Lower-Premium Pre-Existing Condition Insurance Plans Take Effect in Many States

One year ago on July 1, 2010, Secretary of Health and Human Services Kathleen Sebelius announced the availability of new insurance coverage for individuals who were denied insurance because they had a pre-existing condition.[i]  These plans, called Pre-Existing Condition Insurance Plans (PCIPs), were created by the Affordable Care Act of 2010 (ACA). [ii]  As required by the ACA, they operate as transitional coverage until Health Insurance Exchanges are in place on January 1, 2014.[iii]   At that time, group health plans and health insurance issuers that offer group or individual health insurance coverage must cover pre-existing conditions.[iv]

Secretary Sebelius announced the availability of PCIPs last year, saying:

…[F]or too long, Americans with pre-existing conditions have been locked out of our health insurance market. Today, the Pre-Existing Condition Insurance Plan gives them a new option – the same insurance coverage as a healthy individual if they’ve been uninsured for at least six months because of a medical condition.  This program will provide people the help they need as the nation transitions to a more competitive and fair market place in 2014.[v]

Effective July 1, 2011, PCIPs will be more affordable and more readily accessible in most of the 23 states (and the District of Columbia) that have opted to let the Department of Health and Human Services (HHS) administer the plans. As the Center discussed in a previous Alert[vi], in some of those states, premiums have been reduced by as much as 40%, making it easier to afford coverage,[vii] But the scope of the premium reductions varies.  For example, a 55-year-old Virginia resident would see her monthly premium reduced from $498 to $297, a 40% reduction.  However, in Mississippi, premiums will be reduced by 2%.[viii]  It is important to check the PCIP website for updates.[ix]

Coverage and Eligibility

Generally speaking, PCIPs cover primary and specialty care, hospital care, and prescription drugs. To qualify, individuals must be United States citizens or living in the U.S. legally, have been uninsured for at least six months, and have been unable to obtain coverage due to a health condition. The changes that became effective July 1, 2011 in those states whose programs are administered by HHS eliminate the requirement that an applicant must show that she or he has been denied insurance coverage and made it easier to submit proof of such a health condition. Under the relaxed rules, individuals may submit a letter from their physician indicating a qualifying condition or disability. Eligibility is not based on income.

The 27 States that operate their own PCIPs are provided flexibility in how they administer their programs, though certain requirements must be met.  HHS informed those States of its actions reducing premiums and easing eligibility requirements and told the States they could do the same.[x]  PCIPs are fully federally-funded with $5 billion from the Affordable Care Act.

To find out which states are now enrolling and for more information, please visit the new consumer website from HHS, www.HealthCare.gov.