Government Pre Existing Condition Health Insurance Plan
The new healthcare law established a government sponsored pre existing conditions insurance plan for individuals unable to qualify for private medical insurance due to their health status, called the Pre Existing Condition Insurance Plan (PCIP). The goal of the program is to offer low cost medical insurance to individuals that are unable to qualify for or obtain a reasonably priced health insurance plan from the private individual marketplace.
When the Patient Protection and Affordable Care Act was signed into law on March 23, 2010, it required each state to set up and maintain their own Pre Existing Condition Insurance Plan within 90 days. States also had the option of allowing the federal government run the program for them (twenty-three states, plus the District of Columbia chose this option).
The Pre Existing Condition Insurance Plan is funded by a $5 billion allocation from the new healthcare law. Essentially, the federal government reimburses states for claims and administrative expenses that exceed the insurance premiums collected from plan participants.
Why is the Pre Existing Condition Health Insurance Plan important?
Currently, individual medical insurance plans are medically underwritten, except for children less than age 19. This means that applicants age 19 an older may be required to give details about their past and present health status, and be declined coverage based on the existence of one or more pre existing health conditions. Beginning in 2014, the new healthcare law prohibits medical underwriting, essentially requiring all applicants be accepted for individual medical insurance and pre existing conditions be covered.
Do you have a health condition and not sure if you qualify for an individual medical insurance plan? Get instant feedback with our exclusive Insurability Profile Tool™. It is fast, free and confidential. You will also learn approximately how much additional premium you can expect to pay based on your height and weight, tobacco status and occupation.
- Prior to the new healthcare law, Maine, Massachusetts, New York, New Jersey and Vermont had prevailing state regulations that prohibited any applicant from being denied individual medical insurance based on their health status. This means that coverage is “guarantee issue”. These rules are still in effect post healthcare reform.
- In 2010, the new healthcare law mandated that all applicants younger than age 19 be accepted for medical insurance and their pre existing conditions be covered. Before healthcare reform, children could be medically underwritten and declined medical insurance based on their health status (except for the five states previously mentioned).
What are my options for medical insurance if I have pre existing conditions?
Today, roughly 19% of all applicants in the individual medical insurance marketplace are declined coverage because of their health status. Some health insurance companies have denial rates of 40% or higher!
In addition to the Pre Existing Condition Health Insurance Plan, individuals that cannot qualify for an individual medical plan may have other health insurance options. These include: COBRA Continuation, HIPAA Portability or other forms of government health insurance, such as Medicaid or State’s Children Health Insurance Plan.
A Limited Benefit Plan is another type of health insurance for pre existing conditions. Commonly referred to as Guarantee Issue, Fixed Indemnity or Mini-Med Health Insurance, these medical insurance plans pay a fixed amount for office visits, lab tests, x-rays, surgical procedures, and daily hospital confinement benefits. From an affordability standpoint, this is the cheapest health insurance available. Your out of pocket expense, however, may be significant because reimbursements are fixed and not tied to the actual charges billed by your healthcare provider. Also, most Limited Benefit Plans will not pay benefits for pre existing conditions until the insured has been covered for 12 consecutive months under the policy. Aside from being low cost medical insurance, this type of medical insurance does have its advantages, though, including the coveted I.D. Card which allows access to healthcare providers that would otherwise require some proof of health insurance before rendering treatment.
Who is eligible for the Pre Existing Condition Health Insurance Plan?
To enroll in the Pre existing Condition Insurance Plan, applicants must:
- Be under age 65 unless not eligible for Medicare,
- Be a citizen, national or lawfully present in the United States,
- Not have had “qualified” health insurance coverage for at least six months prior to making an application to the Pre Existing Condition Plan, and
- Demonstrate the existence of a pre existing condition.* This requirement varies by state. However, one of the following may be accepted: 1) denial letter from an insurance carrier, 2) letter from an insurance agent or broker indicating the applicant will not qualify for an individual medical insurance plan due to health status, 3) an offer of health insurance that contains a Rider that excludes coverage for a pre existing condition, or 4) letter from a healthcare provider stating the applicant has or any time in the past had a medical condition, disability or illness.
* Eligibility rules vary by state. The requirements presented here are general in nature. Some states have more restrictive guidelines, while others may offer additional ways to document a pre existing condition.
Does the Pre Existing Condition Health Insurance Plan impose waiting periods or restrictions?
The Pre Existing Condition Insurance Plan does not impose waiting periods before coverage begins or restrict the coverage of pre existing conditions.
What benefits does the Pre Existing Condition Health Insurance Plan cover?
All Pre Existing Condition Insurance Plans are required to cover certain categories of services, such as physician and hospital services, surgery, mental health and substance abuse services, skilled nursing home and home health care, preventive and maternity care, and prescription drugs.
In 2011, the Pre Existing Condition Insurance Plans the federal government administers for twenty-three states, plus the District of Columbia offers three medical insurance plans to choose from:
- Health Savings Account (HSA)
The remaining twenty seven states offer similar health plans choices, however, some only give one or two medical plan options.
The most popular medical plans have annual deductibles ranging from $1,000 to $2,999, an out-of-pocket maximum of $5,950 and coinsurance (the amount you pay) of 20%.
- For 2010 and 2011, the Pre Existing Condition Insurance Plan caps the maximum out-of-pocket per covered individual at $5,950.
How much does the pre existing condition health insurance plan cost?
Premiums for the Pre Existing Condition Insurance Plan vary by age, state and type of medical insurance plan selected. Some Pre Existing Condition Insurance Plans also rate for tobacco usage, although not the programs run by the federal government.
Since the new healthcare law set premiums for the Pre Existing Condition Insurance Plan at 100% of each state’s standard rate in the private medical insurance market, the rates are very competitive with individual medical insurance plans offered in any given state.
How do I enroll in the Pre Existing Condition Insurance Program?
Enrollment can be happen electronically or by completing a paper application. To get started, please contact us at 800-403-8511 or visit preexistingconditionsinsurance.org.