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Wednesday, July 1, 2009

The fine print excluded nearly all the treatments: Aetna’s limited benefit insurance policy & bankruptcies

Lawrence Yurdin is a 64-year old computer security specialist. He had insurance through Aetna – a "limited benefit" plan, which, in hindsight, was not worth the paper it was printed on. Or, more precisely, as Aetna spokesperson Cynthia Michener said, "Limited benefits aren't right for everyone, and it clearly wasn't right for Mr. Yurdin." Aetna further acknowledged that his age and condition – an irregular heartbeat – made it likely that he would require more comprehensive coverage.

Lawrence learned this the hard way when he went to the hospital for two separate heart procedures last year, and two more procedures later.

While the Aetna brochure indicated he had purchased $150,000 of hospital care, the fine print excluded nearly all the treatments he received in the hospital, according to today's front-page story by Reed Abelson in the New York Times. With his unpaid medical bills approaching $200,000, he had to file for bankruptcy around Christmas time.

His case is common: three-fourths of the people who file for bankruptcy because of medical bills actually had insurance. As Harvard Law School Professor Elizabeth Warren says, "People do not realize that they are one diagnosis away from financial collapse."

A highly instructive expose by recent insurance executive Wendell Potter about these and other sneaky tactics used by large insurers appears in his testimony at U.S. Senate hearings last week.

Advice to people with a limited benefit health insurance policy: Read the fine print carefully. Maybe you should dump your insurance company before they dump you.

Advice to government legislators and regulators: Suntan lotion bottles must show their Sun Protection Factor prominently. Consumers know that a high SPF will protect them much better than lotion with a low SPF. A simple number that rates the Bankruptcy Protection Factor (BPF) of limited benefit insurance policies will keep consumers from getting badly burned by shoddy insurance products. Or maybe "B" will stand for something else…

Read about another cruel insurance practice.

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