While state-guaranteed personal health policies cost much more than private personal health policies in many states, the blended cost for a family is typically far less than employer group coverage. This is because you only purchase state-guaranteed coverage for one family member and get the rest of the family much less expensive personal policies from private carriers.
Personal health policies are permanent and portable, independent of an employee's employment. This is especially important for employees with preexisting medical conditions in their family since these are the employees most likely not to be able to come to work due to illness.
* The rates shown are for illustrative purposes only. The rates come from policies available in 2008 in the appropriate state for healthy applicants--such rates and policies may no longer be available and be increased based on health factors. Please contact your local health insurance agent for accurate quotes on policies for specific applicants.
Last year 1 million of the 2 million U.S. families filing for personal bankruptcy protection did so for medical reasons1. 82% of these 1 million families had group employer coverage when they first became ill—coverage they lost when they were no longer healthy enough to come to work or were needed at home to take care of a family member with an illness.
In 45 states insurance carriers are allowed to reject or charge more to applicants for personal policies who have a preexisting medical condition. This is why it is so important for you to get a personal health insurance policy, now, for every member of your family that does not (yet) have a preexisting medical condition. Once insured, your premium cannot be increased based on your individual claims history and your policy can be renewed until age 65 (Medicare) regardless of your health. See What is a Personal insurance policy?
A federal law passed in 1996 (HIPAA) requires all states beginning 2006 to offer state-guaranteed personal health policies (sometimes called "state risk pool coverage") to employees that lose their group coverage (called "HIPAA-eligibles"). Forty states go far beyond this federal mandate and offer state-guaranteed personal health policies to all of their residents even if they never had an employer plan.
Below are the most important general facts about state-guaranteed coverage.
There is virtually no difference between a state-guaranteed personal health insurance policy and a traditional private-carrier personal policy—except the price. In fact, state-guaranteed coverage is typically provided by the leading private carrier(s) such as Blue Cross in each state.
While the federal government suggests states charge 100%-200% more than personal policy coverage for state-guaranteed coverage, the cost of state-guaranteed coverage varies widely between states. State-guaranteed coverage has nothing to do with income. It is available equally to all residents of every state who have preexisting medical conditions regardless of whether they earn minimum wage or are a millionaire, although some states offer low income assistance with premiums.
Most states impose a waiting period of up to 12 months before covering preexisting medical conditions, however these waiting periods do not apply to HIPAA-eligibles. A HIPAA-eligible is typically a person formerly on an employer group plan who is no longer eligible for COBRA either because of time (18-36 months) or because COBRA was not offered.
1. Paul Zane Pilzer, The New Health Insurance Solution (New Jersey: Johny Wiley & Sons, Inc., 2005), 4.
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