As Companies Drop Individual Coverage, Policy Holders Scramble

Construction contractor Robin Rudolph took time out from his business recently to shop for a new health insurance plan for his family.

“I spent a solid week researching what’s available in the insurance market and talking to people in order to come up with adequate coverage we can afford,” said Rudolph.

He is one of nearly 9,000 policy holders of Principal Mutual Life who had to scramble to replace coverage after the insurer dumped all of its individual policy holders.

Rudolph, who operates a construction company based out of Davenport, couldn’t find another individual plan - as opposed to group coverage - to serve his needs at an affordable price. He ended up joining the home builders association in Spokane - dues $450 a year - so he could piggyback on their group coverage plan.

Because he can write off the $450 in dues as a business expense, “the changed in plans comes out about a wash moneywise,” he says. “But the coverage is not as good.”

While he was acquiring new coverage, a group of policy holders got together and filed a class action suit alleging breach of contract.

Next, a King County Superior Court judge issued a temporary restraining order, and set trial next May. And finally, the State Insurance Commissioner issued an order directing Principal to restore coverage to its individual policy holders.

The net effect is to leave Rudolph and thousands of others hanging. Principal’s individual plan was a bargain that policy holders won’t easily replace if at all.

Should those who found other coverage stay put? Should others still looking for coverage stay with Principal for the interim. Or should all seek other coverage now?

Thousands are in turmoil.

And they are about to be joined by thousands more.

MSC has filed a plan with the State Insurance Commissioner’s Office to terminate its individual coverage plan, cutting off an estimated 15,000 policy holders, state officials disclosed Tuesday.

The Spokane-based insurance company is seeking to roll customers it covers with individual policies into three new managed care plans that MSC proposes to establish.

But the insurance commissioner has issued an order directing MSC to cease and desist from its effort to drop individual coverage. MSC has filed suit challenging the authority of the insurance commissioner.

“There is great turmoil in the individual market,” says Leslie Thorpe, spokesperson for the State Health Care Policy Board. “Widespread fear exists that there will not be enough companies who offer individual plans.

“A number of other companies have said they want to get out of the individual market.

“As a result, there is talk that insurance companies who want to continue to offer group health plans should also be required to offer individual coverage.”

What can individuals do to protect themselves?

“If it were me,” says the health board’s Thorpe, “I would not give up my individual plan with Principal until I had to.

“It is the Cadillac individual plans in this state,” in terms of benefits and cost, she said.

But to make sure they are covered in the future, she advises those in limbo to look around. She said she would look around, just in case the class action suit doesn’t pan out for policy holders.

And the first place she would look is the new Basic Health Plan. It is a basic plan that all insurers in Washington must offer to employers for group coverage and to individuals on their own.

The basic plan is designed to provide affordable coverage for those not covered by traditional plans, either through their employer or as individuals.

For households with up to 125 percent of the federal poverty level, the insurance coverage costs $10 a month for each adult. Children are free. Above that level, there is a sliding scale in various income brackets.

“Starting the first of the year, the benefits get a little broader,” says Thorpe, “and costs get a lot better for families. Everyone should check it out.”

, DataTimes MEMO: Associate Editor Frank Bartel’s column runs Sunday, Monday and Wednesday.

The following fields overflowed: CREDIT = Frank Bartel The Spokesman-Review