Can an employer change insurance companies knowing that an employee has a terminal illness?

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Can an employer change insurance companies knowing that an employee has a terminal illness?

My brother-in-law was diagnosed with terminal cancer in July of last year. His employer changed insurance companies in January and he passed away in March. Now, the new insurance company won’t honor his terminal illness claim saying that it was pre-existing. Is this legal?

Asked on April 5, 2019 under Employment Labor Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

Yes, it is legal. The employer provides insurance--if it chooses to provide insurance; remember: insurers may choose to not provide insurance at all--voluntarily, as a benefit to employees. It does so for its own purposes (e.g. to reward or incentivize employees) and is not required to take employee needs or situations/circumstances into account. That means it is free to change insurers, such as to reduce costs, improve customer service, or for any other reason. If your brother wanted insurance under his control, he should have purchased and had his own insurance. Instead, he relied on insurance provided by another.


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