Are COVID-19 Losses Covered by Insurance?

Coronavirus surgical mask doctor wearing face protective mask against corona virus banner panoramic medical professional preventive gear.

Along with the obvious public health concerns, the COVID-19 pandemic raises several questions about insurance. Will my health insurer cover testing? Can my business make a claim for lost income?

Although the answers from carriers, regulators and courts might change as the situation evolves, here’s how some of the most common insurance products are expected to respond to coronavirus-related losses.

Health Insurance

Federal and state governments will pay for lab tests associated with COVID-19. However, hospitals might charge their own fees for collecting specimens and can pass those expenses along to consumers. For health plans regulated by the Illinois Department of Insurance, emergency care from an out-of-network provider (including ambulatory services and hospital care) must be billed as if it were from an in-network provider. Similarly, patients at an in-network facility who are treated by an out-of-network provider can’t be charged higher copayments (assuming no qualified in-network provider is available at the facility). In an effort to promote social distancing, telehealth services from medical providers must be covered as if they were part of an in-office visit.

Life Insurance

Purchasers of life insurance may have been asked to disclose recent travel to other countries. If a consumer misrepresented this information on an application and contracted a terminal case of COVID-19 while in a high-risk area, the insurer might be able to deny death benefits. Otherwise, life insurance policies generally don’t have exclusions that would pertain to the present crisis. Policies with a cash-value component might decrease in value due to the pandemic’s impact on the economy but are usually subject to a minimum guarantee.

Workers Compensation

Workers compensation insurance pays for medical care and a portion of lost wages when an employee becomes injured or ill as a result of his or her job duties. Although eligibility differs by state, compensation for illnesses generally only applies when job duties or work environments made employees significantly more susceptible to illness than the general population. Historically, for example, ill workers have received benefits after being exposed to hazardous chemicals but not when catching the flu from a co-worker. Whereas most workers are unlikely to qualify for workers compensation due to COVID-19, hospital workers (and perhaps grocery store employees) might qualify due to their elevated exposure. Time will tell.

Commercial General Liability Insurance

This insurance is intended to respond when a member of the public is harmed by a business’s work or by unsafe conditions at an insured location. Although some coverage might exist if a customer were to contract the virus from someone at a business, it’s possible that the insurance would only respond in cases of negligence (such as a business continuing to remain open to the public after being ordered to close). Although some policies might provide benefits regardless of fault, those amounts are generally limited to no more than a few thousand dollars.

Business Interruption Insurance

This insurance compensates businesses for lost income and extra expenses when they’re forced to shut down through no fault of their own (including by emergency order of the government). Unfortunately for policyholders, coverage is typically dependent on “direct physical loss” or damage to property, such as a fire at either the insured’s business or a neighboring building. Interruptions that result in lost income but aren’t caused by a “direct physical loss” or property damage are generally excluded. Although COVID-19-related lawsuits have already been filed against insurers based on this language, carriers might still be able to deny claims based on other parts of the policy. For example, since the early 2000s, most business interruption policies specifically exempt losses due to viruses and bacteria.

As in all cases regarding claims, policy language can differ from product to product and carrier to carrier. Insurance professionals should carefully read the applicable coverage forms before advising the public about a specific loss.


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What Illinois Insurance Producers Need to Know About the New Health Insurance Exchanges

Throughout the rollout of the Affordable Care Act, insurance sales professionals have been particularly curious about the new health insurance “exchanges.” Beginning this week, millions of consumers will utilize these marketplaces in order to compare their coverage options and purchase their own insurance. But where does this leave agents and brokers? Can they continue to be a source of counsel and expertise for their health insurance customers? What do new terms like “navigator” and “exchange” really mean?

Those questions, as well as others that are especially relevant to insurance licensees, will be addressed here. More general information about the exchanges can be found elsewhere on this blog.

What’s an exchange?

A health insurance exchange is a government-overseen marketplace in which individuals and small businesses can shop for health insurance coverage. Individuals and small businesses who shop in an exchange will be able to closely compare their insurance options, determine their eligibility for new federal tax credits and apply for a health plan of their choice. Although several insurance companies will be offering plans for sale on the exchanges, all plans must meet certain federal and/or state standards.

Even though consumers will still be allowed to purchase insurance outside of an exchange, there are several important reasons why consumers might shop in one. Most importantly, individuals and small businesses must purchase their insurance through an exchange if they wish to receive tax credits and government subsidies that are available under the Affordable Care Act.

What’s the difference between an exchange, a marketplace and a SHOP?

In news items or discussions about the new health care law, you may have heard people use terms like “health insurance exchange” and “health insurance marketplace.” These terms mean the same thing. Although the law itself uses the term “exchange,” the general consensus is that the term “marketplace” is easier for consumers to understand.

You might also read or hear about SHOP, which stands for “Small Business Health Options Program.” A SHOP is a health insurance exchange in which small businesses can purchase group coverage. Most states will have at least two exchanges: one exchange for small businesses (a SHOP) and one exchange for individuals.

How do health insurance producers (agents and brokers) fit into the exchanges?

Health insurance producers are a valuable component to the new health insurance exchanges. Agents and brokers can be compensated for helping individuals and small businesses choose and enroll in a plan from an exchange. In fact, insurance companies can’t have separate compensation methods for producers who sell plans in the exchange and producers who sell other health plans.

Do health insurance producers need to complete additional training in order to help consumers in the exchange?

Training requirements depend on whether the exchange is for individuals or small businesses. Before helping Illinois consumers in an exchange for individuals, licensed health insurance producers must complete an online training program through the Center for Medicare and Medicaid Services. Producers must score at least 70 percent on a final exam and must supply a certificate of completion to each health insurer that they work with.

This training is not required for producers who will only be working in a SHOP exchange, but it is highly recommended. Regardless of the kind of exchange, producers must complete a registration process and sign certain documents.

For more on the training and the role of producers, contact the Illinois Department of Insurance or click here. Note that requirements for producers may differ from state to state.

I keep hearing about so-called “navigators.” Are they insurance producers?

Navigators are specially trained entities and staff who help facilitate enrollment in the exchange’s health plans and provide information about the Affordable Care Act. From the government’s perspective, the hope is that navigators will cater to communities that might be underserved by producers. For example, navigators might be stationed in low-income community centers where visitors are likely to be eligible for a newly expanded version of Medicaid.

Although it is technically possible for a licensed insurance producer to be a navigator, this overlap is unlikely to occur at the same time in the same transaction. Unlike a producer, a navigator in Illinois can’t make recommendations and can’t be compensated, directly or indirectly, by insurance companies. In general, navigators are compensated through federal and state grants. Also, training requirements for navigators are different from the training requirements for producers. Specifics may differ from state to state.

Although Illinois has passed a law that puts certain restrictions on navigators, additional rules are still being finalized by the Department of Insurance. For more about navigators in Illinois, click here.

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