Inactive and terminated health insurance policies jump in 2022
A “significant increase” in the number of inactive or terminated health insurance policies recorded last year could be because businesses continued to face financial challenges brought on by the Covid-19 pandemic, a watchdog said.
An annual report from the Bermuda Health Council on Employers’ Compliance with the Health Insurance Act 1970 added that many small businesses moved cover from private companies to government plans.
It said: “605 employer policies were reported by insurers as inactive or terminated in 2022, with 2,748 employees affected.”
The report added: “There was a 31 per cent increase in the total number of inactive policies reported, and a 15 per cent increase in the total number of affected employees reported in 2022 compared to 2021.”
Figures included in the report showed that 463 and 525 policies were reported in 2021 and 2020, respectively.
The number of inactive policies was the highest since 2015 when 1,106 were reported, according to the report.
The report added of the 2022 figures: “It is important to note that these calculations include some policies that were reported for two or more consecutive months and therefore counted two or more times.
“These figures also include policies reported as terminated by an insurer but were transitioned to another insurer, thus not impacting employee coverage.”
The document’s conclusion said: “There was a significant increase in the number of policies reported by insurers in 2022 compared to 2021.
“The majority of policies were reported in the first four months of 2022.
“This was followed by a drop in the number of non-compliant employers reported for the remainder of the year.
“Given that the highest incidences of noncompliance occurred at the beginning of 2022, it is possible that businesses were still experiencing the financial impact of the Covid-19 pandemic.
“Hopefully, the reduction in the number of reported policies towards the end of the year indicates an ongoing decline in employer noncompliance.”
It added: “Companies with ten or fewer employees remain the majority of businesses reported monthly by insurers as noncompliant.
“However, there was an increase in the number of companies with more than ten employees published on our website.
“Small businesses state that they struggle to afford their monthly health insurance premium.
“Many have moved their policies from private insurers to the Health Insurance Department.
“As such, the Health Insurance Department reports the vast majority of noncompliant businesses.”
Ricky Brathwaite, BHeC’s chief executive officer, said later that insurance companies could deem policies as inactive during specific data collection periods, “due typically to non-payment of the policy by an employer”.
The report explained that the health council monitors employer compliance with the Act by investigating complaints received from members of the public as well as information from insurers.
It said: “Insurers provide a monthly report that includes a list of policies in arrears or terminated with claims not being paid.
“The health council then sends each employer a letter via e-mail to notify them of their noncompliant status and legal obligations according to the Act.
“Employers are given two weeks to provide proof of coverage, such as a statement or e-mail from their insurer.
“If a response is not received, follow-up e-mails and phone calls are conducted.
“Those employers who fail to provide evidence of a current policy face having their company name published on the health council’s website.”
Complaints made by members of the public are investigated by collecting evidence such as pay stubs, medical bills and employment contracts as well as seeking verification from insurers before the employer is contacted.
The report said: “If necessary, an inspection of employer financial and employment records is conducted.
“Resolution of complaints involves the repayment of unlawful deductions, payment of medical bills incurred during non-coverage, and activation of health insurance coverage.
“For persistent noncompliance, the Health Council facilitates legal action in the criminal courts.”
It added: “Of the employers investigated in 2022 for having inactive health insurance policies, 53 per cent of policies were reactivated.
“This resulted in 1,415 employees regaining health insurance coverage.
“A minimum of $566,439 was recovered in premiums in 2022.
“This figure is based on an uninsured employee’s monthly standard premium rate of $400.31.”
The report said that 3 per cent of reported policies moved to another insurer, so employee coverage was not impacted, and that 2 per cent of businesses closed or removed all employees from plans.
It added: “A total of 65 noncompliant employers were posted on the website in 2022, compared to 86 in 2021.”
There were 16 employer compliance complaints made last year, compared with 13 in 2021.
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