Federal Legislation To Stop Rescission

SIOUX FALLS, SD - Whether you have a pre-existing condition or come down with a major illness, four months from now, insurance companies will no longer be allowed to cancel insurance coverage for sick policy holders. That's when the federal legislation that recently passed will become law. But South Dakota's second largest insurer has followed that guideline for years.

After working for a small business, Linda Watts needed to take out health insurance. But having a pre-existing condition made that a challenge.

"Several years ago, I had a TIA, which is a mini-stroke and that stays with you forever and even though I had very good recovery from it, it stays with you," Watts said.

After being turned down by four companies, DAKOTACARE agreed to cover her last summer.

"I was very glad there was a yes in there," Watts said.

But she also doesn't have to worry about losing that coverage if she gets sick again.

Cancelling health insurance coverage for sick policy holders is called rescission and has been happening for years.  It's something DAKOTACARE doesn't do and will soon be against the law for all health insurance companies.

"Some of the activity in the news with some of the larger organizations about rescinding policies for trivial conditions or conditions unrelated to the claim or conditions that were unknown to the member is pretty unconscionable and the insurance company's shouldn't be doing that and we've never done that," Kirk Zimmer with DAKOTACARE said.

DAKOTACARE has only dropped six policy holders since it began individual plans in 2006. But it had nothing to do with someone's health.

"And those cases have been in situations of material or intentional misrepresentation or fraud in the application process," Zimmer said.

The new federal health insurance law takes effect September 23. But some larger companies have also announced plans to end rescission before then.

"The fact that the majority of the industry, whether they're competitors of DAKOTACARE or not, are taking that step up and say, 'We're doing the right thing and we're doing it early,' is what we think is the right thing to do," Zimmer said.

Offering policy-holders, such as Watts, more security in their health coverage.