If you’re self-employed, unemployed or have a history of being treated for medical conditions with private medical insurance, you may have difficulty obtaining individual health insurance.
If this is your situation, you might have to get your health insurance from your state insurance risk pool (if it has one).
State Sponsored Insurance Pools
Started in 1976 in Minnesota, and available in over 30 states, these insurance pools create a group of all the people denied health insurance coverage by private insurance companies. The states then provide a state sponsored health plan those people can buy into.
Note: For more information on these plans go to the website of the National Association of State Comprehensive Health Insurance Plans (http://www.naschip.org).
The cost for these plans will be higher than if you qualified for a private insurance plan.
How Insurance Risk Pools Work
State pools usually operate like traditional plans like Preferred Provider Organizations (PPO) or Major Medical Plans.
For example, following is some data from one of the Iowa state medical plans:
Deductible- $1500 in-network and $3,000 out of network
Coinsurance- 80 percent for in-network and 60% for out of network (That’s the amount the state will cover after the deductible is met.) You’re responsible for the remainder.)
Lifetime Payout- $3 million
Covered Items- Hospital room and board, general nursing care, medical and surgical supplies, accidental injury care, hospital intensive care units, inpatient care units, diagnostic services, drugs and biological, doctors visits (subject to copays) and much more.
As suggested, this is very similar to what you might find in a PPO or Major Medical.
Insurance Risk Pool Costs
Risk pool insurance is more expensive than traditional individual medical plans. However, state laws usually set a cap on it of 125 to 200 percent of the market rate.
For example, if the standard market rate for your state is $400 per month, the risk pool insurance rate might be set at between $480 and $800 per month.
Note that if you have a preexisting condition, you may have to wait six to twelve months before coverage will kick in for that.
Uneven Risk Pools
Some state risk pools do an excellent job providing an insurance alternative for their citizens who cannot obtain private medical insurance. Their plans are designed well, are self funded and affordable.
In fact, risk pools are designed to work like a private insurer and be funded by the premium dollars. They’re non-profit and created by the state for that purpose.
However, especially in troubling economic times for state governments, some programs cannot stay funded with those dollars. Â The money strapped states cannot provide the funding that’s necessary to keep the risk pools afloat.
States Without a Risk Pool
If your state doesn’t have a risk pool check and see what your state offers in lieu of that at the National Association of Insurance Commissioners website (http://www.naic.org).
Often, states that don’t provide a risk pool require one insurer, like Blue Cross, Blue Shield to accept all applicants.
