted to better grasp a procedure’s effectiveness.[24] This can, for example, arise with procedures for bone marrow transplants. A federal court in Montana held that an insurer properly denied coverage for autologous bone marrow transplant therapy to treat a patient’s refractory Crohn’s disease because there wasn’t enough evidence to demonstrate that this therapy would have a beneficial medical effect.[25]
Finally, let’s examine coverage under health insurance policies for complementary and alternative medicine, including chiropractic services, massage therapy and acupuncture. Nearly one-third of American adults use some form of complementary or alternative medicine, according to reports by the National Center for Health Statistics, spending more than $30 billion annually on everything from fish oil supplements to acupuncture.[26]
Notably, “insurance companies often cover several visits for chiropractic care and physical therapy, but only very expensive plans tend to cover acupuncture, massage and yoga.”[27]
Furthermore, “some states have passed legislation prohibiting discrimination in health insurance coverage against the services provided by chiropractors.”[28] An insurance company is more likely to cover chiropractic care and physical therapy than other alternative therapies. In a survey conducted by Consumer Reports, thirteen percent of respondents “who saw a massage therapist said that insurance picked up the tab for more than 75 percent of the cost.”[29]
[1] Adam Felman, What is Health Insurance?, Medical News Today, (May 9, 2018), https://www.medicalnewstoday.com/info/health-insurance
[2] 43 Am. Jur. 2d Insurance § 540.
[3] 10 Most Common Health Insurance Exclusions, Consumer Health Alliance, (Oct. 16, 2014), http://www.consumerhealthalliance.org/10-most-common-health-insurance-exclusions/.
[4] Protecting Employees: Workers’ Compensation vs. Health Insurance, Insureon Blog, (May 7, 2014), https://www.insureon.com/blog/post/2014/05/07/workers-com-vs-health.aspx.
[5] Coverage under medical and health insurance plans for services performed by dentists, oral surgeons, and orthodontists, 43 A.L.R.5th 657.
[6] Tourdot v. Rockford Health Plans, Inc., 439 F.3d 351, 354 (7th Cir. 2006).
[7] Michael Hiltzik, Where America Gets Its Health Coverage: Everything You Wanted to Know in One Handy Chart, Los Angeles Times, (Mar. 29, 2016), http://www.latimes.com/business/hiltzik/la-fi-hiltzik-gaba-20160329-snap-htmlstory.html.
[8] Id.; Medicare, National Conference of State Legislatures, http://www.ncsl.org/research/health/federal-issues-health-and-human-services/medicare.aspx (last visited Aug. 3, 2018).
[9] Michael Hiltzik, Where America Gets Its Health Coverage: Everything You Wanted to Know in One Handy Chart, Los Angeles Times, (Mar. 29, 2016), http://www.latimes.com/business/hiltzik/la-fi-hiltzik-gaba-20160329-snap-htmlstory.html; Medicaid, Medicaid.gov, https://www.medicaid.gov/medicaid/index.html (last visited Aug. 3, 2018).
[10] Health Insurance Portability and Accountability Act, California Dep’t of Health Care Services, http://www.dhcs.ca.gov/formsandpubs/laws/hipaa/Pages/1.00WhatisHIPAA.aspx (last visited Aug. 3, 2018).
[11] 42 U.S.C. § 18022.
[12] Wash.Rev. Code § 48.44.330; Carr v. Blue Cross of Washington &Alaska, 971 P.2d 102, 108 (Wash. Ct. App. 1999).
[13] Alcoholism: A Disease of Speculation, Baldwin Research Institute, https://www.baldwinresearch.com/alcoholism.cfm (last visited Aug. 3, 2018).
[14] 43 Am. Jur. 2d Insurance § 548; 70 N.Y. Jur. 2d Insurance § 1493.
[15]42 U.S.C. §§ 300gg, 300gg-2.
[16]O.S.T. ex rel. G.T. v. BlueShield, 335 P.3d 416, 419 (Wash. 2014).
[17] Laura C. Hoffman, Ensuring Access to Health Care for theAutistic Child: More Is Needed Than Federal Health Care Reform, 41 Sw. L. Rev. 435, 442 (2012).
[18] Autism and Insurance Coverage | State Laws, National Conference of State Legislatures, (June 7, 2017), http://www.ncsl.org/research/health/autism-and-insurance-coverage-state-laws.aspx.
[19] Steven S. v. GHI, 6 Misc. 3d 213, 218 (Civ. Ct. 2004).
[20] Seema Mohapatra, “Time To Lift The Veil of Inequality in Health-Care Coverage: UsingCorporate Law to Defend the Affordable Care Act”, 50 Wake Forest L. Rev. 137, 137 (2015).
[21] Burwellv. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2275 (2014).
[22] Coverage of artificial insemination procedures or other infertility treatments by health, sickness, or hospitalization insurance, 80 A.L.R.4th 1059.
[23] Saks v. Franklin Covey Co., 117 F. Supp. 2d 318, 326-27 (S.D.N.Y. 2000).
[24] 43 Am. Jur. 2d Insurance § 557.
[25] Parsons v. Sisters of Charity of Leavenworth Health Sys., Inc., 832F. Supp. 2d 1222, 1230 (D. Mont. 2011), aff’d, 490 F. App’x 867 (9th Cir. 2012).
[26] Mike Valles, Alternative Medicine and Your Health Insurance, The Simple Dollar, (May 2, 2018), https://www.thesimpledollar.com/alternative-medicine/.
[27] Teresa Carr, Does Insurance Cover Acupuncture and Other Nondrug Therapies?, Consumer Reports, (May 4, 2017), https://www.consumerreports.org/health-insurance/does-insurance-cover-acupuncture-nondrug-therapies/.
[28] 43 Am. Jur. 2d Insurance § 558.
[29] Teresa Carr, Does Insurance Cover Acupuncture and Other Nondrug Therapies?, Consumer Reports, (May 4, 2017), https://www.consumerreports.org/health-insurance/does-insurance-cover-acupuncture-nondrug-therapies/.