A review of Advanta Health Insurance Company leads to a report on the company’s bankruptcy. Advanta filed for bankruptcy in November 2010 and the bankruptcy became final on February 28, 2011. All assets were liquidated and the company was dissolved. The bankruptcy was due to a weak financial outlook that could not withstand the withdrawal of several customers during hard financial times.
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Advanta Health Insurance Company Bankruptcy Process
You may be wondering what a bankruptcy means for the holders of health insurance policies. There are two options for insurance companies that file for bankruptcy. The first option is to allow another company to buy its policies. This usually takes place before the public even knows about the impending bankruptcy.
If another company buys the policies, the policy holders are informed and given the option to switch companies. Often the switch is done with a company that offers the same coverage, so details about coverage, doctors, and other health related issues do not have to be rehashed. To the policy holder, it is often just a change in names and has no noticeable effect on coverage.
If this option is not available or the company filing for bankruptcy cannot find a company willing to buy their policies, customers will be notified. The whole bankruptcy process can take anywhere from six month to two years. Once customers are notified of the bankruptcy, they have time to find another insurance carrier.
If the policy is through an employer, the employer will handle the entire transition as they take bids from other insurance companies. In many cases, customers will stay with the company that is filing bankruptcy until the end of the calendar year and then make the transition.
Advanta Health Insurance Company Claims
During the transition time of a bankruptcy, customers will have claims to file and claims that are pending. It is easy and common to feel nervous once your health insurance company files for bankruptcy, if you have a pending claim or you have to file a claim before the transition.
If you are working with a company that is licensed to sell health insurance policies in your state, you don’t have to worry about this. One reason a health insurance company becomes licensed with a state’s department of insurance is to ensure the company will have financial accountability.
Once a company is licensed, it is monitored with the department of insurance. In addition to being monitored, it is backed up financially by the department. This means that if a company cannot at any time fulfill its financial obligations to its customers, the department of insurance will step in and help meet these financial obligations. You can go to your state’s department of insurance to see a list of licensed insurance companies.
Doctors, hospitals, and labs will continue to accept the insurance of the company filing for bankruptcy. Chances are, they don’t even know about the bankruptcy. You can continue to receive regular treatment and even surgery and everything will be covered by your current insurance company. Claims that have not been filled once the bankruptcy is final will still be paid by court order.
Advanta Health Insurance Company Assets
Insurance company bankruptcy filings are different than the average bankruptcy. Insurance companies typically file for bankruptcy when they get to the point that their policy amounts are higher than their assets. This means that if all claims were to be filed at the same time, they could not pay their customers.
Because of this, it is also typical for an insurance company to file for bankruptcy when they still have assets. Advanta Insurance Company still had $100 million in cash assets when bankruptcy was filed. This money was used to pay all remaining bills and debt as well as to give compensation payments to several employees who were laid off during the bankruptcy process.
The rest went to court fees and to paying all claims that were pending with the company. The small amount that remained was given to those who had invested in the company. Even though $100 million is a lot to the average person, it is not a lot in the insurance industry, which grosses billions of dollars every year in cash revenue.
Advanta is no longer selling health insurance, but you can compare health insurance rates from several other companies by entering your zip code in the box now.