The individual insurance market is going through some growing pains this year. Previously health maintenance organizations (HMO's) were the answer to the rising cost of health care; now they are becoming the problem. Increasingly medical groups and doctors are only accepting preferred provider organizations (PPO's). Blue Cross has just introduced affordable health plans that offer both first dollar coverage and a catastrophic cap. Now Blue Cross has different plans with different limits on your share of the costs but all the plans except the HMO have a cost-sharing feature to them. This means they are offering coverage for preventive care at affordable rates, for as little as 25% of the negotiated rate for office visits, but they are requiring all subscribers to pay out of pocket for major medical expenses until the out of pocket maximum is reached. Recently, in an attempt to move subscribers towards the "share" plans, Blue Cross raised their HMO rates significantly. The trend will be for the other insurance companies to follow suit. In the meantime, if you are hooked on the HMO system and the zero out of pocket idea, PacifiCare, Health Net, and Blue Shield are still offering competitive products at reasonable rates.
There are other concerns in the health care industry. One of the most important of these issues is: How do people who are not in perfect health secure coverage. For individuals with minor treatable illnesses or those who are on medications, the choices have become limited. Currently all carriers offer "level one" rates to individuals. After an application is submitted and reviewed for medical history, they may request medical records. Once all the information regarding an application is gathered and reviewed the underwriter may decide to deny or offer coverage at a higher rate. Typically, they charge a surcharge of 20% or 50%. For example a $100.00 a month premium at "leve1 + 20 %" becomes $120.00 a month. Reasons a provider might surcharge an applicant are diabetes, uncontrolled blood pressure and asthma just to name a few. Whether they deny or surcharge an applicant is up to the medical underwriting department of each carrier, and each carrier has different standards and time limits that an individual must be symptom and treatment free.
If you are denied coverage, you are probably eligible for the major risk medical insurance program (MR MIP). This is a state subsidized medical insurance program that is not difficult to get but may take up to a year or longer on a waiting list. You have to be denied coverage by an insurance company in order to apply for this program. The state decides how many applicants are accepted each month. The budget for MR MIP has decreased which means applicants are accepted on the plan but at a much slower rate.
What about persons whose COBRA plans or group plans are terminating? The Health Insurance Portability and Accountability Act (HIPAA) covers this area. This plan guarantees applicants health coverage as long as it is put into force within 63 days of the loss of group coverage. The HIPAA plans offered are not as diverse as the individual plans on the market, yet individuals in this situation will at least be able to secure some type of health insurance coverage. As of January 1, 2001 the rate for HIPAA plans are based on subcriber's age. So for example a 25-year-old diabetic who is just coming off his father's employer sponsored plan may get a guaranteed issue policy at the following rates.
$181.00 for a $1000.00 deductible plan
$172.00 for a $2000.00 deductible plan
How does all this affect you? It really depends on your particular situation and your medical history. It is best to discuss your situation with an experienced agent who knows all the options available. If you have questions about health coverage or are interested in securing coverage for you or your family give me a call and I will be happy to speak with you about the plans and options available to you.
Respectfully,
Terri Carver, RHU
