Health Insurance for American Travelers
[singlepic=1668,250,,,right]There are many fun steps in preparing for your career break travels, and planning for health insurance issues is not one of them. However, it is probably the most important issue you should pay attention to, especially for Americans.
Keith and Amy Sutter have successfully made the transition from briefcase to backpack. They are currently traveling the world while documenting efforts in environmental sustainability on their blog, Green Around The Globe. They share with us how Americans must navigate a complex process to get health insurance while traveling around the globe.
Second only to our salaries, health insurance was the most valuable component of our employer-provided compensation before we made the leap from briefcase to backpack. Walking away from the relative simplicity of employer-provided health benefits was fraught with forms, confusion and seemingly endless options. Tempting as it was, throwing our hands up and foregoing health coverage was not an option. Going without health insurance seemed riskier than riding a motorbike through downtown Hanoi at rush hour blindfolded, not something either of us want to do. By detailing our experiences throughout the process of obtaining health insurance coverage for our career break we hope to share what we learned and make the process a bit easier for you.
Private health insurance in the United States is a quagmire of benefit statements and long medical history applications. We quickly found this out when we began researching our options. As this was the first time we would not have employer or university-provided group health benefits, we had to start from scratch. We quickly discovered the world of travel insurance.
There are many reputable travel insurance companies out there that offer great coverage while traveling abroad. As an American, however, you must keep in mind that most of these plans will not cover you within the United States and many of these plans are not recognized as “creditable.” “Creditable coverage” is defined quite broadly and includes nearly all U.S. group and individual health plans. But despite the broad definition nearly all travel insurance is NOT deemed creditable coverage. One notable exception is HTH Worldwide’s Global Citizen, which is underwritten by A-rated insurance companies licensed by each State’s department of insurance as admitted carriers. The trick here is that depending on what state you live in you may need to go through underwriting in order to obtain coverage.
[singlepic=1669,200,,,right]If you live in a state that allows health insurance companies to send your application through the underwriting process, your first step after choosing an insurance provider is to complete a very long application detailing ALL of your medical history, including every doctor, prescription and over-the-counter medication you have taken for the last 5 years. Take ibuprofen for headaches? Remember that sinus infection four years ago? Or that ingrown toenail you had taken care of a few months back? And of course, there is the catchall question at the end of the application wanting to know if you have EVER been to a doctor, been admitted to a hospital or taken prescription medications. All of this information must be painstakingly detailed in your application. Forget a piece of your medical history and the insurance company can later challenge your claim and even deny you coverage.
The underwriting department of the insurance company will review your completed application, and if you are determined to be an acceptable insurance risk you are eligible for coverage. If you are deemed to be an unacceptable insurance risk, as we were, your application will be denied and it’s time to explore other options.
Our next step after failing underwriting in Pennsylvania was to move our legal address to New Jersey, which prohibits insurance companies from denying coverage or charging higher rates based on underwriting. As we are currently renting out our home in Pennsylvania while abroad, we were able to change our residency, get New Jersey driver’s licenses and officially move in with Amy’s mother, who luckily happens to live in New Jersey and had already volunteered to receive our forwarded mail. Once we had a legal mailing address in the Garden State we became eligible for health insurance issued under New Jersey’s more favorable underwriting regulations.
Going without health insurance seemed riskier than riding a motorbike through downtown Hanoi at rush hour blindfolded, not something either of us want to do.
WHY GET US COVERAGE WHILE ABROAD?
You might be asking yourself, if getting private health insurance policy is so difficult, why not just get travel insurance while traveling and then get a private policy when you get home? There are two reasons. The first reason is that you might unexpectedly end up sick or injured and back in the United States having not transitioned from backpack back to briefcase and the world of employer-provided health coverage. And even if you have travel insurance, the chances are that if you need to use it, it’s for the emergency medical evacuation coverage, which provides coverage in the event of a serious illness or injury that requires medical treatment that cannot be provided where you are when you get sick or hurt. If the closest appropriate medical care is back in the United States, that’s where you’ll end up. And even if you are initially transferred somewhere else, if the illness or injury requires long-term care, you’ll most likely return to the United States to receive that care. Unfortunately, most travel insurance policies end as soon as you land on U.S. soil and any medical treatment that you receive once at home will all be out of pocket. The second reason to get U.S. coverage while abroad is the preservation of continuous coverage.
When you terminate your current U.S. creditable health insurance coverage, you only have a window of 63 days to get new health insurance coverage from a creditable provider before preexisting condition exclusion periods become effective. This means that you can no longer use past coverage to offset preexisting condition exclusion periods, which can be as long as 12 months. For example, if you have ever sought treatment for back pain in the past, you can be denied coverage for any back pain related treatment for as long as the first 12 months of coverage under your new insurance policy. This essentially boils down to the fact that as an American, you need to have creditable coverage with no gaps greater than 63 days to ensure coverage in the future. And again, most travel insurance does not qualify as creditable.
WHAT WE DID
[singlepic=1671,200,,,right]After drowning in the fine print while trying to figure out what to do for health insurance, we hired a professional health insurance broker to help us figure out the right plan for us. Over the course of several months of research the three of us ultimately found that the best fit was to carry two separate insurance policies – one travel policy and one very basic but creditable domestic policy. For a total annual cost of $7,648, we went with World Nomads for our travel insurance policy ($1,036 annually) and Horizon Blue Cross Blue Shield of New Jersey Basic and Essential EPO Plan (even the name is long and confusing) for our domestic insurance policy ($6,612 annually). It’s a lot of money for something we hope we never to have to use, but for us the peace of mind is worth it.
Creditable Coverage: Health coverage of an individual under a group health plan (including while on COBRA continuation coverage), individual health insurance coverage, Medicare, Medicaid, a state health benefits risk pool, a public health plan, and certain other health programs. May be used to offset time from any pre-existing condition exclusion if no significant break in coverage (generally 63 days) happened before starting a new group health plan.
Underwriting: Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to acquire—or to “write”—business that will make the insurance company money, and to protect the company’s book of business from risks that they feel will make a loss. In simple terms, it is the process of issuing insurance policies.
- State law information can be found at the National Association of Insurance Commissioners
- United States Department of Labor Q&A on Health Coverage Portability
*Disclaimer: The information provided here is for informational purposes only. Keith and Amy Sutter are not licensed insurance brokers or sales people. You should consult a professional insurance broker or salesperson to best determine your health insurance needs.