State Insurance Pool: Can it help you?

A “State Insurance Pool” is a ground-breaking program that secures insurance benefits for all individuals, even those who are considered to be high-risk by the insurance industry.  Quite often referred to as “Guaranteed Access Programs“, these pools are unique plans created by individual state legislatures in order to make available a sturdy safety net for those folks to whom the dreaded term "medically uninsurable" has been applied.  Previously, this determination meant that a person in need of medical care was denied health insurance coverage usually because of a pre-existing health condition.  Sadly, it is the patient with such health issues who is in the greatest need of quality health care, yet quite often unable to afford the treatments because of the financial strain involved.  Previously, this has led to interruptions in medical care for patients who had exhausted available COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) benefits, and were now unable to meet steep financial demands from care providers.

It is noteworthy that state insurance pools vary from state to state; however, they usually function within the confines of a state formed not-for-profit alliance, which is governed by a board of directors.  In general, this board has representative members from the insurance industry, individual insurance customers, and members of the specific state insurance department. Operating very much like a clearing house, the board enters into contracts with an insurance company, and then oversees the day to day operations of collecting members’ premiums, receiving and paying out claims, and answering questions on eligibility for treatment.  

While coverage is frequently comparable to the coveted 80/20 major medicals and outpatient coverage, prospective members may still be denied plan benefits because of perceived issues of being uninsurable, yet this limitation is often restricted to a 12-month period.  Thereafter, acceptance is all but guaranteed.  While this is good news for patients seeking insurance protection, it is important to remember that this coverage, while state sponsored, is not free.  As a matter of fact, premium costs are usually quite a bit higher than comparable plans offered on the open market by competing insurance companies, yet because of state law regulations, there is a firm cap on the amount of money a patient may be charged for insurance.  In general, this cap runs between 125 to150 percent of the base individual market rate.  While the cap is firm, there is still some elasticity in the rates, and they sometimes may vary based on plan participants’ ages, or even domicile addresses.

Quite often copies of rejection notices must accompany an application for coverage under the umbrella of a state insurance pool from state-licensed insurance carriers.  Additionally, anyone wishing to take advantage of a state-run plan must be a resident of the state in which the plan is offered.  In lieu of a rejection by an insurance carrier, an individual who can evidence 18 months or more of uninterrupted health care coverage and is considered HIPAA eligible will quite often qualify for pool coverage.  Coverage for dependants is available as well.

In short, a state insurance pool is of invaluable help to anyone who has been denied health insurance because of pre-existing conditions or has exhausted the allotted time period of COBRA benefits, and needs assistance in receiving needed medical care without fear of exorbitant out-of-pocket expenses. 

As of 2003, thirty-three states offered high-risk pools to their residents.  Twelve states have chosen to opt out of these programs by providing alternatives.  For example, the District of Columbia has contracted with Carefirst Blue Cross Blue Shield to have an open enrollment period where interested individuals may purchase coverage regardless of medical conditions, and enjoy full benefits after only a short two-month waiting period. Rhode Island and Pennsylvania have contracted with Blue Cross/Blue Shield to offer year-round enrollment for otherwise deemed uninsurable patients.

Interestingly, this health care concept has since been expanded to also apply to hurricane insurance.  “Windstorm Coverage Pools” are an alternative for homeowners who are unable to purchase individual coverage for their residences.  Homeowners in a few coastal counties of Georgia and New York are even to participate in pool coverage for wind and hail damage through a program entitled “FAIR” (Fair Access to Insurance Requirement).