Guaranteed High Risk Health Insurance Choices

About 375,000 Americans with significant medical conditions are expected to rely on government-subsidized high risk insurance plans through 2011. The cost will be paid primarily by taxpayers but applicants will pay a reduced premium of $140 to $900 per month.

Those people with ongoing medical issues typically have a cost of treatment that exceeds the premium collected. In this situation it makes more sense to provide medical care through some type of public program rather than rely solely on commercial insurance. We recognize that these people could not possibly pay the full cost of their medical treatment without public subsidies and as a public policy, we pledge to support the treatment of those with significant medical issues. High risk health insurance pools are used to pay part of the cost while the participants pay a price similar to the amount paid by healthier individuals.

The federal high risk health insurance is available to individuals who have been without health insurance for more than 6 months. The premium will be about the same as other major medical insurance and out-of-pocket expenses are limited to $5,000 per year for deductibles and co-payments.

Even with total enrollee payments of up to $12,000 per year (the premium plus out-of-pocket costs), the Department of Health and Human Services expects to spend up to $4 billion this year to subsidize the cost of the high risk health insurance pools.

Commercial health insurance plans take an entirely different approach to ensuring financial stability. While guaranteed issue health insurance is offered in most states, the insurance limits the amount of benefits available to cover pre-existing medical conditions to ensure that claims do not exceed the collective amount of premiums paid. These policies provide a limited amount of coverage to all applicants regardless of prior medical history.

High risk individuals may use only the government-subsidized plan only, a commercial insurance only (where available), or a combination of a government-subsidized insurance and a commercial insurance plan to allow the best protection and coverage that each individual's personal budget will allow.

At the time this article was written 7 states had not yet announced whether they would operate a high risk health insurance pool as directed by the federal health insurance reform law. 20 states had decided that they will allow the federal government to provide this coverage. The remaining states will operate their own high risk health insurance plan.

Federal funds for high risk health insurance are available on the same basis as the subsidies to the Children's Health Insurance Program (CHIP). This means, for example, that California would receive $761 million, the largest amount of funding. The states with the smallest amount of funding, Vermont and Wyoming, would each receive $8 million. It is not clear what happens to the insurance enrollees when the federal funds are exhausted.

History of high-risk insurance plans

The federal government provided states with an opportunity to establish or expand high risk health plans under the Federal Trade Act of 2002 with a grant program of $20 million. Bonus grants were given to state pools that paid premium subsidies for those with low incomes, provided additional benefits, eliminated waiting lists, or implemented disease management programs. The State High-Risk Pool Extension Act of 2006 extended the provisions of the Federal Trade Act and authorized an additional $90 million of seed funding though 2009 to encourage states to establish qualified high-risk pools. Premiums must be limited to 150% of the standard in the individual market for states to qualify for a grant.

The 2010 Patient Protection and Affordable Care Act created temporary high-risk insurance for those with pre-existing medical conditions but includes eligibility criteria that exposes potential applicants to severe financial risk before insurance is available.

We believe that high-risk insurance plans where public funding is provided in consideration of the ability to restrict eligibility and limit the medical benefits available under the insurance will continue to be a pillar of our nation's health care delivery system.

High Risk Health Insurance

by Tony Novak, revised 2/2/2011

Individuals with significant pre-existing medical conditions seek health insurance that meets two specific criteria: 1) guaranteed acceptance regardless of medical history and 2) coverage for pre-existing medical conditions. Both features are required in order for a health plan to be truly effective from the individual's perspective of reliving the risk of high medical expenses. However, each of these two features are handled differently and health plans that include one of the two features do not necessarily include the other. The chart below lists the availability of guaranteed issue health insurance. Note that each plan and each state may handle the coverage for pre-existing medical conditions differently. Most health insurance requires a waiting period before benefits are available to cover the cost of pre-existing medical conditions. Fifteen states do not have a high risk health insurance pool including: Arizona, Delaware, Georgia, Hawaii, Maine, Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, and Virginia. In those states it may be necessary to combine guaranteed issue limited benefit insurance with customized non-insurance treatment options as discussed on each individual state's Web page.

The temporary pre-existing condition insurance plans initiated in each state by federal law in 2010 are an option for some but the eligibility requirements mean that a patient with serious medical conditions must undergo six months of often expensive treatment without insurance. This usually results in the depletion of personal and family assets which offers little overall comfort to those who need health coverage.

Availability of guaranteed acceptance health insurance

Legend:
Green = available
Red = not available
white = unknown or undecided

Link to state page	High risk health insurance pool	Guaranteed issue commercial health Insurance
AK	State
AL	federal
AR	State
AZ	federal
CA	State
CO	State
CT	State
DC	federal
DE	federal
FL	federal
GA	federal
HI	federal
IA	state / uncertain
ID	federal
IL	State
IN	federal
KS	State
KY	State
LA	federal
MA	State
MD	State
ME	State
MI	State
MN	federal
MO	State
MS	federal
MT	State
NC	State
ND	federal
NE	federal
NJ	State
NH	State
NM	State
NV	federal
NY	State
OK	State
OH	State
OR	state
PA	State
RI	State
SC	federal
SD	State
TN	federal
TX	state / uncertain
UT	state
VA	federal
VT	State
WA	State
WI	State
WV	federal
WY	federal

Applications are now being accepted for the federal high pre-existing insurance plan marked as "federal" in the chart above. To be eligible, an applicant must live in one of the 20 states indicates, be a US resident without health insurance for more than 6 months and have had difficult obtaining coverage due to a pre-existing medical condition. Applicants cannot be declined due to a pre-existing medical condition or current medical costs. Premium rates vary from $140 to $900 per person per month depending on age and location of residence. Policy deductible, co-payments and out-of-pocket expenses are limited to $5,000 per year. Applications received before the 15th of the month are eligible for coverage beginning on the first day of the following month. See the state insurance exchange page links above for more information.

Each state that will set up its own pre-existing condition health insurance plan will announce details separately. Enrollment information will be posted on the state page when details are available.

Opinions expressed are the sole responsibility of the author and do not necessarily represent the opinion of Freedom Benefits Association or any other person, company or entity mentioned. Information is from sources believed to be true, but cannot be guaranteed.