The guaranteed issue in health insurance refers to a condition in which health insurance coverage is offered to all eligible applicants regardless of their health status. It is due to the Guaranteed issue that individuals who were earlier denied health insurance because of the pre-existing medical conditions were able to gain access to health coverage, as their medical condition was not taken into consideration.
Guaranteed Issue under Different Healthcare Plans
Guaranteed Issue Under the Affordable Care Act (ACA)
According to the Affordable Care Act, all individual health insurance plans that are effective from January 2014 or later are required to be sold on a guaranteed issue basis. Health insurers were not allowed to base coverage eligibility on the applicant’s medical history, and no pre-existing condition can be excluded from the new plans. However, this was not the case before the Affordable Care Act. Back in the year 2012 only six states offered guaranteed issues for all plans to all residents. Five states in 2012 had a designated carrier Blue Cross Blue Shield that issue coverage to all residents applying for a health plan. Four states had guaranteed issue for HIPAA eligible individuals while another 4 states provided guaranteed issue to HIPAA eligible individuals and residents having prior continuous coverage. In the remaining 32 states, applicants’ medical records were taken into consideration before issuing coverage, and individuals having significant or relatively minor pre-existing conditions were denied coverage.
Coverage in the Individual and small group market besides being guaranteed issue is also now issued with modified community rating due to the Affordable Care Act. It further means that health insurance premiums can only vary based on age, tobacco use, and zip code and cannot be based on medical history. Thus both modified community rating and guaranteed issue are satisfying for individuals having pre-existing medical conditions. However, before picking a health plan individuals need to discuss their pre-existing conditions if any with a health insurance agent, enrollment assister, or with the person handling their employer’s HR department. This is important because healthcare provider networks and prescription drug formularies significantly vary from plan to plan. Thus individuals having pre-existing medical conditions need to ensure that the plan chosen by them includes their doctors in their network as well as cover the medications taken by them. Individuals with pre-existing conditions should also be aware of the plan’s cost-sharing like coinsurance, copays, and deductibles because they should be aware of the amount that they have to pay in out-of-pocket costs during the year.
Guaranteed Issue for Group Coverage of a Small Employer
According to federal law, health insurance offered to companies with two to fifty employees should be offered on a guaranteed issue basis, and this was mandated since HIPAA became effective in the year 1997. Since then, health insurers have not been able to deny coverage to small employers based on the health condition of their employees.
Albeit, Health insurers were not restricted by HIPAA to base health premium prices for small groups on the overall medical history of the group. As per this, health insurers can offer discounts to healthy groups and charge higher premiums from less healthy employees and their dependents, if their states allowed it. The health insurers could also charge higher premiums from employees’ groups engaged in hazardous occupations even though their employer covers on-the-job injuries. However, this practice of basing premiums on medical history or their type of industry was ended by the ACA. Besides guaranteed issue, even small group coverage now follows similar modified community rating rules used in the individual market. The premium can vary from group to group based only on age, zip code, and tobacco use.
Guaranteed Issue for Large Employer Groups
Under the Affordable Care Act, large employers should offer coverage to their employees, and health insurers are not allowed to impose minimum participation requirements when large employers are looking to seek coverage for their employees. Health insurers are required to offer coverage to a large group on a guaranteed issue basis, which means that the insurer cannot reject the group altogether. Large group coverage does not require to follow the modified community rating rules applicable to individual plans and small group. This means that premium rates of large groups can be based on the overall claims experience of the group, where they can offer discounts to healthier groups and charge higher premium rates for less healthy groups. Large groups usually mean more than 50 employees, though in few states large groups refer to more than 101 employees.
Coverage Exempted from ACA Rules
There are some types of health coverage that are still not regulated by the Affordable Care Act and are not sold on a guaranteed-issue basis. Health plans like short-term plans, critical illness plans, healthcare sharing ministry coverage, along with individual life insurance plans. Applicants of these plans usually have to prove that they are healthy to be issued plans. Based on their health conditions or if they have pre-existing medical conditions they can even be declined or charged higher premiums.
Guaranteed Issue under Medicare, Medicaid, and CHIP
The federal government issued health plans like Medicare, Medicaid and the Children’s Health Insurance Program (CHIP) are guaranteed issue. Applicants only need to be eligible for the coverage and their medical condition is not taken into consideration. This also holds correct for private supplemental coverage offered to Medicare beneficiaries.
However, there is an exception for the Medigap plans sold outside of the initial enrollment period. When individuals turning 65 years of age enrolled in Original Medicare, then there is a six-month window during which they are allowed to have any Medigap plan available in their area, as it is a guaranteed issue. But once the window closes, in most of the states Medigap plans use medical underwriting, a look at an individual’s medical history, to determine their eligibility for the coverage and the price of the premium they will be charged. Medigap plans are guaranteed issues only during some limited special enrollment periods, and some of the states have also set up an annual guaranteed issue window for the Medigap plans. However, in the majority of the states, there is no annual enrollment period for Medigap plans like that existed for Medicare Part C and Part D plans.