The New High-Risk Health Insurance Pool: Common Questions
Kimberly Lankford

Kiplinger Personal Finance

One of the first big provisions of the health-care-reform law to take effect is the creation of a $5-billion program to provide coverage for people with medical conditions who've been rejected by private insurers. The Pre-Existing Condition Insurance Plan, a new high-risk pool, was launched in most states on July 1 and is designed to last until insurers can no longer reject people because of their health, in 2014.

The law sets the general rules for eligibility, pricing and coverage, but the specifics vary by state. Twenty-nine states (and the District of Columbia) chose to administer the plans themselves, while the U.S. Department of Health and Human Services will run the plans in the remaining 21 states.

I've received several questions from readers about the new high-risk pool and how it will work. Here's a sampling:

Q: Who can be covered by the new high-risk pools?

A: The pools are designed to provide coverage to people with medical conditions who have been rejected by private insurers. The plan sounds good in theory, but there's one big catch: The law specifies that you must be uninsured for six months before you can be covered under the new pool. To qualify for the HHS-run program, you must also provide a letter showing that you have been rejected for private coverage within the past six months or were offered a policy that excluded coverage for your medical condition (and were still uninsured for six months). The states administering their own plans have similar requirements.

Q: When will the coverage take effect?

A: The federal program has a rolling start date. People who applied by July 15 were to start receiving coverage on Aug. 1; if you apply by Aug. 15, then your coverage will start on Sept. 1. Most state plans started taking applications by July 1, and the last few plans will be opening before the end of the summer.

Q: How much does it cost?

A: The price varies by state and age, but the law specifies that the plans must charge market rates -- so someone in the high-risk pool cannot be charged more than a healthy person would pay in that state. A 50-year-old in the plan administered by HHS would pay from $350 per month up to $530 per month, depending on the state. Someone in their late 20s would pay from $140 to $200 per month. The HHS-administered plan has a 20 percent co-pay, like many private plans, with no cost sharing for preventive care. State plans are offering a range of deductibles; many have a high-deductible plan that can be paired with a health savings account.

Q: Aren't those prices lower than those of some states' current high-risk pools? Can people in those pools join the new Pre-Existing Condition Insurance Plan?

A: Yes, the prices for the new high-risk pool are generally lower than they are for states' current pools, which often charge 150 percent to 200 percent of the standard rates -- or higher. Thirty-four states currently have high-risk pools, which will continue to exist in addition to the new pool and will have different eligibility criteria and prices. "People who are currently in their state's high-risk pool will not be eligible for the new high-risk pool," says Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services. You can qualify for coverage under the new pool only if you are uninsured for six months.

Q: The new pool is likely to be less expensive than the current pool. Won't that encourage people to drop their coverage for six months just so they can switch to the less-expensive coverage?

A: "I hope not," says Sebelius. "Typically, people with health conditions cannot go for six months without coverage. It's a fairly limited number of people, and it's working as a bridge to 2014," when insurers cannot reject people because of their health. HHS anticipates that about 200,000 people will be enrolled in the new high-risk pool at any given time.

Q: Can states use any of the $5 billion designated for the new high-risk pool to help lower their premiums and provide better coverage in their current high-risk pools?

A: "Unfortunately, we don't think the law allows it," says Sebelius. "The language is pretty restrictive." HHS is currently dealing with the handful of states that have guaranteed-issue programs, however -- where people currently cannot be rejected because of their health -- to determine how they can use the money to help their residents.

Q: I lost my job more than a year ago, and my COBRA eligibility will be ending in a few months. Should I look into coverage through the new high-risk pool?

A: No. Because you're coming off COBRA, you have special rights (called "HIPAA eligibility") that require states to provide you with coverage without a waiting period, regardless of your health, as long as you haven't gone for more than 63 days without coverage. Contact your state insurance department to find out more about its HIPAA rules (see www.naic.org for contacts, or www.coverageforall.org for details).

Q: How can people find out about the high-risk-pool options in their state and sign up?

A: Go to HealthCare.gov, the government's new Web site that makes it easy to learn about the specific health-coverage options for your situation -- including public and private programs. The site includes detailed information about the Pre-Existing Condition Insurance Plan and applications for the program in the states administered by HHS, as well as information about older high-risk pools that are administered by the states.

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