What is a guaranteed issue health insurance plan?
“To sum it up…”
- A guaranteed issue health insurance plan has no right of refusal by the offeror
- Guaranteed issue plans do not use medical underwriting
- Guaranteed issue plans include applicants within initial eligibility periods
- Medicare Supplement is an important guaranteed issue plan
Guaranteed issue health plans favor the consumer. The offeror does not reserve a right to refuse acceptance of the applicant. Obamacare reformed the health insurance industry to require uniform pricing and guaranteed issue health plans. The consumer must buy health insurance or face the no insurance penalty.
Comparison shopping is the preferred method for selecting guaranteed issue health plans. In guaranteed issue situations, the focus is on the strength of the benefits, costs, and coverage.
Guaranteed Issue Factors
State laws that provide guaranteed issue plans are effective for getting applicants accepted in plans. They bar discrimination in application process based on health, gender, age, occupation, and location. However, except for a few progressive state governments, the guarantee issue does not protect against price discrimination using factors prohibited in admission decisions.
The Affordable Care Act solved that issue for plans sold on the Obamacare Marketplace and state exchanges.
Prior to the Affordable Care Act, women had to bear the financial burdens of reproductive capacity. Caesarians and pregnancies were considered insurance risks and pre-existing conditions. The insurers used actuarial data to impose higher, even prohibitively large, costs for health insurance on women. This idea exposes the extremes to which insurers went to punish female consumers for their anatomies.
The idea that female pregnancies existed independent of the male gender, so as to impose costs on one group rather than the other was logically indefensible. Actuarial data did not shift the cooperative nature of pregnancy from both genders to one gender. It was a simple case of wrongful discrimination against women that was finally corrected by the Affordable Care Act.
Obamacare Features Guaranteed Issue Plans
The plans approved for sale on the Obamacare Marketplace and state exchanges are guaranteed issue plans. Sellers may only use group or community rating to set prices. The applicants are the group to which the guarantee applies.
The Affordable Care Act uses a limited form of community rating to set prices. Among the applicants to any qualified health policy, Obamacare severely limits the seller’s powers to vary pricing by individual characteristics.
The below-listed items describe the permissible forms of price discrimination.
- Age is a factor in setting prices permitted by the Affordable Care Act rules. The rules limit the ratio of the price differential between the oldest and youngest members. The ratio for age cannot exceed a ratio of 3:1.
- Location is a factor that insurers can use to set prices within a group or class of members. Location is a cost factor when providing medical care services.
- Tobacco usage cannot vary the price of insurance beyond a ratio of 15:1. It is useful to note that upon completion of smoking cessation treatment, the rate drops for tobacco users. The additional charges are within the power of the individual. Smoking causes long-term injury and is a potentially fatal condition when it causes severe damage to the heart and lungs.
No Medical Underwriting Allowed
One of the most effective reforms of the Affordable Care Act was the rule against medical underwriting. Now, an individual’s prior health condition and pre-existing illnesses cannot bar acceptance nor increase the price of insurance.
This prohibition against rejecting applicants was the insurance side of the individual mandate. It has particular relevance to the treatment of women in pricing and coverage.
The Individual Mandate
The Affordable Care Act made health insurance a requirement to avoid a tax penalty. The individual mandate is the consumer side of the guaranteed issue in Obamacare. Insurers must accept applicants, and every eligible applicant must have insurance.
In Obamacare, “guarantee issue” means that every applicant must get coverage and at prices that are as equal as possible. The group or community rating permitted by the law has few exceptions.
State Laws Require Guaranteed Issue
In a few jurisdictions, state laws guarantee issuance of health plans and require insurers to offer some plans with coverage to all members of a group or class. The guarantee is for price and acceptance regardless of the individual’s age or health status. This price leveling feature is valuable protection; some individuals get insurance coverage that they would not have received with medical underwriting.
The price guarantees are just as valuable, with medical underwriting, insurers can vary prices in accordance with the rated risks. Most states do not offer this protection on the vast majority of health plans. The Affordable Care Act made a sweeping and dramatic change.
Medigap insurance is an important part of Medicare coverage. Too often overlooked, it is an investment that can save consumer budgets during times when outpatient care involves expensive medications. It also has the possibility of additional help for costs from Medicare and Medicaid.
Medicare Supplement issuers are state-licensed insurers that use medical underwriting to accept applicants except during the initial eligibility period.
The applicant can get guaranteed acceptance at group rated prices within five months after they have both Medicare Part A and Medicare Part B.
Medicare Supplement After the Initial Enrollment Period
The laws guarantee acceptance during the initial enrollment period and control the prices. Despite the rules, some insurers may seek to delay acceptance of high-risk cases. The importance is in the fact that after the initial enrollment period, many insurers use medical underwriting and may delay or seek to reject applicants.
State laws permit price discrimination after the initial enrollment period, and pricing can interfere with participation for those with limited funds.
Remedies for Refusal of Guarantee
The states have dedicated assistance offices to help consumers get the guaranteed coverage to which they are entitled. The State Health Insurance Assistance Program (SHIP) is an important contact for consumers in the selection process. They can advise consumers and review their status under the state’s insurance laws.
Guaranteed Issue Health Plans Involve Price and Acceptance
State governments authorize the sale of certain types of insurance and regulate its conduct closely. For example, states will enforce guaranteed issue rights for wrongful refusals or delays in coverage.
In addition to the Obamacare Marketplace, consumers can contact their state government to get the rights for which they qualify. They can also get confirmation of eligibility under state rules.
Compare and Discover
Comparison shopping is an ideal way to select policies. It places consumer priorities first and guides decisions that find the best value in health policies.#mdabottom to start your own free health insurance comparison.