Health insurance changes afoot

Portability of health conditions included in amended law

Under proposed amendments to health
insurance legislation, insurers will no longer be able to refuse to insure
patients with pre-existing medical conditions when they change jobs.

Due to ambiguous wording of the
existing law, insurers have been allowed to deny medical insurance to cover
some existing illnesses or conditions, or even to refuse to cover an individual
at all, according to health minister Mark Scotland, who presented amendments to
the law to the Legislative Assembly on Friday, 10 September.

“Some approved insurers have taken
advantage over the years of loopholes in the current legislation, such as the
definition of ‘pre-existing condition’. The objective of the new amendment to
the law is that all persons resident in the Cayman Islands will be eligible for
a standard health insurance contract,” said Mr. Scotland.

He said regulations would be amended
“so there can be no misunderstanding or misinterpretation about the coverage an
employee and his dependents must have upon the employee changing a job. If an
employee had a comprehensive plan of benefits in his previous job, he would be
entitled to similar coverage upon changing that job”.

No ‘cherry-picking’ allowed

The minister told lawmakers during
a debate on the proposed amendments that insurers would no longer be allowed “to
cherry-pick and decline insurance to individuals”. He acknowledged that the
amendments could lead to an increase in health insurance costs, but he said
this would be offset by increases in benefits and to the general health of the
local population.

“Under the current law, there were
many instances where approved insurers were refusing to provide cover for minor
medical conditions and ailments which were controlled with medications,
including diabetes, hypertension and cholesterol,” Mr. Scotland said.

He said the Health Insurance
Commission would monitor a range of new premium rates for upgraded standard
health insurance contracts.

Under the proposed amendments,
insurers must provide a standard insurance plan without any underwriting for
average people, but amended regulations would allow insurance providers to
increase premium rates by up to 200 per cent of the standard premium to take
into account the increased risk being assumed by the insurer, the minister

Mr. Scotland said refusal of
coverage must be reported to the Health Insurance Commission.

He told legislators that the
amendments would lead to fewer uninsured and underinsured people in Cayman, the
medical bills of whom the government has had to meet. In the 2009-2010
financial year, the government spent more than CI$20 million on health care for
underinsured or uninsured people on Island and overseas, Mr. Scotland said.

Support from lawmakers

Lawmakers backed the Health
Insurance (Amendment) Bill, 2010, which also introduces higher fines for
employers who fail to provide health insurance for staff or who make illegal
deductions purporting to be for insurance premiums from salaries.

In the last financial year, the
Health Insurance Commission received almost 1,400 complaints and enquiries
about the provision of health insurance, Mr. Scotland said.

Under the amended law, employers
who fail to provide, at a minimum, a standard health insurance contract for
employees will face fines of $30,000 upon summary conviction, and $40,000 on
conviction following an indictment. The amended law increases the existing
fines from $5,000 and $10,000, respectively.

In response to numerous complaints
to the Health Insurance Commission, the law is also being amended to increase
fines for employers who make unlawful deductions from employee salaries. They
will face fines that are increased from $5,000 upon conviction and $10,000 on indictment
to $30,000 and $40,000, respectively.

Employers who fail to provide
employees with health insurance details, such as the name of the insurer, the
effective date of coverage, and insurance number, within 15 days of
commencement of employment, will face increased fines of $15,000 and an
additional per-day penalty of $1,000. Previously, the fines were $5,000 upon
conviction and $100 a day.

Increases included

The amended law increases how much
an insurance company will pay for a variety of treatments. Currently, the
maximum amount an insurer will pay for a single episode of illness is $25,000.
The proposed amended law increases this to $100,000 per episode. It also
increases the maximum coverage per year for patient services to $100,000 rather
than the current $25,000 per year; increases outpatient coverage from $100 a
year to $1,200 per annum; and, for the first time, covers mental health costs.

The maximum amount a person can be
covered in his or her lifetime remains at $1 million.

The law addresses the issue of
employees who lose their jobs and are left without insurance while they seek
new employment. The amendments state that employers must extend arrangements
for health insurance coverage to an employee for three months after the worker
has been terminated or until the person is re-employed, whichever is earlier.

The entire cost of the premium
would fall to the employee, but the employer would be legally bound to make the
coverage available. Fines for employers failing to do so will increase from
$5,000 to $30,000.

Under the amended law, insurance
providers who reduce medical benefits for clients reaching retirement age will
face fines of $10,000.

The amendments also empower the
health insurance superintendent to impose direct fines of $1,000 per offence
and up to $100 per day while the offence continues.

“Previously, the amount of possible
fines made it hardly worth the trouble of taking these cases to court,” Mr.
Scotland said, adding that he was aware of some unscrupulous employers who
found it cheaper to pay the fines rather than their employees’ insurance

Mr. Scotland said that over the
last financial year, health insurance inspectors carried out 381 investigations
into complaints, 10 of which were in some stage of prosecution and 83 per cent
of which had been resolved.

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