What happens if I lie on my health insurance application?

Why you should not lie on your health insurance application to get a better offer.

First of all, this is fraud. It is illegal, and the insurance providers could press criminal charges against you if the situation is severe enough to warrant it. Many times the insurers will simply deny your claims. Many clients may not think is that bad until they are in the situation where this occurs. For more severe risk, the insurance company has a right to deny the health policy outright, and will issue a refund for it, even if the claim experienced was unrelated to the health condition omitted from the application. This effectively can negate your policy for any big claim you may file. Trust us: your money is better spent on the actual emergency or alternative coverage.

As an agency with thousands of clients around the world, we unfortunately have to deal with fraud at times, and every single time, it's a terrible situation that involves large financial debts, denials of coverage, and sometimes even death. We really hate being in the middle of these disputes, as we are client advocates first and many times have to help clients with a long, drawn-out legal dispute when they are obviously lying. This strains our relationships with the insurers, puts hospitals and doctors out large sums of money, and leaves clients with untreated medical conditions.

If you are still intent on lying on your application, please don't do so through us; we really don't want your business.

Here is how fraud normally turns out for a client during a large claim:

A client applies to an insurer truthfully and gets an exclusion he does not like. That client then decides to commit insurance fraud against another insurer to get a better offer.

He picks his target and applies; this time, he intentionally omits his medical condition. Let's say he hides the fact that he is taking blood pressure medication.

The insurer gives him full coverage, and issues the standard policy, with no exclusions: just what he wanted. 

A few years later, the client has a severe emergency, he arrives to the intensive care unit and doctors are not quite sure what is wrong. After a week in the ICU, many tests, and consulting with specialists, the condition, which may or may not have been related to his heart, is treated. (Many times more severe cases take longer to resolve.) For reference, an average heart stent here in Latin America ranges between $15,000-$50,000 USD, which is the risk the applicant thinks he doesn't retain anymore.

During the client's time in the ICU, his doctors refer to his medical history; sometimes it's requested from the home country; sometimes its a distressed spouse trying to keep a loved one alive during this stressful time; sometimes the medical condition may have been obvious and shows how long it would take the condition to get to its current stage. Regardless, this condition is then reported to the insurer, who is in touch with the hospital for payment of expenses. At this point, the insurer determines that the client had a non-disclosed, preexisting condition. At this point, the insurer will simply deny the claim, and in more severe fraudulent cases, they will outright cancel the policy for any benefits or conditions.

The client may try to fight back, but the insurance company simply refers to the conditions of coverage, signed by the insured, and points out their right to cancel the policy or deny the claim due to the omission of details on the application.

We have had full policies get cancelled right in the middle of large, complex claims involving multiple conditions that may not even be related to the preexisting condition. This leaves the family of the patient and the hospital involved in a terrible situation. Many times care will stop until the client puts down a large deposit on the needed care, or hire an air ambulance to their home country which can be extremely expensive without an evacuation policy. Fighting the insurer on their denial ruling, despite the fraudulent omission can take months to reverse, way too long for your loved one to get care.

What could have happened?

If the client hadn't lied, he might have received an exclusion. In this case, the insurance provider would have notified the hospital of the exclusion. This would cause the insurance company to have paid the entire bill if it wasn't related to his heart. Otherwise the hospital, upon realizing the bill would not be paid by the insurance company, could have worked with the client to find a solution before things escalated. This may be a reduction in cost for paying directly, or a referral to a public option they can utilize more cheaply.

If this was one of our clients, we would have suggested ahead of time that he:

• Get a supplemental evacuation plan from us for about $500 a year that can get him back to his home country, where his Medicare, provincial plan, etc. could have covered him.

• Purchase a plan that covers pre-existing conditions.

• Shop around to multiple carriers with different risk tolerances that may give you a better offer, such as an increased deductible for the preexisting condition instead of a total exclusion.

• Purchase a local government-subsidized plan that may cover preexisting conditions, or have a backup plan to go to a lower-cost public hospital in case of a heart-related issue.

Lastly, our applicant could've gotten a plan that with higher deductibles and lower benefits that would save cost over the years just in case he has other catastrophic claims. His savings through the lower-cost policy may well be enough to self-insure and cover that potential $50,000 surgery, while still providing coverage for everything else.

Hopefully, this persuades at least a few people to be truthful on their applications and avoid suffering the consequences of insurance fraud.