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Health Insurance, the letter of creditable coverage and why it’s important.

03-23-2011 by Colleen King


When you change health insurance plans, or just drop coverage, your previous carrier will send you what’s called a Letter of Creditable Coverage. This will show the start and end day of your coverage with them. So what, what does this mean?


This could be very important especially if you are moving to a different policy as many people are doing right now, in order to cut their premium. If you have a condition you need care for, and you did not have prior coverage, the new carrier could see it as a pre-existing condition and not be obligated to cover it for the first six months of your new policy. And this is legitimate, it’s not just insurance companies looking to not pay claims. They are looking to not pay claims they are not obligated to. Isn’t that what you are looking for when credit card bills or cell phone bills show up, charges that aren’t yours to pay?


This came to mind recently when a client of mine told me she needed proof of prior coverage as her new carrier was asking for it. She had a procedure, the new carrier wanted to make sure there was no lapse in coverage over 63 days (that’s the magic number, have no idea how they came up with it) so we had to contact the old carrier.


Carriers vary in their ‘workability’ so if you get one of these letters, keep it. One carrier I work with reguarly, I called to get one for a client and even though I wasn’t the agent of record on that old policy, but being able to give certain identifying information, they emailed me what we needed within 10 minutes. This client’s old carrier had to snail mail the letter to her, and it took two weeks.


Most of the time you won’t need it, but when you get one, keep it to make SURE you won’t need it (Murphy’s Law). Unless of course you won the Mega Millions lottery, but even then, why spend it on something you don’t have to!




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