You’re Not Optionless If You’ve Been Denied Coverage: PCIP and High Risk Insurance Pools

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By the Census Bureau’s last count, forty-eight million Americans lacked health insurance. And as treatment costs rise, qualifying for affordable private coverage is only getting harder: Insurers are increasingly cutting costs by limiting or denying coverage to the higher-risk patients that need it most.

For those who have been denied health coverage, two important new options are available. And depending upon your policy needs and where you live, one coverage plan may be a far better deal than the other (more in ‘The Simple Dollar’s Health Insurance Guide’).

The First Option: High Risk Insurance Pools

Congressional debates over the possibility of a national, single payer U.S. healthcare system seem like they will never end. Fortunately, in the time it has taken Congress to come together on a national healthcare plan, 35 state governments have hatched their own programs to provide coverage to high-risk residents and their families.

How High-Risk Pools Work

High-risk pools are state or HHS-run programs that provide coverage for state residents who have been formally rejected by other insurers. Various health insurance companies participate in the pools and offer coverage to state residents regardless of pre-existing medical conditions or exhaustion of COBRA benefits.

While high-risk pool coverage varies from one state to the next, all plans are temporary. To avoid unexpected medical bills, policyholders need to play close attention to the their policy’s restrictions on enrollment periods, lifetime maximums and active coverage durations. And while a pre-existing medical condition will not prevent a patient from qualifying for a plan, coverage of treatments related to that condition may be limited.

The problem with high-risk pools is that they are also high-cost. Premiums are not cheap; they can run between 125 to 200 percent above the policy rates charged to a healthy person of the same age.

While high-risk pool coverage varies from one state to the next, all plans are temporary

What Pools Cover

Pools offer good coverage in most states, but specific policies can be highly variable. The National Association of Health Underwriters (NAHU) says that these programs typically provide their services through a PPO plan, but may also offer an HMO and/or a Health Savings Account (HSA). Depending on your state’s chosen provider and payment plan, a high-risk pool will cover:

  • Primary and specialized care
  • Hospital services
  • Prescription drugs
  • Maternity care
  • Mental health care
  • Substance abuse programs

Occasionally, high-risk pools will also provide disease management programs for the chronically or seriously ill.

The problem with high-risk pools is that they are also high-cost. Premiums are not cheap; they can run between 125 to 200 percent above the policy rates charged to a healthy person of the same age

Eligibility and Qualifications

All states will require high-risk coverage applicants to submit paperwork proving:

  • They are citizens or immigrants living legally within the particular state
  • They have been uninsured for at least six months
  • A pre-existing medical condition has been formally diagnosed
  • A private insurance company has rejected them on the basis of this pre-existing condition within the last year

Know Your State’s Policy

While some states operate and fund their own pools, many are also lead by the national Department of Health and Human Services. Coverage options and costs vary widely even among the HHS-run state pools, so be sure to check your resident state’s policies and restrictions.

The Second Option: The New Federal Pre-Existing Condition Insurance Plan (PCIP)

Last year, the Patient Protection and Affordable Care Act established a national program dedicated to covering millions of Americans suffering from “pre-existing conditions” (an industry term for any condition requiring regular medical care). Unlike with a private insurer, patients on the Pre-Existing Condition Insurance Plan (PCIP) will never be dropped from the policy or charged outrageous premiums because they’re diabetic or HIV-positive.

How the PCIP Works

Like the state-run high risk insurance pools, this program is a temporary coverage option for patients with pre-existing conditions that lack insurance. Additionally, the PCIP does not place any kind of restriction on pre-existing conditions. This means that it covers all applicants no matter the treatment costs of past and current conditions. And until the program is finished, there are no coverage limits – annual or lifetime.

The program will be discontinued at the end of 2013. After that date, health insurance companies will be legally prohibited from denying coverage on the basis of pre-existing medical conditions. PCIP policyholders will, at that point, finally be able to choose an insurance plan from the long list of providers that currently do not consider them eligible.

PCIP does not place any kind of restriction on pre-existing conditions. This means that it covers all applicants no matter the treatment costs of past and current conditions. And until the program is finished, there are no coverage limits – annual or lifetime

What the PCIP Covers

In addition to the health care benefits provided by the high risk pools, the PCIP program includes preventive care without any deductible amounts. There are three levels of coverage available through the PCIP program, so patients can select coverage that best fits their medical needs. All plans cover standard services like flu shots, yearly physicals, and cancer screenings. There are additional plans for patients in need of maternity care, home health and hospice care, or skilled nursing care.

Pricing PCIP Coverage

In some states, switching to PCIP coverage can represent a 40 percent reduction in out-of-pocket medical costs. The premiums range between $140 and $900. The specific amount is determined by age and regional insurance market prices. For the most part, patients pay the same rates that a healthy person from their area would for a comparable policy.

The costs of participating in the PCIP program are clearly outlined on Healthcare.gov’s information page. There is a deductible of $2,000 for services and a $500 deductible for prescriptions. This only applies to care that is given within PCIP’s network. Once the deductible has been met, the patient will pay for 20 percent of the medical costs. There is a maximum out-of-pocket cost of $4,000 for the year 2013 and no cap on the maximum amount of coverage. As of February 2013, the PCIP has changed the enrollment eligibility; check with Healthcare.gov here to see if your state has re-opened enrollment.

In some states, switching to PCIP coverage can represent a 40 percent reduction in out-of-pocket medical costs

What Happens in 2013, Congress?

While nationally fewer people have enrolled in the PCIP program than was anticipated, enrollment in certain states is much higher than anticipated. Budgets for these states are getting tight and there is a possibility that the PCIP’s $5 billion budget will be gone before the program’s year is up. If this happens, PCIP patient coverage will be at risk until Congress passes new funding measures.

Fortunately, by the end of 2013, many of the laws stipulated in the Affordable Care Act will be legally effective. Insurers will soon have to cover all applicants and offer the same rates regardless of pre-existing conditions. Overdue as they may be, these measures will finally make affordable and adequate health coverage a possibility for all Americans. Keep up to date on all ACA changes here: http://www.healthcare.gov/

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