Insurance Help for the Chronically Ill

Hundreds of thousands of Americans with preexisting medical conditions -- many of whom have been unable to obtain health insurance at any price -- are now eligible for affordable coverage. The federal government has begun paying for new insurance programs aimed at people with chronic health problems who have been rejected for coverage by private insurers.

The temporary high-risk pools are designed to last until 2014, when new rules take effect that prohibit insurers from rejecting individuals based on their health. However, many health-care experts doubt that the $5-billion federal subsidy will be sufficient to last that long. The new pools are expected to help about 200,000 people at any one time -- only a small slice of the 46 million Americans without health insurance.

Twenty-nine states and the District of Columbia will administer the plans themselves; the U.S. Department of Health and Human Services will run the plans in the remaining 21 states. Go to the government's excellent new Web site, www.healthcare.gov, for details (see Click Your Way to Better Health).

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Tough restrictions. The idea of providing coverage to people with preexisting conditions sounds good in theory, but there's a big catch: You must be uninsured for at least six months to qualify for the new high-risk pool. The HHS-run program also requires you to provide a letter proving that you have been rejected for private coverage within the past six months, or were offered a policy that excluded coverage for your medical condition, and that you were uninsured for six months. State plans have similar restrictions.

Premiums are capped. Although prices vary by state and are age-adjusted, the new high-risk insurance plans cannot charge more than a healthy person would pay in that state. A 50-year-old, for example, would pay between $350 and $530 per month for the HHS-run plan, depending on the state, while a twentysomething would pay between $140 and $200 per month.

Like many private health-insurance plans, the federal version includes a 20% co-payment for most medical procedures; preventive care is fully covered. State plans offer a range of deductibles, and many include a high-deductible option that you can pair with a tax-deductible health savings account.

No switching allowed. A majority of states already have high-risk insurance pools, and some charge people with preexisting conditions up to 200% of the standard rate. But forget about switching to one of the new, more affordable pools to save money. You can qualify for coverage only if you are uninsured for six months. Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, says she hopes people with chronic conditions won't risk dropping their current health insurance just to qualify for cheaper coverage later. "Typically, people with health conditions cannot go for six months without coverage," Sebelius told Kiplinger's.

Options for the unemployed. If you lost your job a while ago and are in danger of losing your extended health-care coverage, you have a better option than the new high-risk insurance pools. Under existing rules, your state is required to provide you with insurance without a waiting period and regardless of your health after you exhaust your COBRA coverage, as long as you have not gone for more than 63 days without insurance. Contact your state insurance department (find the number at www.naic.org) or visit www.coverageforall.org for details.