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Someone who cannot medically qualify for life or health insurance because of a preexisting condition is called an uninsurable. Do not let the name scare you off. Uninsurable does not mean that you cannot get health insurance—it means that you will have to pay a higher premium for health insurance until the preexisting condition goes away.
There are basically six options for you or your family member who is “uninsurable.” In order of preference for most people they are as follows:
- Find a job with good health insurance benefits.
- Get subsidized state-guaranteed health insurance (through a state risk pool or its equivalent) if you are not HIPAA-eligible.
- Get state-guaranteed health insurance if you are HIPAA-eligible.
- Qualify for Medicaid and other income-based programs.
- Become eligible for someone else's health insurance or Medicaid.
- Purchase a medical discount card.
If you have an “uninsurable” family member, go back and read Chapter 3, paying particular attention to your HIPAA rights as a new employee and as an employee transferring between employers.
How to Become a “Friend of the Governor”: State-Guaranteed Subsidized Insurance for Those Who Are Not HIPAA-Eligible
$$$ Tip: State-guaranteed health insurance can be the bargain of a lifetime if you are very ill—an annual premium of $3,600 a year can get you $100,000 a year or more in health benefits. Unfortunately, for obvious financial reasons, states don't spend money advertising their state-guaranteed coverage—often, only people who know the governor or someone in state government get to take advantage of it. After reading this section, if you have a family member who is very ill, you will know your rights to state-guaranteed subsidized health insurance as a resident of your state—as if you were a “friend of the governor.”
What Is a State Risk Pool?
A state risk pool, also called a high-risk pool, is typically a nonprofit entity that pays for the losses experienced by insurance carriers who provide individual/family health insurance to unhealthy individuals who qualify. (See Appendix A for specific information on the state risk pool in your state.) State risk pools lose hundreds of millions of dollars every year. States subsidize their state risk pools (or equivalents) by charging insurance carriers a premium-based fee on health insurance policies sold in their state, through tobacco and other revenue taxes, and by using federal grants and matching federal funds.
Eligibility for State-Guaranteed Coverage
To qualify for state-guaranteed coverage, you cannot be eligible to participate in an employer's health benefits plan, cannot be eligible to receive COBRA benefits, and must satisfy at least one of the following three conditions:
- You have been denied coverage by a private health insurance carrier for health reasons.
- You have been offered coverage with an exclusion for a preexisting condition.
- You have been offered coverage for an uprated premium.
In some states, such as Texas, you can satisfy one of these three conditions by obtaining a letter from a licensed health insurance agent stating that one of these conditions would occur if you were to apply for private health insurance. You can find phone numbers, web sites, and more information on state-guaranteed coverage in your state in Appendix A.
Tip: Ask the state-guaranteed coverage administrator if it will accept such a letter instead of making you apply to a carrier and get rejected. As explained in Chapter 4, once you are rejected, you and your family members are probably going to have some explaining to do whenever you apply for health insurance. While state-guaranteed coverage may be your only option today, hopefully you will soon become healthier and will obtain much less expensive health insurance from a private carrier.
Tip:If you are an employer, see Chapter 11 for how to make all of your employees instantly HIPAA-eligible so they can be guaranteed immediate coverage without any exclusions for preexisting conditions.
Cost of State Guaranteed Coverage
The premium for state-guaranteed coverage is legally set, typically at 200 percent of the average individual policy premium (see Appendix A for your state). While these premiums may seem expensive, they are nonetheless a good deal for unhealthy citizens, and they are also good for employers with employees in a state risk pool who might otherwise be in the employer's group plan.
A participant in a state risk pool may be consuming $10,000, $100,000, or more in annual medical expenses while paying only $2,000 to $6,000 in annual premiums.
Most state risk pools accept only individual applicants. Because the premium is typically twice as expensive, you should choose such coverage only for the sole family member with the preexisting condition. However, you should always check to see whether your state risk pool has coverage available for other family members and at what cost. A few states illogically offer coverage for additional family members at rates cheaper than you would pay for private (nongovernment risk pool coverage). For example, if you qualify to buy health insurance through the state risk pool in Maryland ($224 premium for an unhealthy male, age 35), that state allows you to add five children for an additional $112 ($336 total premium)—much less than similar coverage for five children would cost from a private carrier.
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