April Capil has mixed feelings about the national outcry over canceled health insurance policies. Five years free of the stage III breast cancer that nearly claimed her life, the Boulder, Colo., resident is once again healthy, but she’s still struggling to put her life back together.

Like millions of Americans, Capil thought she had solid individual health insurance. Then she got sick and found that her coverage was woefully inadequate.

Additional Photos

April Capil, a breast cancer survivor, sits in her home in Boulder, Colo., on Dec. 3. Capil, who is suing health insurance provider HealthMarkets for $230,000 in unpaid medical bills, said she worries that many people falsely believe their policies are comprehensive. Stephanie Davis/MCT

The financial problems that followed would aggravate Capil’s health struggles, force her into bankruptcy and trigger a fraud lawsuit over $230,000 in unpaid medical bills against HealthMarkets Inc., the parent company of her former insurer.

The litigation is nothing new for HealthMarkets. The North Richland Hills, Texas, insurer, formerly known as UICI, has a long history of battles with state regulators trying to root out “junk insurance” in the individual market. But numerous sanctions and a host of consumer protections in the Affordable Care Act have put a financial squeeze on the company and forced it to change its business model.

Beginning in January 2014, the health care law prohibits the kind of limitations, exclusions and benefit spending caps that made Capil’s coverage so problematic.

But after falsely promising that Americans could keep their health insurance if they liked it, President Obama bowed to political pressure in November and OK’d a one-year extension on 2013 individual policies –even those facing cancellation next year because they don’t meet the health law’s new minimum standards.

Now Capil, a software project manager, wonders how many Americans will use the president’s canceled-policy “fix” to unwittingly renew another year of “junk insurance” like she used to have.

“It’s sad that there are people who have this insurance who don’t know that they’re going to end up like me if they ever get sick,” she said. “I feel like people are upset that they’re losing these plans and they’re upset because they think their plans are comprehensive. But they aren’t. These insurance companies have been selling Americans coverage that will bankrupt them if they ever have a serious illness.”

It’s a concern others share as well.

THEY ‘SEEM LIKE A GOOD DEAL’

“As those policies are grandfathered in, people have to be aware they may be exposed,” said Mark Rukavina, a health care consultant in Massachusetts and an expert on medical debt. “It’s something to think about as these people stay with these plans that seem like a good deal.”

Capil thought her plan was a good deal. She said her insurance agent told her it was full, comprehensive coverage and if she ever got cancer, Capil would never pay more than a deductible or co-insurance.

What she got instead was a “limited benefit plan,” which is “commonly seen as inadequate because it tends to pay for routine care and leave you without coverage fairly soon if something major costing tens of thousands of dollars kicks in,” said Ed Haislmaier, a senior research fellow for health policy at the Heritage Foundation, a conservative Washington think tank.

Donna Ledbetter, HealthMarkets’ director of external communications, declined an interview request for this story, citing Capil’s pending lawsuit. She also declined to answer questions not involving that litigation.

Capil’s experience is cautionary. Most people don’t realize their policies have coverage limitations until they actually need the coverage.

Of the 16 million Americans with individual coverage, only 725,000 people had limited benefit policies in 2012, Haislmaier said, citing industry data.

Of these, he said roughly 132,000 were enrolled in HealthMarkets limited benefit plans, which are sometimes called “scheduled benefit” plans.

“They do cover a wide range of things,” Haislmaier said, “but with very low benefit levels. So they wouldn’t turn you away saying, ‘You have a heart condition. We only cover cancer.’ They turn you away saying, ‘You exceeded your $50,000’ ” coverage limit.

That’s what happened to Mike Adams, a 61-year-old restaurant owner and career guidance counselor in Ramona, Calif.

Only three days after complaining of chest pains in late 2011, Adams was preparing to undergo quadruple heart bypass surgery with his wife, Theresa, by his side. As she followed his gurney into the operating room area, a frantic hospital clerk came running up the hallway in hot pursuit.

‘CHASED DOWN’ FOR A CHECK

“They chased down Theresa, following me into the operating room, pulled her aside, and she’s scared to death already, and then they just hollered out, ‘Mrs. Adams! Mrs. Adams! You have terrible insurance. We’re going to have to get a check from you right now.’ They wanted the entire deductible right there,” Adams said.

Unable to come up with $3,600 on the spot, Theresa Adams convinced the staff to go ahead with her husband’s surgery. She paid the deductible with a credit card the next day.

After 11 days in the hospital, Adams had racked up about $240,000 in medical bills.

But his insurance from Mid-West National Life Insurance Co. of Tennessee, a subsidiary of HealthMarkets, wouldn’t cover roughly $193,000 of the charges.

Adams thought his insurance provided comprehensive catastrophic coverage with generous benefits for major medical episodes. Like Capil, he, too, said his insurance agent assured him that it did.

But Adams’ plan capped payment for “miscellaneous” hospital inpatient charges at $18,000 – and most of his costly care had been lumped into that vague category.

“That’s the kind of gaming that state insurance departments exist to regulate,” Haislmaier said.

SHOCKING REALIZATION

Adams’ realization that he had junk coverage was a complete shock. He said he had paid his premiums for seven years and had never filed a major claim.

“And then all of a sudden you find out, ‘Oh crud. They don’t cover any of this stuff?’ ” Adams said.

“And to have them chase Theresa down in the hospital like that? That stuff makes me mad when I think about it. It’s not right. Full disclosure, that’s all any of us ask for,” he added.

Ledbetter, the HealthMarkets spokeswoman, wouldn’t comment on Adams’ claims, citing his pending lawsuit against Mid-West National Life over his unpaid medical bills.

If you exclude the fly-by-night insurers that set up bank accounts, collect premiums and skip with the cash, HealthMarkets and its subsidiary insurance companies hold a rare distinction, said Capil’s attorney, Antony Stuart of Los Angeles.

“They’re the worst health insurance company that is actually trying to operate within the law,” Stuart said. “I can’t imagine that there has ever been any worse.”

Along with improperly denying benefits, Capil and Adams accuse HealthMarkets and its agents of deceptive marketing by misrepresenting the terms of their policies and obscuring the policies’ coverage limitations in confusing contract language.

FINE PRINT AND LEGALESE

“Their claim is ‘Oh, you should have read all of the fine print and understood it,’ ” Adams said. “I’m supposed to understand that? You have to be a doctor and an attorney to understand it. And by the way, you have to be an insurance underwriter also because you can’t understand the legalese. You can’t understand the medical terminology. And you can’t understand the insurance industry. And that’s what they expect you to do.”

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