Risky Business: Health And Life Insurance Falls Short On Pot

Hilary Bricken

At one time or another, most of us are faced with the task of having to deal with health and life insurance. And with more and more Americans using marijuana for medical or recreational use, it begs the question as to whether insurance companies will underwrite such policies for those who consume.

Unfortunately, no U.S. health insurance policies cover medical marijuana use . . . yet. The reason for this is the same reason neither Medicare nor Medicaid cover medical marijuana: the U.S. Food and Drug Administration (FDA) has not approved any drug containing or derived from marijuana because it remains a federally illegal schedule I controlled substance. Therefore, regardless of state marijuana legalization, health insurance companies are not obligated to and will not provide coverage for non-FDA-approved, federally illegal contraband.

Whether consumer-directed healthcare plans or CDHPS (Health Savings Accounts, Health Reimbursement Accounts, and Flexible Spending Accounts) cover cannabis is more complicated. Under a CDHP, the insured has a personal healthcare account that can be used for copays or deductibles, with the patient having discretion on how to spend the funds for her own medical needs. Funds are deposited into and withdrawn from a CDHP tax-free. Since the patient has discretion in how her own CDHP funds shall be spent, it logically follows that CDHP funds can be used to purchase medical marijuana in a state with legalized medical marijuana.

So far though, this has not been the case.

The first problem with CDHPs and medical marijuana is tax deductibility. According to the IRS, federally illegal controlled substances are not a tax-deductible medical expense. Even if you are unconcerned about tax deductibility, private insurance companies will not cover medical marijuana as part of a CDHP because of another technicality: doctors do not write prescriptions for medical marijuana, but rather recommendations. Since marijuana is still federally illegal, doctors cannot legally prescribe it. The reimbursable medical expenses from this insurance company I chose at random illustrate how insurance companies will only reimburse medication expenses pursuant to a prescription.

Not surprisingly, life insurance companies also have a bit of a reefer madness mentality as they usually lump in marijuana-users with tobacco and alcohol users and charge them considerably more. Moreover, if your life insurer does not believe you are in fact consuming marijuana for a medical condition (based on a fact-intensive inquiry including whether you have a criminal record and how often you consume), it will view you as a recreational user and your premiums will increase accordingly. A list of allegedly marijuana-friendly life insurance carriers can be found here.

Unless and until we see marijuana legalized, decriminalized, or re-scheduled, cannabis consumers can expect both to continue having to pay for their medical marijuana and higher than normal life insurance premiums with most insurers.

Hilary Bricken is an attorney at Harris Moure, PLLC in Seattle and she chairs the firm's Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at [email protected].