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Availability of Medical Insurance Coverage for Medical Cannabis Patients

With medical marijuana legal in more than half of the United States and nearly 70% of the country having access to medical marijuana, the clinical research on the health benefits and healing properties of cannabinoids is contributing to the growing empirical studies and evidence supporting the use of marijuana as an effective medicine.

Frustratingly, however, many medical cannabis patients suffering from debilitating conditions and diseases such as multiple sclerosis, cancer, muscular dystrophy, seizure disorders, anxiety, migraines, and chronic pain, must solely bear the cost of medicine in the form of cannabis because it is not covered by healthcare insurance. Although a physician’s recommendation of cannabis for a patient’s qualifying ailments is no different than a script for opioids, anticonvulsants, or antidepressants, the patient’s health insurance provider will cover the cost of the latter but not the former.

Why? Several reasons.

First, cannabis remains a Schedule I drug under the Controlled Substances Act, which the federal government defines as “drugs with no currently accepted medical use and a high potential for abuse.” Schedule I is reserved for the most dangerous drugs with potential for severe psychological or physical dependence. Because marijuana is classified as a Schedule I substance, the health insurance industry does not consider cannabis to be “medical care” eligible for health insurance.

Next, private healthcare insurance companies as well as Medicare (federal health coverage for senior citizens) and Medicaid (federal coverage for low-income citizens) are generally only legally required to cover FDA-approved drugs. Since marijuana is not an FDA-approved drug, insurance companies are not required to cover it as part of their insurance plans. Insurers have covered synthetic marijuana products that have been approved by the FDA, including Marinol (which has been an approved medication for 30 years) and more recently, Syndros. Both drugs are classified as Schedule III drugs and recognized as having an “accepted medical use and low to moderate potential for abuse.” These synthetic drugs, however, are slow to work and lack the potency and effectiveness of the non-synthetic alternative.

Additionally, health insurers rely on Section 213 of the Internal Revenue Code to deny coverage for medical cannabis, which is not a recognized “medicine” eligible for federal tax deduction. Section 213(a) allows an individual to deduct certain medical expenses, including the cost of medicine and drugs, to the extent such expenses exceed three percent of adjusted gross income. Section 213(e)(1) defines “medical care” to include “the diagnosis, cure, mitigation, treatment, or prevention of disease.” Section 213(e)(2) defines “medicine and drugs” to include “only items which are legally procured and which are generally accepted as falling within the category of medicine and drugs (whether or not requiring a prescription).” Moreover, Section 213(e)(1)(ii) provides that amounts expended for illegal operations or treatments are not deductible.

Section 213, however, deals with tax deductions and specifically provides that in order for “medical expenses paid (including expenses paid for medicine and drugs) to be deductible, they must be for medical care of the taxpayer, his spouse, or a dependent of the taxpayer and not be compensated for by insurance or otherwise.” (emphasis added). Thus, Section 213 deals with federal tax deductions for medical expenses and does not technically preclude a private insurance company from offering coverage in a green state.

Despite these barriers, there are some limited ways a medical cannabis patient is able to obtain insurance coverage in certain jurisdictions. Recently, New York State ordered insurers to cover any medical visit involving a medical marijuana certification provided that the main reason for the doctor visit is not only to obtain the certification itself. Insurers, however, are not required to cover the cost of the medical marijuana purchased by the patient.

Worker’s Compensation boards in several states have approved coverage for medical cannabis recipients. A New Jersey administrative law judge recently ordered that a workers compensation insurance carrier reimburse past and future cannabis purchases made by a man injured on the job at a lumber mill whose physician recommended medical cannabis to manage his pain. The ruling, which was the first of its kind, has sparked similar decisions in New Mexico and Maine, with other states following suit. Though only those with workplace injuries currently stand to benefit from these decisions, it does raise the question of whether this trend will spill over into mainstream health insurance coverage.

The wholesale prohibition and rejection of marijuana on the federal level is slowly eroding. Recently, the FDA issued a historic approval of GW Pharmaceutical’s anti-seizure drug Epidiolex, the first FDA-approved drug made from a cannabis plant compound. The FDA approval will likely result in the DEA rescheduling the CBD based drug and Rite Aid Pharmacy has already expressed interest in dispensing the drug once it is released to the market. In the event of rescheduling, it will be interesting to see whether health insurance carriers offer some sort of coverage option for CBD.

While the United States is still figuring things out, medical insurers in other countries have moved towards cannabis coverage. Insurance carriers in the Netherlands cover medical cannabis on a case-by-case basis, offering reimbursement for patients with specific medical conditions. In Germany, where medical cannabis was legalized nationwide in 2017, insurance carriers are required by law to cover medical cannabis. One German insurance company recently reported reimbursing nearly 16,000 patients since Germany legalized medical cannabis. Meanwhile, Canada recently passed full federal legalization of marijuana and following a landmark case last year, health insurance companies have begun covering medical marijuana purchases. Not bad, eh?

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About this Author

Gene Markin, Stark and Stark, Construction Litigation Lawyer, New Jersey
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Gene Markin is an Associate in Stark & Stark’s Construction Litigation Group where he concentrates his practice on complex construction litigation involving community associations, developers, sponsors, design professionals, engineers, and contractors.  He has represented numerous condominium associations in construction defect cases involving faulty workmanship and negligent installation of exterior claddings, EIFS (exterior insulation finish system), stucco, brick, stone, masonry, cultured masonry, balconies and decks, windows and doors, Duradek, Azek Trim, EPDM...

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