Even though most Americans get their health insurance through their employer or the employer of a family member (group health insurance), some people do not have access to this type of coverage and buy their own insurance independently. Unlike the group health insurance market, in most states an insurer can turn you down for individual coverage if you have a serious pre-existing medical condition (e.g., cancer, HIV) that would make you uninsurable. States are not required to have an alternative option for medically uninsurable individuals to access coverage, but most do. A high-risk health insurance pool is the most common way to provide individuals access to coverage. In addition, in many states, high-risk pools serve as the guanrateed-issue purchasing option for individuals who wish to exercise federal group-to-individual insurance portability rights. High-risk pools are also available in many states as a purchasing option for individuals who are eligible for the 65 percent federal health insurance tax credit provided by the Trade Adjustment Assistance Act of 2002.
High-risk pools are private, self-funded health insurance plans organized by state to serve high-risk individuals who meet enrollment criteria and do not have access to group insurance. In most states, they are independent entities governed by their own boards and administrators, but in some states they function as part of the state's department of insurance. You can apply for high-risk pool coverage through an insurance agent or directly with the state. You generally have a choice of health plan options and will receive enrollment cards and other information just like any other health plan. High-risk pools normally contract with a health insurance carrier or third-party administrator to administer paperwork and claims, so your enrollment card and other paperwork may not even appear to be produced by the high-risk pool. Once enrolled, you use your benefits just like any other consumer of private insurance coverage.
Coverage options are very similar to traditional individual health insurance offerings. It is generally a comprehensive major medical plan with a range of deductible options. The most common risk-pool option is a PPO plan, but many states also offer indemnity coverage and some state have HMO and/or HSA options available to consumers. Most pools offer coverage of prescription drugs, maternity, and mental health and substance abuse, among other services. Many have excellent disease management programs for enrollees since so many pools serve people with severe chronic illnesses.
RIsk pool health insurance is more expensive than traditional individual insurance. This is fair because pool members, by definition, are those who are considered to be medically uninsurable. State laws generally cap risk pool rates between 125-150 percent of the base individual market rate
Example: If the average standard individual market base rate in a state for a 30-year old male is $100/month, a medically uninsurable male of the same age would pay $125-$150/month for comprehensive coverage in a risk pool.
Risk pool rates are determined by your age and sometimes by where you live in the state. Pool rates are fairly affordable nationwide because they are directly tied to the rates in each state's existing individual market.
Just like almost all individual policies, high-risk pool policies contain pre-existing condition waiting periods to prevent adverse selection. Adverse selection occurs when a person buys health insurance only after he or she has a medical problem that will require the use of benefits. However, nearly all pools give consumers credit against the waiting period if you have had prior health insurance coverage within a specified number of days. The amount of the credit against the waiting period is generally proportional to the length of the prior coverage.
Thirty-three states have high-risk pools. NAHU's Health Care Coverage Options Database can tell you if your state has a pool, provide you with contact information for that pool, and also tell you the basic participation requirements.
Twelve states use other means to provide coverage for medically uninsurable individuals such as requiring that all individual policies be issued at least part of the year without regard to medical condition, coverage through a designated carrier of last resort, or coverage through a reinsurance pool. The remaining five states have no means of providing individual market access to people with catastrophic medical conditions. High-risk consumers in those states may have trouble obtaining coverage. To find out the options for high-risk health insurance consumers in your state, please look at NAHU's Health Care Coverage Options Database. To find an insurance agent or broker your area who can assist you in finding high-risk pool or other individual coverage, please go to NAHU's agent locator. For more general information on individual health insurance, see our Consumer Guide to Individual Health Insurance Coverage.
The National Association of Comprehensive Health Insurance Pools (NASCHIP), the professional association for high-risk pool administrators is a great source of additional information. Also, for a more detailed review of NAHU's legislative work regarding high-risk pools, please see our high-risk pool issue page.
CA for the Self-Employed
This association of self-employed individuals produces the Comprehensive Health Insurance for High-Risk Individuals: A State-By-State Analysis on an annual basis.