Trade Group Announces More Insurers To Stop Dropping Coverage for Sick

April 29, 2010 (PLANSPONSOR.com) - Health insurers will no longer revoke customers' coverage once they get sick, as part of an industrywide ban on a practice known as “rescissions.”

Bloomberg reports that Karen Ignagni, CEO of America’s Health Insurance Plans, said in a letter that companies will end the practice beginning in May, ahead of the September 23 deadline set by the new health reform law. “Our community is committed to implementing the new standard in May 2010 to ensure that individuals and families will have greater peace of mind when purchasing coverage on their own,” Ignagni wrote, according to the news report.   

The ban follows announcements by WellPoint Inc. and UnitedHealth Group Inc. that they will no longer cancel customer policies without evidence of fraud or intentional misrepresentation (see Insurers to Stop Dropping Coverage for Sick Ahead of Reform Deadline).

Democrats from three U.S. House committees wrote to seven health insurance executives urging them to immediately ban rescission except in cases of fraud or intentional misrepresentations, and to institute third-party reviews of any decision to drop coverage.

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