The Low-Cost Health Care Option You Never Heard Of

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The Affordable Care Act of 2010 has faced a variety of legal challenges in recent months by those who say it is unconstitutional. Legal experts predict that the U.S. Supreme Court will ultimately have to settle the debate that could derail much of the effort to cover this country's 50.7 million uninsured. But in the meantime, the Department of Health and Human Services (HHS) is continuing to institute many of the law's other provisions in an effort to provide low-cost health care to everyone.

One provision that you may not have heard about is the establishment of Pre-Existing Condition Insurance Plans (PCIPs). The plans are intended to help people who have pre-existing conditions and were previously denied coverage to get insurance between now and 2014, when the when the law will make it illegal for private insurance companies to deny coverage to people with pre-existing conditions. The legislation allocated $5 billion to develop the PCIPs to cover 6 million potentially eligible adults, but so far, just over 8,000 people have enrolled, according to figures released last month by HHS.

"That's probably due to a few factors," says Marty Rosen, executive vice president of Health Advocates, an advocacy group that helps people and employers find affordable healthcare options. "One is how well promoted they've been," he says -- and most states have fallen short on that, considering that they had just 90 days after the healthcare bill went into effect to get the PCIPs up and running. "And secondly, it's still costly."

But in spite of that cost, he says, this new health-insurance option really is valuable to a certain segment of the population. "If you have an active major medical problem, this could be hugely significant." Reaching those people was the whole point of these provisions, says Jean Hall, PhD, associate research professor at the University of Kansas; Hall authored a report on PCIPs for The Commonwealth Fund, a nonprofit devoted to improving access to health care. "They really just level the playing field for the individual market," she says. By law, the plans must be set at standard market rates, which means that people with pre-existing conditions will be able to get plans at prices on a par with what healthy people pay in the individual insurance market. "They're still going to be expensive, but it's better than what people [with pre-existing conditions] would have to pay if they had to buy from private companies."

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THE DETAILS: The plans, which went into effect this past July, operate in all 50 states, but each state operates them a little differently. In 23 states, PCIPs are administered by the federal government, who contracted the job out to the Government Employees Health Association, which operates health insurance plans for all federal employees. The remaining 27 states and the District of Columbia chose to administer their plans themselves, and for that reason, costs, benefits, and eligibility requirements vary state to state (although the benefits are the same for all states being operated by the federal government). Nevertheless, all PCIP plans are required to adhere to a few basic rules:

You have to have a pre-existing condition, and must have been uninsured for at least six months, to be eligible. In most cases, you're required to provide written proof of being denied coverage and other documentation showing that you have a pre-existing condition.

As mentioned, the costs for the plans must be equivalent to the standard market rates for healthy individuals in the states in which they're operated, and the rates don't vary based on gender.

Annual out-of-pocket costs are capped at $5,950, though some states set lower limits.

The plans are limited to U.S. residents.

WHAT IT MEANS: If you've been living without insurance because no provider would cover a pre-existing condition, these plans are a great way to get coverage. "But they're not for everybody," says Hall. For instance, people with pre-existing conditions who've just been laid off work (where they had had employer-provided health insurance) and haven't been uninsured for six months wouldn't qualify. And though the plans make insurance cheaper, the cost of the plans can still be a barrier, says Rosen. Costs range from $240 per month for a $5,000 deductible plan in Utah to $1,006 per month for a $1,500 deductible plan in Alaska. Plans administered by the federal government all have a standard $2,500 deductible, but state premiums range from $330 to $556 per month. Those prices can push unemployed people out of the market, Rosen says.

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But Hall says that the costs could be coming down over the next few months. "Because enrollment hasn't been as rapid as expected, some states may try to bring prices down," she says. The way the funding was set up, if the states don't draw enough participants, they'll lose the money. Some states will even be expanding the types of plans being offered in 2011, developing one for complete medical care and another for individual medical services like medications. "Getting an insurance program up and running in 90 days was an incredible feat," she says. "Now that things have slowed down, they're figuring out what they can do to make these plans more user-friendly."

If you have a pre-existing condition and haven't been able to get coverage, here are a few things to know:

Find out whether you qualify. Check out PCIP.gov or PCIPlan.com to find out whether you qualify and what the premiums and deductibles are in your state. Hall recommends consulting an independent insurance broker (find one in your local yellow pages) who can help explain your state's plans and what you'll need to apply.

Look for alternatives. People who don't qualify for PCIPs may qualify for their state's high-risk insurance pool, a precursor to PCIPs. High-risk insurance pools exist in 35 states and are similar in function to PCIPs. They target individuals with pre-existing conditions who can't get coverage from private insurers, but they don't require people to be uninsured for six months. However, these high-risk plans are usually much more expensive than PCIPs. And in some cases, basic insurance coverage will begin immediately, but you may have to sit out a three- to 12-month waiting period before the plans will pay for your pre-existing condition. To find out whether your state has a high-risk pool, visitwww.naschip.org/states_pools.htm.

Find free health care. If you still can't get coverage, either due to cost or eligibility requirements, find local clinics that provide basic services for free.

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