Don’t assume you can increase
your health insurance benefits
whenever you want
By Geoffrey Mann – March 12, 2024
Things change. A decision that made perfect sense a few years ago might now seem ill-advised. Making changes to your health insurance policy might not be as straightforward as you’d think, though. Downgrading is easy, but upgrading usually means essentially re-applying for the policy. Don’t get a bare-bones policy now, thinking you’ll be able to increase benefits if you need them later.
A health insurance policy can usually be modified, but only at the annual renewal. Features that you might want to change include
- The primary coverage area
- Benefits, such as adding outpatient or dental coverage
- Plan limits
- Deductibles or co-pays
There are plenty of understandable reasons you might want to make changes like these, and the insurance providers are generally receptive to them. Reducing your benefits is a simple pro-forma request that is usually approved without fuss. Increasing benefits, on the other hand, is usually more involved because the provider would be taking on more risk, and risk is often expensive for them.
Once you start using your benefits, you should expect that the provider will exclude the associated medical conditions from any increased benefits – from their viewpoint, these are pre-existing medical conditions. And if you’ve contracted a chronic condition, there’s a good possibility that your request to increase benefits will be denied entirely.
Here’s a real-life example: a Tenzing customer was recently diagnosed with skin cancer. Roughly a year earlier, he had decided on an inexpensive, basic health insurance policy. He had a few claims related to diagnosis and early treatment, and when his annual renewal came up, he requested an upgrade to a policy with higher coverage limits. Not surprisingly, the provider would not approve the upgrade. He is effectively stuck with the basic policy.
What’s more, because his cancer has been diagnosed, it will be considered a pre-existing medical condition if he applies for a policy through another provider. As a result, it’s highly unlikely he’ll ever be able to find other coverage for the cancer. His coverage will forever be limited to the basic policy he bought last year.
It’s actually easy to understand why a provider would not take on what would surely be significant claims outlays related to a current cancer diagnosis. Insurance companies are for-profit entities that are able to make money by understanding and managing the risk of paying for their customers’ medical treatment. When it’s all but certain someone will incur significant medical bills, it doesn’t make sense to agree to pay more of those bills.
If your reasons for increasing benefits don’t involve a medical condition, the chances are your request will be granted. If you’ve gotten a raise, or moved, or plan to travel extensively, having a more robust policy makes sense. The rules for covering a new spouse or dependent are different – you can usually add them to your policy within a defined time period after the marriage or birth.
Read more: Making changes to an existing health insurance policy
Considering which health insurance policy is right for you is one of those times when you should think about what’s worst that could happen. That’s what you’re insuring against – much (much!) more so than the convenience of not paying out of pocket for a doctor visit.
