Individuals applying for CINICO’s Standard Health Insurance Contract as of July 1 are required to pay two months of premiums up front.
CINICO chief executive Lonny Tibbetts said the policy changes, which were announced Monday, will charge the up front premiums to new plan members and were implemented to deter people from abusing loopholes in the health insurance and immigration system.
“Over the last few months, we continue to experience what we call the ‘Immigration compliance’ applicants, whereby applicants apply for coverage, pay the first premium, attain coverage, present the letter to immigration and then never pay another premium until their renewal requires proof of insurance coverage, some six or 12 months later,” said Mr. Tibbetts.
Mr. Tibbetts pointed out that as a result of the abuse, about 100 policies a month were being terminated at the health insurance company.
“We’ve been averaging a little over 100 terminations per month and it takes a lot of resources to do that. By the time we get them enrolled, we’re terminating them,” he said.
According to Mr. Tibbetts, CINICO sees about 25 new applications every month.
The policy changes affects low-income individuals under age 60 in the private sector who apply for CINICO’s Affordable Plan. Silver Plan members, applicants over age 60, will not be affected. Civil servants and seafarers will also not be affected by the new policy.
Individuals applying for CINICO’s Affordable plan are charged premiums in the range of $167 to $300 per person per month for a standard health insurance contract under CINICO’s individual plan.
“Payment for two or three months of premiums up front for an individual policy could be a strain for some employees, employers, and individuals who don’t have a monthly health insurance program in place already and may not have budgeted for it,” said Aon Risk Solutions health and life insurance broker Jeanette Verhoeven.
Ms. Verhoeven said charging two or three months of premiums up front for individual plans is not uncommon, and she is aware of at least three local insurance companies that charge two or three months of premiums when installing health insurance plans.
“However … I can understand that in the face of some persons starting an insurance policy to get an [health insurance] ID number, but then not keeping up with their premiums, that some insurance companies may seek up to a two- or three-month commitment from their clients to install a policy, and this appears to be supported under Health Insurance Regulations for individual policies,” she said.
Mr. Tibbetts said nonpayment of insurance premiums has placed a “tremendous burden” on CINICO’s resources in administrative costs, as once a customer fails to pay the following month’s premium, CINCO has to file a warning of termination of their contract. Then, when CINCO terminates the contract, it has to notify the Department of Health and Regulatory Services and the Health Insurance Commission.
Nonpayment of premiums has been a long-standing issue, he said, adding that he believes work permit applicants should be required to get a certificate of health insurance compliance, which would display the applicant’s coverage status on a month-by-month basis. “We, as a prudent business entity, are merely trying to ensure that our efforts and resources are not consumed by persons only seeking coverage for temporary compliance, as opposed to genuine coverage, which is required by the law,” he said.
Ministry of Home Affairs Chief Officer Eric Bush, who oversees the Immigration Department, said Tuesday he was unaware of any of these changes to CINCO’s policy. “I have discussed this with the CIO [Chief Immigration Officer] and we will all be working with the CEO of CINICO as well as the Health Services Commission to determine how best the intention of compliance is best governed,” said Mr. Bush.
Mervyn Conolly, of the Health Insurance Commission, said discussions were under way with CINICO and the Immigration Department in relation to the policy change.
Compass journalist Brent Fuller contributed to this report.