Health insurance disclosure requirements

Why disclosure matters

Health insurance is sold on promises that the buyer cannot test until a claim arrives. Disclosure rules make sure the buyer learns, before relying on the coverage, what it does and does not do. On the exam, expect questions about what must be disclosed, to whom, when, and in what form.

General disclosure tools you should know

Across the health market, a few standard tools do most of the disclosure work:

• The policy itself is the contract. The application and any riders attached to it form part of what the insured receives.
• An outline of coverage summarizes the benefits, exclusions and limitations in plain terms, so the buyer can compare products.
• A free-look period lets a new policyowner review the policy after delivery and return it for a full premium refund if it is not what they expected.
• Exclusions and limitations, especially any limit on preexisting conditions, must be stated clearly rather than buried.

The producer's job is to deliver these documents, point the buyer to the limitations, and never describe coverage as broader than the contract actually provides.

Florida's short-term health insurance disclosure

Florida spells out a specific, signed disclosure for short-term health insurance. In the individual market, short-term coverage is coverage whose contract expires less than 12 months after its original effective date and, counting renewals or extensions, lasts no more than 36 months in total.

Every individual short-term contract must include written disclosures signed by the purchaser at the time of purchase. They have two parts.

1. A required statement, in substance warning that the coverage:

• is not required to comply with certain federal market requirements, principally those in the Patient Protection and Affordable Care Act;
• may exclude or limit preexisting conditions or health benefits such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services;
• might carry lifetime and/or annual dollar limits; and
• if it expires or eligibility is lost, the buyer might have to wait for an open enrollment period to get other coverage.

2. Specific information:

1. the duration of the contract, including any waiting period;
2. any essential health benefit that the contract does not provide;
3. the content of coverage; and
4. any exclusion of preexisting conditions.

Form and record-keeping rules:

• The disclosures must be printed in no less than 12-point type and in a readable color.
• The issuer must keep a copy of the signed disclosures for 5 years after the date of purchase.
• Disclosures delivered electronically must meet the same requirements.

Florida's group, blanket and franchise short-term policies must carry the same federal-requirements warning statement in every contract.

Behavioral health coverage disclosures

A health insurer offering behavioral health coverage required by federal or state law has two ongoing duties:

• On its website: publish the federal and state requirements for behavioral health coverage, plus contact information (including a hyperlink) for the Division of Consumer Services of the Department of Financial Services, where consumers can send inquiries or complaints.
• Annually: send each such insured a direct notice describing those requirements, including the Division of Consumer Services' website address and statewide toll-free telephone number for complaints.

Related context: essential health benefits

Why does the short-term disclosure mention essential health benefits? Florida lets insurers and HMOs build new policies that include at least one service in each of the 10 essential health benefit categories required under the federal Affordable Care Act. Short-term coverage is not held to that standard, which is exactly why the buyer must be told, in writing, which essential health benefits are missing.