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In 33 states, high-risk pools can provide coverage if commercial insurers reject you. Most cap their premiums at 125% to 150% of the cost of standard coverage, and they may have lower benefit caps than commercial policies. But some state pools have long waiting lists or, like Florida's, are closed to new applicants. Arizona, Georgia and Nevada are among the states that have no high-risk pool. For information about your state's pool, contact the National Association of State Comprehensive Health Insurance Plans or Communicating for Agriculture's Risk Pool Resource.
If you're shut out of a high-risk pool, your ace in the hole may be the Health Insurance Portability and Accountability Act of 1996 (HIPAA). That law requires insurers to provide you with some type of coverage after you leave your job -- regardless of your health condition -- as long as you had an eligible group policy and haven't been without coverage for more than 63 days in the preceding 18 months.
You generally have to exhaust your COBRA coverage first. After that, each state has its own HIPAA rules, so contact your state insurance department before dropping your old coverage. Insurers who are regulated in Florida, for example, tend to charge 200% to 300% of their standard rate for their HIPAA policies, says John Sinibaldi, a health-insurance broker in Seminole, Fla. (Another source of information is NAHU's Consumer Information Center.
A HIPAA continuation policy was a godsend for Cheryl Crawford, 50, of Chino Hills, Cal. Crawford had coverage through a group HMO with Kaiser Permanente when she owned a small insurance brokerage. But she no longer qualified for a group policy after she sold her business. In the meantime, she had developed a rare blood disease. Kaiser rejected her for individual insurance but offered coverage under a HIPAA continuation policy. "It was just a matter of how much I'd have to pay," says Crawford.
Her premiums nearly doubled, to $484 per month. But she was permitted to keep her doctors, and her co-payments remained a reasonable $25 per office visit and $10 per prescription, so the new policy limits her out-of-pocket costs. Even when she began an oral form of chemotherapy to help break up blood clots, she still paid only $10 for a two-month supply. "That makes a huge difference to me," says Crawford.
Beware of gift horses
Although it's possible to find deals on health insurance even if you're not in good health, coverage is rarely cheap. "If you end up with a plan that's 20% to 30% below the market price, that's a big red flag," says Fairbairn. An insurance company may lowball the price to get you to sign up, and then proceed to hike premiums for the next several years until you're paying a lot more than you would for other options.
Mark and Noreen Eccleston have bought their own health insurance for the past 20 years, ever since Mark, 62, left his job as a mechanical engineer and started his own company repairing freezer units used by food distributors. The Ecclestons, of Greenwood, Ark., would find low-cost policies through various group associations for self-employed people, watch the premiums climb year after year, and then shop around for another association policy.
That's a common experience among people who buy policies through small groups that members join primarily to get health insurance. Policies offered by large professional organizations can work well because the group is able to negotiate with insurers for good rates. But small organizations don't have that kind of leverage. They tend to attract people with health problems who can't qualify for individual coverage. So when patients begin submitting claims, insurers are usually forced to raise the price for everyone. Members who are healthy desert the plan to find cheaper coverage elsewhere, leaving the group with a less-healthy pool of policyholders -- what insurers call an "actuarial death spiral."
Things finally came to a head for the Ecclestons after Noreen, 60, incurred $50,000 in medical bills as the result of an auto accident in 1992. Her bills were covered, but the insurer gradually started to boost the couple's premiums, until they went from $250 per month to $1,000.
Sick of the spiraling costs, the Ecclestons went to eHealthInsurance.com to shop for individual policies, which are subject to different rules than group plans. Noreen hadn't been treated for accident-related injuries for nearly a decade, and the Ecclestons qualified for an individual policy with Golden Rule for $400 per month.
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