One of the greatest concerns for those involved in personal injury lawsuits is obtaining or maintaining health insurance coverage. In previous years, insurance companies could deny coverage to individuals based on pre-existing health conditions and/or disabilities. To combat this issue, some states enacted "guaranteed issue" laws requiring insurers to cover individuals who meet certain criteria, regardless of health status. At the federal level, the Health Insurance Portability and Accountability Act (HIPAA) of 1996 requires that some insurance companies provide coverage to HIPAA-eligible individuals.
The introduction of the Affordable Care Act (ACA) in 2010 initiated a number of reforms to the health insurance industry. Beginning January 1, 2014, additional regulations will go into effect, making healthcare accessible to every United States citizen, regardless of health status. In the meantime, however, guaranteed issue laws remain in effect.
What are Guaranteed Issue Laws?
Guaranteed issue laws require insurance companies to issue a healthcare plan to all applicants, regardless of pre-existing conditions. However, in some states, insurance companies may be allowed to prohibit the treatment of certain pre-existing conditions.
What is wrong with the current system?
There is much confusion surrounding guaranteed issue laws, as requirements for individual markets and small group markets (between 1 and 50 or 2 and 50 employees, depending on the state) vary from state to state. Most states are not required to guarantee issue policies to all individuals, but at the federal level, some insurance companies must provide coverage to HIPAA-eligible individuals. To be considered a HIPAA-eligible individual, one must meet the following criteria:
- Has had at least 18 months of prior coverage;
- Has had no more than a 63-day gap in coverage;
- Has exhausted any COBRA or state continuation coverage for which they were eligible.
States have the ability to decide where that required coverage comes from–either from private insurers, or from another source of insurance coverage (e.g. a statewide high risk pool). Unfortunately, there are no current regulations that limit the cost of these plans, leaving those who need healthcare vulnerable to prohibitively expensive coverage.
Where are Guaranteed Issue Laws active?
Requirements vary from state to state; the requirements for individual market coverage and small group market coverage can also differ within each state.
- 6 states (Maine, Massachusetts, New Jersey, New York, Vermont and Washington) require guaranteed issue to all residents.
- 4 states (Michigan, Pennsylvania, Rhode Island and Virginia) and Washington, D.C. have identified BlueCross BlueShield as a last resort insurer who must issue coverage to anyone, regardless of health status.
- 5 states (Arizona, California, Delaware, Rhode Island and Tennessee) require guaranteed issue to only HIPAA-eligible individuals.
- 4 states (Idaho, Nevada, Ohio and Oregon) require guaranteed issue to HIPAA-eligible individuals and other individuals who have been previously covered and meet certain criteria.
- The remaining 32 states have no guaranteed issue law for individual markets.
Small Group Market
Federal law requires that all states offer guaranteed issue plans to small group markets. Small groups cannot be denied coverage based on the health status of individuals within that group.
This includes individuals who are self-employed, but only in 14 states (Colorado, Connecticut, Delaware, Florida, Hawaii, Maine, Massachusetts, Michigan, Mississippi, New Hampshire, North Carolina, Rhode Island, Vermont, and Washington).
Implications of the Affordable Care Act (ACA)
There have already been some changes to guaranteed issue laws based on requirements mandated by the ACA. Effective March 23, 2010, citizens residing in any state who have been denied coverage and who have been without health insurance for at least six months are eligible to purchase a guaranteed issue individual health insurance plan through the temporary federal risk pool, known as the Pre-existing Condition Insurance Plan (PCIP).
Beginning September 23, 2010, new individual market and small market group plans can no longer deny or exclude coverage for children under the age of 19 based on pre-existing conditions and/or disabilities. This provision does not apply to grandfathered individual plans (i.e. those that existed as of March 23, 2010).
As of January 1, 2014, all individual and group health plans must guarantee issue policies to all applicants. Additionally, insurance companies will not be allowed to change or increase premiums for certain individuals based on health status.
These changes do not require significant legislative change at the state level for the small group market, but they will require significant regulatory and legislative changes for the individual market. In effect, these changes may make high risk pools obsolete, as insurance companies will be required to offer coverage to all individuals, regardless of health status.
For more information regarding guaranteed issue health insurance, you may find the following resources helpful:
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).