Sunday 17th February, 2008


Get tax benefits from health benefits

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The Davies Campus California Pacific Medical Centre, located in a heavily gay district in Castro, San Francisco, had a problem in the year 2000. It simply could not cope with the number of HIV patients claiming insurance health benefits that were not paid.

A law was passed in California: the AB 2186, to require HIV patients to seek specialist care in order to qualify for insurance benefits. The problem was that medical practitioners did not have a specialty for Aids in the same way for example, that heart disease is a specialty. The result: HIV patients could not claim!

This is one of the problems with health insurance: the apparent bias against certain illnesses such as Aids, mental illness, cosmetic implants, contact lenses and certain non-illnesses such as pregnancy. And then there is retirement that simply cuts you off the plan.

Health insurance is also difficult for small business owners and individuals. While premiums are fairly low for large groups, simply because of the numbers equation, premiums for small groups are priced higher.

In the US there are now laws such as the Mental Health Parity Act, the Health Insurance Portability and Accountability Act, and the Consolidated Omnibus Budget Reconciliation Act that came about as a result of a consumer lobby.

Such legislation seeks to protect discrimination against certain individuals, and guarantee their health insurance benefits in the long view for healthy nation status.

Another interesting piece of legislation is the Women’s Health and Cancer Rights Act. In this law insurance companies cannot exclude or refuse to pay for certain cosmetic procedures such as breast reconstruction after a mastectomy.

Exclusion in a health insurance policy refers to an illness the health plan provider will not pay for eg HIV/Aids. There are other exclusions, as well as broad-brush exclusions termed: a pre-existing disease.

A pre-existing illness or disease is one that had manifested itself before the employee applied for the health plan coverage.

The US lobby that brought the Health Insurance Portability and Accountability Act ensured that a pre-existing medical condition will not be subject to an exclusion clause.

If we are serious about first world nation status, it is an opportune time to get involved in understanding what our health plans on the local market will not pay for, and to initiate a lobby for international standards.

The insurance companies will not do this for its clients; this is something the clients must do for themselves. Another interesting reform in the US legislation is a move to make health insurance premiums a tax deductible.

The term tax deductible refers to the ability to subtract the amount of the annual insurance premium from the quantum of income that is subject to tax; so you pay less tax.

But such a move must follow legislation for consumer friendly claims adjudication laws.

Next week: More tax deductions