Making Health Insurance More Affordable for Individuals
Oct. 15, 2009 – Group health insurance plans generally are more cost-effective and accepting of individuals with pre-existing medical conditions, but most people with no health insurance coverage don’t realize they can qualify for group health insurance benefits in a number of ways other than through job providers.
The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires insurers to cover people with pre-existing medical conditions if previously covered by a group health insurance plan within a predetermined period of time – usually about 6 months. But even with no prior health insurance coverage, individuals obtaining group health insurance coverage can have their conditions covered after a standard waiting period of between 12 and 18 months.
While HIPAA offers protection for individuals with group health insurance – where about 60 percent of Americans obtain health insurance coverage, it only applies to group health insurance and not individual health insurance plans. People who are self-employed, work part-time or are unemployed typically don’t have group health insurance benefits. And the Kaiser Family Foundation indicates about 21 percent of people applying for individual health insurance are refused coverage, charged higher premiums or provided a plan excluding their pre-existing medical conditions.
But what many don’t realize is in a dozen states an individual can qualify as a “group” to obtain health insurance, and in all other states any two or more individuals can form a “group” and obtain more affordable and effective group health insurance.
As federal lawmakers grapple with various national health care reform proposals, health insurers have said a meaningful federal mandate requiring all Americans to purchase health insurance coverage would be enough to enable insurers to provide health coverage at lower costs and cover people with pre-existing medical conditions.
But the measures recently approved by two U.S. Senate committees propose a maximum annual tax of $750 charged to individuals incapable of proving they have health insurance coverage while requiring health insurance providers to cover people with pre-existing conditions. Health insurers say the potential penalty is too low and would only result in fewer people purchasing health insurance while increasing costs for those whose premiums ultimately would be increased to offset the additional cost of covering people with pre-existing conditions.
Colorado, Connecticut, Delaware, Florida, Hawaii, Maine, Massachusetts, Mississippi, New Hampshire, North Carolina, Rhode Island and Vermont are states allowing individuals to form “groups of one” for the purpose of purchasing group health insurance plans, according to the Kaiser Family Foundation. All other states and the District of Columbia require at least two individuals to qualify for group health insurance coverage. States allowing groups of one have varying regulations defining the types of coverages available to them.
As the nation’s unemployment rate has risen, more people have lost their employer-provided group health insurance benefits but have the option of continuing them for a period of time through the federal COBRA law, but they are responsible for all premium costs, including what their former employers’ paid to provide group insurance for an individual and his or her family. Often times, the COBRA costs are too high for people drawing unemployment, forcing them to drop their health insurance coverage.
If an individual loses health insurance coverage, he or she can apply for coverage with another health insurer within 63 days of losing group benefits and still be covered for pre-existing conditions with no waiting period. And every state has a designated “insurer of last resort,” which must accept individuals if they apply within 63 days of losing their prior health insurance coverage. The “Catch 22” is that in some states, there are no limits on the amount of premiums charged and deductibles can be very high.
Many professional organizations also offer group health insurance plans for their members, who often are self-employed.
Regardless their situation, for people lacking health insurance coverage, waiting for meaningful and effective federal health care reform could take years. But taking some initiative could result in immediate savings while ensuring their families’ health care will be covered.