How Californians with Preexisting Conditions Can Get Health Coverage

Californians with no health insurance and preexisting conditions that would otherwise prevent them from obtaining coverage were given a new opportunity on Monday, October 25th with the debut of a new health plan. This new coverage is designed to bridge the former health insurance model with the new one to be revealed in 2014, which will no longer allow insurers to decline coverage to people with preexisting conditions.

Since this interim insurance is debuting in California, it is considered a guinea pig plan. That means if all goes well, the rest of the country may receive plans just like it.

Transitioning from the Old to the New

Ever since talks of health care reform gained media attention, there were disputes on how the government would successfully transition from the current health insurance model to one that would make sure all citizens had access to low cost health insurance.

At the time, approximately 46 million people were uninsured. However, the number of people without health insurance has risen to 50.7 million (or 1 in 6 people) in recent months. This means it is even more pertinent for Americans to find ways to get affordable coverage.

If they can’t access affordable coverage, they very often don’t get the health care they need. This is evidenced by a recent UCLA report that showed many patients with high deductibles delay care because they can’t afford to pay.

As a result, the government came up with health care exchanges and high risk pools to help those without coverage and with preexisting get insured.

Of course, these options are only offered as short term health insurance solutions until 2014 when all of the provisions in the health care reform law take effect. They do allow for as successful a transition as possible from the old to the new model, though.

Californians Helped First Due to Greatest Need

Some may wonder why California was chosen as the first state to implement official health insurance exchange coverage options for those with preexisting conditions.

At the time that the state’s health insurance bills were signed into law by Gov. Arnold Schwarzenegger, it was revealed that California was the state with the highest number of uninsured residents and therefore was in the greatest need.

Plus, since there were so many residents who would utilize the plan, the government would have a greater sample pool to work from when determining how effective the new coverage options would be.

So on Sept. 30, right around midnight, with the urging of President Barack Obama, Schwarzenegger signed Senate Bill 900 and Assembly Bill 1602 into law. These bills would establish the California Health Benefit Exchange and authorize an independent, five-member oversight board to define how the exchange would operate.

In addition, the governor signed the Federal Temporary High Risk Health Insurance Fund to give the exchange $761 million in federal funding.

How the Exchange Works

The exchange is meant to make life a little easier for the majority of Californians who can’t afford coverage out of pocket. So here are some basics to remember about the exchange:

  • Households get tax credits: The exchange offers an immediate tax credit for low- and middle-income individuals and families earning 133 percent to 400 percent of the federal poverty rate.
  • Low payment options: Depending on income, qualifying households will pay no more than 2 percent to 9.5 percent of household income on health insurance.
  • Insurance levels: Consumers will have access to four insurance levels: Bronze (individual covers 60 percent of benefit costs), Silver (individual covers 70 percent), Gold (individual covers 80 percent) and Platinum (individual covers 90 percent).
  • Catastrophic coverage: Catastrophic coverage will be available to people younger than 30 and will offer a high deductible and low-premium cost. It will only be available in the individual market and pay for three primary care visits.

The total out-of-pocket limits will equal the Health Savings Account (HSA) limit, which is currently $5,950 for individuals and $11,900 for families. However, those expenses could be reduced based on income.

For instance, households with incomes of 100-200 percent of the poverty level will pay out-of-pocket amounts that equal one-third of the HSA limit, households at 200-300 percent of poverty level will pay half and households at 300-400 percent will pay two-thirds.

What If I Want Coverage?

If you are a Californian interested in acquiring coverage with the new exchange, know that you will be approved only if:

  • You have been declined coverage from a carrier due to your preexisting condition

or

and

  • You have been without health coverage for at least six months

If you meet the above criteria and are further interested in pursuing coverage, you can visit www.pcip.ca.gov or call 1-877-428-5060 for a health insurance quote or more information.

The health insurance exchange is expected to help 23,000 hard-to-insure California residents. If it is successful, it will branch out to the rest of the country. Hopefully, this will be a good start in providing high-risk insurance options to residents who need coverage through the United States.