Living with Diabetes

Health Insurance Options for Individuals

Individual Health Insurance Coverage

People who buy coverage in the individual insurance market generally do so because they do not have access to employer-sponsored group health coverage and they do not qualify for public programs, such as Medicare or Medicaid. People with diabetes and other chronic conditions have faced difficulties finding policies that will accept them, that are affordable and that provide adequate coverage. As a result of the Affordable Care Act, this has already begun to change for those under age 19 and will change for adults in 2014.

States regulate the individual insurance market. The rules as to who can purchase and what is included in the coverage vary depending on where you live. The individual health insurance market in most states is characterized by "medical underwriting." That is, insurers in this market decide whether to sell coverage (and if so, what benefits to offer and what premiums to charge) based on health status, prior medical history, age, gender and other characteristics of applicants. Diabetes is a condition for which most medical underwriters will automatically deny coverage. However, this is not true in all states.

How the individual insurance market works will change in many ways as the new health reform law passed in March 2010, the Affordable Care Act, is implemented. For additional information about individual health insurance and changes under health care reform, please visit: http://www.healthcare.gov/foryou/family/have/individual/index.html. You may also contact the office of your state insurance commissioner to find out what type of coverage laws exist in your state and where you might look to obtain coverage. Contact information for state insurance departments is available at http://www.naic.org/state_web_map.htm.

Pre-Existing Condition Insurance Plan

Through the Affordable Care Act, people with diabetes who have been uninsured for six months or more can access insurance through a new program called the Pre-Existing Condition Insurance Plan (PCIP). PCIP, which is administered by either your state or the U.S. Department of Health and Human Services, became available in 2010 and will continue until the provisions banning discrimination based on pre-existing conditions are fully implemented in 2014. PCIP programs vary depending on the state. There are no waiting periods for coverage of pre-existing conditions and out-of-pocket costs are capped. PCIP is available in every state, including states that already had a state-run "high-risk pool" program. Visit the PCIP webpage to learn more about how PCIP works in your state: https://pcip.gov/PCIP_States.html or call 1-866-717-5826.

*Beginning February 16, 2013, the Federally-run PCIP programs are suspending acceptance of new enrollment applications. State-based PCIP programs will stop accepting new enrollment applications after March 2, 2013. All PCIP programs will continue providing coverage to the people currently enrolled.

Note: There is an exception to the enrollment freeze for people who lost PCIP coverage in the past 6 months because they moved out of state, and there may be other exceptions, so you should call the PCIP program in your state for more information or if you think you may be eligible.

State High-Risk Pools

Thirty-five states have established "high-risk pools" that offer health insurance coverage to "uninsurable" residents whom private insurers might turn down because of their health status. Approximately 200,000 people are currently enrolled in state high-risk pools across the U.S.

For people enrolled in these programs, high-risk pools offer an important (possibly the only) source of available coverage. High-risk pools typically offer benefits that are comparable to basic private market plans but benefits do vary. Even so, in some states, high-risk pool benefits are limited and there may be a waiting period of 3-12 months on coverage of pre-existing conditions. Sometimes, though not always, high-risk pools will waive the pre-existing condition exclusion period if you had prior coverage. High-risk pool premiums are generally more expensive than coverage sold by private insurers as states set high-risk pool premiums based on a multiple of the average individual private plan premium.

Some states impose specific enrollment caps and limit enrollment in the high-risk pool based on the availability of funds. Many other states that do not have enrollment caps have laws that authorize state high-risk pools to institute a waiting list if funding for the program is insufficient. However, if you are federally eligible as described below under HIPAA (and if the state designates its high-risk pool for federally eligible individuals), the pool must accept you when you apply even if it is otherwise closed to new enrollment.

Contact the office of your state insurance commissioner to find out what coverage laws exist in your state and where you might look to obtain coverage. Contact information for state insurance departments is available at http://www.naic.org/state_web_map.htm. You can also search for insurance options available to you at: http://finder.healthcare.gov/.

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits under certain circumstances the right to choose to continue on their employer's group health plan for limited periods of time (18-36 months). Events that can require a plan to offer COBRA continuation coverage include voluntary or involuntary job loss, reduction in the hours worked, death or divorce of the covered spouse, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan. The option for coverage continuation under COBRA generally applies to employers with 20 or more employees and you have a limited amount of time to elect COBRA.

Call your employer's benefits administrator for questions about your specific COBRA coverage options. If your health plan coverage is from a private employer (not a government employer), you can visit the United States Department of Labor website for more information about COBRA at: http://www.dol.gov/ebsa/publications/cobraemployee.html, or call 1-866-444-3272. If your health plan coverage is from a state or local government employer, call 1-877-267-2323 (x61565). If your coverage is through employment with the federal government, visit the Office of Personnel Management’s web site at: www.opm.gov.

Many states have passed "continuation" laws that apply to small group health insurance policies sold to employers with 2-19 workers. There is little uniformity between the states in regard to qualifying events, duration, covered benefits and cost. Speak with your employer's benefits administrator or human resources department for additional information on the continuation policy that may be available to you. You can also contact the office of your state insurance commissioner to inquire about insurance requirements and consumer protections in your state. Contact information for state insurance departments is available at http://www.naic.org/state_web_map.htm.

State Conversion

Sometimes, people leaving group health plans sold by an insurance company have "conversion" privileges. This means, in some states, a person is able to switch job-based group coverage to an individual policy upon loss of eligibility for job-based coverage. Some states establish conversion rights for individual health insurance contracts as well (for example, in the case of a divorce).

Eligibility for a conversion policy means you cannot be turned down for the coverage. Conversion policies also will not impose new pre-existing condition exclusion periods. In some states, there are also rules establishing minimum benefits that conversion policies must cover (for example, most or all of the benefits that were covered under the prior policy) and maximum rates that can be charged. Absent such state rules, however, conversion policies tend to have somewhat limited benefits and are very expensive.

Additionally, if you are eligible for both a conversion policy and COBRA continuation coverage, you will need to weigh your options carefully. Electing conversion coverage instead of COBRA will generally disqualify you from being eligible for a federal law (HIPAA) that guarantees health insurance coverage without a pre-existing condition period once your COBRA policy expires. Please contact the office of your state insurance commissioner to find out what type of conversion coverage laws exist in your state, and where you might look to obtain coverage. Contact information for state insurance departments is available at http://www.naic.org/state_web_map.htm.

HIPAA-eligible Coverage

HIPAA stands for the Health Insurance Portability and Accountability Act of 1996. HIPAA established special protections for certain people -- called "federally eligible individuals" or "HIPAA-eligible individuals" — when they lose group health coverage. Once people become HIPAA-eligible, they are guaranteed an offer of at least two health insurance policies that do not impose pre-existing condition exclusion periods. HIPAA is silent on what people can be charged for such coverage.

HIPAA's requirement to guarantee issue coverage with no pre-existing conditions varies among states. In some states, HIPAA rules apply to all private insurance companies that sell coverage in the individual health insurance market. Some states, however, have made alternative arrangements to guarantee these HIPAA protections only from the state high-risk pool. Private insurers in these states are still free to medically underwrite their policies, deny applicants and impose pre-existing condition periods, even for HIPAA-eligible individuals. A number of states also limit how much insurers can charge HIPAA-eligible individuals (and often other residents) for coverage.

To be HIPAA-eligible, you must meet certain criteria including having 18 months of continuous creditable coverage. To find out more about coverage available to you under HIPAA, please contact your state's department of insurance. Contact information for state insurance departments is available at http://www.naic.org/state_web_map.htm.

Groups of One

Some states allow "groups of one," where self-employed persons can gain access to policies sold to other small employers and enjoy some or all of the legal protections that attach to those policies. Specifically, small employers must be sold coverage on a "guaranteed issue" basis, meaning they cannot be turned down by insurance companies because of the health status of anyone in the group. In these group-of-one states, rating limits apply to the premiums that can be charged to small employers including groups of one. Conversely, in most state individual health insurance markets (prior to the implementation of health reform), consumers can be turned down or charged substantially more for coverage based on their health status. In addition, under federal law, a special tax deduction is available to self-employed individuals who purchase their own health insurance. Please contact your state’s department of insurance to find out whether insurers in your state offer health insurance policies for groups of one. Contact information for state insurance departments is available at http://www.naic.org/state_web_map.htm.

Medicaid

Medicaid is a program providing medical care for certain individuals and families with low incomes and resources. This program became law in 1965 and is jointly funded by federal and state governments (including the District of Columbia and U.S. Territories). This funding allows states to provide medical care to people who meet certain eligibility criteria.

Currently, there are a number of specific requirements and income eligibility levels vary by state. But, in general, Medicaid covers children, pregnant women, parents of eligible children, people with disabilities that preclude work, and some elderly people. Note: Some people who are elderly or who have a disability qualify for both Medicaid and Medicare.  If a person with diabetes is not sure whether he/she qualifies for Medicaid, he/she should apply for Medicaid and have a qualified caseworker in his/her state evaluate the situation.

Medicaid is a state-administered program. Each state sets its own guidelines subject to federal rules. Certain services must be covered by the states in order to receive federal funds, such as in- and outpatient hospital services, doctor visits, and long term care services, such as nursing home care or community-based care. Additional services are optional and are elected by states. For example, coverage of prescription drugs is an optional state benefit, however, every state and the District of Columbia provides prescription drug coverage to Medicaid enrollees. The cost of health care for people in Medicaid varies by state but is extremely limited for most.

Under the health reform law passed in 2010, the Patient Protection and Affordable Care Act (ACA), beginning in 2014, adults and children in families with incomes up to 133 percent of the poverty level (about $15,000 for an individual and $31,000 for a family of four in 2012 in most states) will be eligible for health insurance through the Medicaid program. On June 28, 2012, the U.S. Supreme Court declared the ACA constitutional. As part of that decision, the Supreme Court upheld the Medicaid expansion, however it also ruled that this expansion is optional. This means it is up to each state whether it will expand their Medicaid program eligibility to include nearly all adults and children with incomes up to 133 percent of the poverty level. At this time, it is not clear if every state will expand their Medicaid eligibility as envisioned in the ACA.

How to learn more and apply: The eligibility rules and benefits for Medicaid are different in each state. As a result of the ACA, Medicaid eligibility for some people will be determined in a different way beginning in 2014. Thus, if a person was previously determined ineligible for Medicaid, he/she may want to consider reapplying. To apply for Medicaid in your state, contact your local Medicaid office (look in the blue pages of your phone book for contact information, probably under "Medical Assistance"). Some states let you apply over the Internet, by telephone, or at locations in the community, such as community health centers. A link to your state's Medicaid website can be found at www.medicaiddirectors.org.

More information about Medicaid can also be found on the federal health care website at: http://www.healthcare.gov/using-insurance/low-cost-care/medicaid/index.html

This website also has information about free or low cost care options:
http://www.healthcare.gov/using-insurance/low-cost-care/index.html

Health Reform

The Affordable Care Act, the federal health reform law enacted in March 2010, provides new protections and improves access to affordable coverage options. The law includes provisions that apply to individuals (including those who are self-employed) to address the problems with finding individual health insurance coverage. The reforms will not be implemented all at once but rather in stages. Portions of the law have already taken effect while other regulations will be implemented through 2014 and beyond. These new provisions include:

Starting in 2010:

• If you have been uninsured for six months and have a pre-existing condition, you may be able to buy health insurance through the Pre-existing Condition Insurance Plan in your state. This program provides an insurance option for people with pre-existing conditions until 2014, when insurers can no longer deny you coverage based on your health.
• A new federal government health care web portal was created which includes a tool that allows you to search for insurance options. This is available at: http://finder.healthcare.gov/.
• Starting as early as September 2010, job-based health plans and new individual plans won’t be allowed to deny or exclude coverage to any child under age 19 based on a pre-existing condition, such as diabetes.
• Starting as early as September 2010, if you have children under age 26, you can generally insure them if your policy includes coverage for dependents. The only exception is if you have a "grandfathered" employer-based plan and your child has an offer of health insurance through his/her job.
• Starting as early as September 2010, insurance companies cannot include lifetime dollar limits on coverage and annual dollar limits in most plans are restricted and later phased out.

Beginning in 2014:

• Employer-based health plans and new individual plans won't be allowed to exclude anyone from coverage or charge a higher premium for a pre-existing condition, such as diabetes.
• If your employer does not offer insurance or that insurance isn't affordable, you will be able to buy insurance directly through an Exchange in your state. An Exchange will be a new marketplace where individuals and small businesses can buy affordable health insurance that meet certain benefits and cost standards.
• Essential health benefits like hospitalizations, prescription drugs, and preventive and wellness services and chronic disease management will be covered in all new individual, small group and Exchange plans.
• If your income is less than the equivalent of 400% of the poverty level (which was about $43,000 for a single individual or $88,000 for a family of four in 2010) and your job does not offer affordable coverage, you will be able to get tax credits to help you pay for insurance.

The American Diabetes Association will provide updated information as it pertains to people with diabetes on our website as the reforms go into effect. However for the most up-to-date information, please refer to the new health care web portal at: www.healthcare.gov. Additionally, for a timeline of what is changing and when, please refer to: www.healthcare.gov/law/timeline/index.html.

Some information on this fact sheet is from www.healthcare.gov and "Health Insurance Resource Manual," prepared for ADA by Georgetown University Health Policy Institute.