Consumer Guide To High-Risk Medical Insurance Pools
What are high-risk pools?
Even though most Americans get their medical insurance through their employer or the employer of a family member (California group medical insurance), some people do not have access to this type of coverage and buy their own insurance independently. Unlike the group medical insurance market, in most states an insurer can turn you down for individual coverage if you have a serious pre-existing medical condition (e.g., cancer, HIV) that would make you uninsurable. States are not required to have an alternative option for medically uninsurable individuals to access coverage, but most do. A high-risk medical insurance pool is the most common way to provide individuals access to coverage. In addition, in many states, high-risk pools serve as the guaranteed-issue purchasing option for individuals who wish to exercise federal group-to-individual insurance portability rights. High-risk pools are also available in many states as a purchasing option for individuals who are eligible for the 65 percent federal medical insurance tax credit provided by the Trade Adjustment Assistance Act of 2002.
How do high-risk pools work?
High-risk pools are private, self-funded medical insurance plans organized by state to serve high-risk individuals who meet enrollment criteria and do not have access to group insurance. In most states, they are independent entities governed by their own boards and administrators, but in some states they function as part of the state's department of insurance. You can apply for high-risk pool coverage through an insurance agent or directly with the state. You generally have a choice of medical plan options and will receive enrollment cards and other information just like any other medical plan. High-risk pools normally contract with a medical insurance carrier or third-party administrator to administer paperwork and claims, so your enrollment card and other paperwork may not even appear to be produced by the high-risk pool. Once enrolled, you use your benefits just like any other consumer of private insurance coverage.
What type of coverage options do high-risk pools provide?
Coverage options are very similar to traditional individual medical insurance offerings. It is generally a comprehensive major medical plan with a range of deductible options. The most common risk-pool option is a PPO plan, but many states also offer indemnity coverage and some state have HMO and/or HSA options available to consumers. Most pools offer coverage of prescription drugs, maternity, and mental medical and substance abuse, among other services. Many have excellent disease management programs for enrollees since so many pools serve people with severe chronic illnesses.
How much does high-risk pool insurance cost?
Risk pool medical insurance is more expensive than traditional individual insurance. This is fair because pool members, by definition, are those who are considered to be medically uninsurable. State laws generally cap risk pool rates between 125-150 percent of the base individual market rate
Example: If the average standard individual market base rate in a state for a 30-year old male is $100/month, a medically uninsurable male of the same age would pay $125-$150/month for comprehensive coverage in a risk pool.
Risk pool rates are determined by your age and sometimes by where you live in the state. Pool rates are fairly affordable nationwide because they are directly tied to the rates in each state's existing individual market.
Will a high-risk pool cover all of my medical conditions immediately?
Just like almost all individual policies, high-risk pool policies contain pre-existing condition waiting periods to prevent adverse selection. Adverse selection occurs when a person buys medical insurance only after he or she has a medical problem that will require the use of benefits. However, nearly all pools give consumers credit against the waiting period if you have had prior medical insurance coverage within a specified number of days. The amount of the credit against the waiting period is generally proportional to the length of the prior coverage.
Does my state have a high-risk pool?
Thirty-three states have high-risk pools.
What if my state does not have a high-risk pool?
Twelve states use other means to provide coverage for medically uninsurable individuals such as requiring that all individual policies be issued at least part of the year without regard to medical condition, coverage through a designated carrier of last resort, or coverage through a reinsurance pool. The remaining five states have no means of providing individual market access to people with catastrophic medical conditions. High-risk consumers in those states may have trouble obtaining coverage. To find out the options for high-risk medical insurance consumers in your state, please look at NAHU's Medical Care Coverage Options Database. To find an insurance agent or broker your area who can assist you in finding high-risk pool or other individual coverage, please go to here. For more general information on California individual medical insurance, see our Consumer Guide to Individual Medical Insurance Coverage.
Where can I find more information about high-risk pools?
The National Association of Comprehensive Medical Insurance Pools (NASCHIP), the professional association for high-risk pool administrators is a great source of additional information. Also, for a more detailed review of NAHU's legislative work regarding high-risk pools, please see our high-risk pool issue page.