Final answer:
An insured individual must notify their health insurance company of a claim within a reasonable time frame, which typically ranges from immediately up to 90 days, as per their policy terms. This allows for efficient claims processing and hinders fraudulent activities, aligned with mitigating adverse selection as intended by insurance mandates.
Step-by-step explanation:
For individual health insurance policies, it is typical that the insured or claimant must provide the insurance company with notice of claim within a reasonable amount of time after a covered event occurs. This timeline can vary based on the terms of the policy, but it often ranges from immediately up to 90 days. The purpose of prompt notification is to allow the insurance company ample time to process the claim and to prevent fraud. It also ensures that the claimant is acting in accordance with the contract terms to facilitate a smoother claims process. While the policy's specifics should always be the guiding document, the general rule underscores the importance of timely communication between the policyholder and the insurer.
The importance of notifying insurers promptly is highlighted by the concept of adverse selection, where individuals with more knowledge about their own health risks might wait until they need to use the insurance before acquiring or notifying their insurers. Insurance mandates like the employer mandate, which requires all employers with more than 50 employees to offer health insurance, and the individual mandate, which required all individuals to have health insurance or pay a fine, were put in place to mitigate such problems and to keep health care costs reasonable for both consumers and insurance companies.