What is a guaranteed issue health plan?
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UPDATED: Mar 19, 2020
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- A guaranteed issue plan requires insurers to issue a health plan to all applicants without considering their health status or similar factors
- Insurance companies previously had the ability to deny coverage to those who had a pre-existing condition
- The Affordable Care Act changed many guaranteed issue laws and made it a requirement to issue health insurance to all applicants
- Some grandfathered plans may be exempt from these new regulations under the Affordable Care Act
Guaranteed issue laws make it necessary for insurance companies to offer health plans to everyone who applies, even if they have a preexisting condition or some other health factor that might affect their eligibility.
Previously, if someone did not have health insurance and then developed a certain medical condition and tried to purchase a health coverage plan, insurance companies had the right to deny them coverage based on their health status.Denial of health coverage based on a preexisting health condition was a common practice before guaranteed issue laws stepped in to amend this problem.
Denial of health coverage based on a preexisting health condition was a common practice before guaranteed issue laws stepped in to amend this problem.
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What were the regulations regarding guaranteed-issue under the HIPAA act of 1996?
Prior to the passage and implementation of the Affordable Care Act, guarantee issue health plans were not a requirement, except under certain circumstances.
Under the Health Insurance Portability and Accountability Act, which passed in 1996, many health insurance companies were required to provide guarantee issue plans to specific people, who were known as HIPAA eligible, who met certain qualifications, despite any medical conditions or disabilities they might have.
Anyone who had prior health coverage for more than 18 continuous months and who have only been without insurance for less than 63 days and made an attempt to get all other forms of coverage, including COBRA and state-sponsored insurance must be guaranteed some type of insurance.
Even in these cases, there may have been clauses in the policy relating to preexisting conditions, meaning people did not receive coverage for relevant treatment immediately. Additionally, the cost of these plans was regulated by the state, meaning there was no limit on how expensive they could get.
The original HIPAA law required that all health plans for all companies with anywhere between 2 and 50 employees be guaranteed insurance. However, there were no regulations imposed on larger companies with more than 50 employees.
Some states did have stricter regulations when it came to guaranteed plans than others; Maine, Massachusetts, New York, New Jersey, and Vermont required that individual market insurers provided guarantee-issue plans to all of their residents.
In Washington DC, Rhode Island, Michigan, Pennsylvania, and Virginia, there were Blue Cross Blue Shield plans that were required to be issued if someone had no other coverage options. Idaho, Nevada, Ohio, and Oregon required insurance companies to provide guarantee-issue coverage to people that were HIPAA eligible, as well as other individuals who had continuous coverage and met certain other requirements.
Additionally, 14 states allowed self-employed individuals to purchase guarantee issue plans in a small group market along with smaller companies.
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How have they changed under the Affordable Care Act?
The Affordable Change Act made significant changes to guarantee issue plans and regulations. It became a requirement that all group plans and individual plans accept applicants regardless of their health status or other factors relating to preexisting conditions and overall health. Additionally, insurance companies are prohibited from imposing any restrictions, exclusions, or absolute denials relating to preexisting conditions for children under the age of 19.
Although these new regulations apply to group plans through an employer or new plans available through the Healthcare Marketplace, they may not necessarily apply to grandfathered plans, which are those that were already in existence when the Affordable Care Act was enacted.
Prior to the implementation of the Affordable Care Act, many states that did not require health insurance companies to offer guarantee issue plans to individuals had high-risk pools.
These high-risk pools were there to cover people who had preexisting conditions or another problem affecting their health status and were turned down by private insurance companies. However, after the Affordable Care Act was put into practice, many of these high-risk pools became unnecessary due to the guarantee issue coverage requirements outlined in the Affordable Care Act (ACA).
The ACA requires that all states have a preexisting condition insurance plan available for people who have been denied coverage by private companies and who have gone without health insurance for six months or more.
Even under the ACA, guaranteed issue does not put a limit on how much insurance companies can charge you for coverage, except in certain states who might have their own limits.
Guaranteed-Issue Health Plans
Improvements in healthcare have made it easier for people to receive guaranteed issue health plans. The Affordable Care Act allows people with preexisting conditions and other health status factors to find a health plan that will accept them at a fairly affordable rate. If you know you have a preexisting condition, you should still shop around and look for a plan that meets your needs since there are more guaranteed issue health plans available now than ever before.
If you know you have a preexisting condition, you should still shop around and look for a plan that meets your needs since there are more guaranteed issue health plans available now than ever before.
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