To offer individual plans each carrier is required to:
- issue coverage to all eligible people without regard to anyone's past, existing or expected health conditions;
- renew coverage for all eligible people without regard to anyone's past, existing or expected health conditions;
- not apply a pre-existing condition limitation period to anyone who is younger than 19 years old;
- apply no more than a 12 month pre-existing condition limitation period to other eligible people, looking back at no more than the six-month period prior to the effective date of coverage;
- reduce the pre-existing condition limitation period that may apply to a person by the period of creditable coverage the person previously had;
- establish modified community rates for individual plans, which may include age for the standard individual plans, and may include age, gender and geographic location for the Basic & Essential (B&E) individual plan;
- offer at least three of the standard plans (Plan A/50, Plan B, Plan C, Plan D or the HMO Plan), except that an HMO may offer the HMO Plan only; and
- offer a Basic and Essential Plan (B&E Plan).
Guaranteed Coverage and Guaranteed Renewability
Provided you satisfy the eligibility requirements described in the Eligibility Section, you cannot be denied coverage for any reason including your past or current health condition, claims history, occupation, age, gender or any other reason that may be related to your health or the health of any family member. What's more, you are guaranteed that your policy will be renewed provided you remain a resident of New Jersey and your premium is paid in a timely fashion and you do not commit fraud.
Pre-existing Conditions and Portability
Except as stated below for federally defined eligible individuals, if you have been uninsured for more than 31 days prior to the enrollment date (whi ch means the effective date of coverage under the individual plan), you are subject to a 12-month waiting period for coverage of "pre-existing conditions."
Defining Pre-existing Condition
A "pre-existing condition" is an illness or injury which manifests itself in the six months before the enrollment date and for which:
||a person sees a doctor, takes prescribed drugs, receives other medical care or treatment or had medical treatment recommended by a doctor, or
||an ordinarily prudent, or careful, person would have sought medical advice, care or treatment.
A pregnancy which exists on the date coverage begins is a pre-existing condition. However, certain complications of pregnancy will not be excluded for coverage as pre-existing conditions.
Defining Pre-existing Condition Limitation Period
The maximum pre-existing condition limitation or waiting period allowed for the individual plans is 12 months from the enrollment date. The pre-existing condition limitation period may be less, or even eliminated, if you had prior "creditable coverage."
During the pre-existing condition waiting period, you will be covered for all conditions other than the pre-existing condition, subject to the terms of your contract or policy. After the pre-existing condition waiting period has ended, all illnesses and injuries -- including those related to the pre-existing condition -- will be covered subject to the terms of your contract or policy. "Creditable coverage" is the term used under the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") to define the types of prior coverage a person may have had. It includes, but is not limited to: individual and group plans, whether insured or self-funded, Medicare, Medicaid, and CHAMPUS. The individual plans contain a complete definition of "creditable coverage."
As long as no more than 31 days have passed between when your prior creditable coverage ended and the effective date of your new individual plan:
||the carrier will credit (reduce) the 12-month pre-existing condition limitation period by the length of time you were covered under your prior creditable coverage AND
the carrier will waive the 12-month pre-existing condition limitation period for any pre-existing condition that was diagnosed and/or treated and covered under your prior creditable coverage
If you do not have more than a 31-day lapse in coverage, you may change health plans without having to satisfy any new pre-existing condition waiting period. If you have only partially satisfied the pre-existing condition waiting period under prior coverage, you will have to satisfy only the balance of a pre-existing condition waiting period under your new coverage.
You will be required to provide your new carrier with proof of the prior creditable coverage, so that the waiver or credit may be applied. Your prior plan should provide you with a certificate of creditable coverage to be used for such proof.
Exception to the 31-day requirement for federally-defined eligible individuals: If an eligible person is a "federally defined eligible individual," the pre-existing condition waiting period requirement will only apply if there has been more than a 63-day lapse in coverage between the date the prior creditable coverage ends and the enrollment date. (For a federally defined eligible individual, the enrollment date is the date the person submits a substantially complete application for coverage.)
A "federally defined eligible individual" is defined as "a person who has been covered for at least 18 months without a break in coverage of 63 or more days under a group health plan, governmental plan, church plan, or health insurance coverage offered in connection with any such plan; who is not eligible for coverage under Medicare or Medicaid; and who does not have another health benefits plan, or hospital or medical service plan."
The prior creditable coverage must not have been terminated based on a factor relating to nonpayment of premiums or fraud. In addition, if the person was offered the option of continuation of coverage under a COBRA continuation provision or similar State continuation option, the person must have elected and exhausted that continuation coverage.
Keep in mind: The method for counting breaks between coverage varies based on whether you are moving from a group health plan as a federally-defined eligible individual to an individual plan, or moving from a nongroup plan (for example, an individual plan, Medicaid, NJ FamilyCare) to an individual plan, because enrollment date is defined differently. For federally-defined eligible individuals, the break in coverage is measured from the date the federally-defined eligible individual’s coverage under the group health plan ended until he or she submitted a substantially complete application for coverage under the individual plan. For everyone else, the break in coverage is measured from the date the individual’s coverage under the prior health plan ended until the effective date of coverage under the new individual health plan.
Carriers are required to community rate individual plans. This means that the rates are the same for everyone who purchases the particular individual plan, and are not based upon the actual or expected claims history of any single person. Carriers establish rates based on whether the coverage is for a single person, two adults, an adult plus child(ren) or a family, but carriers may not consider the health status of any specific person purchasing an individual plan. (So, for instance, there is no special rate for smokers versus non-smokers.) Carriers may consider a limited number of other factors, depending upon whether the plan is a standard plan or a B&E plan.
Modified Community Rating for Standard Plans
Carriers have the option to use age as a rating factor for the standard plans. Some carriers rate by age, and some do not. If a carrier rates by age, it must do so using 5-year rating bands from ages 25 to 65. So, rates vary from carrier to carrier and from one individual plan to another. That is, one carrier’s price for Plan D is not likely to be the same as another carrier’s price for Plan D. And, because Plan D has a higher carrier coinsurance than Plan B, Plan D will generally be priced higher than Plan B. The list of carriers and their rates for various plans can assist those interested in purchasing individual health coverage with a comparison of rates.
Modified Community Rating for B&E Plans
Carriers have the option to use age, gender or geographic location in setting rates for the B&E plan. Carriers may use one, two or all three of those permissible rating factors. As with the standard individual plans, age bands are specified by regulation, as are geographic locations. Still, the rates for one carrier's B&E Plan may be very different from the rates for another carrier's B&E Plan. In addition, while the B&E Plan basically covers the same services and supplies, some carriers have designed riders to enhance the benefits under the B&E Plan, which results in some significant differences between the B&E Plans (with rider) offered by one carrier as compared to that of another, and further rate differences among carriers.
Caps on Rate Increases
Frequently Asked Questions About IHC Plan Features And Rates
As of January 5, 2009, and for the next four years, New Jersey law imposes two renewal rate caps. One limits the rate increase upon annual renewal to 15% for consumers who bought an individual plan prior to January 5, 2009. The other limits the annual renewal rate increase to 15% for consumers age 55 or older who bought a plan on January 5, 2009 or later. The cap, intended to cushion the transition to age rating for certain consumers, applies only for 4 years and thus will expire in 2013.
Question 1: If I have a pre-existing condition and apply for coverage on February 12th requesting that the individual plan be effective March 1, and I enter the hospital on March 2 because of that condition, would I be covered for the hospitalization?
It depends on several factors: whether you were covered under prior creditable coverage, whether you are a federally-defined eligible individual, how long you had prior creditable coverage, and how much time passed between your old and new coverage.
There are several possible outcomes:
If you are not a federally defined eligible individual (meaning you did not have at least 18 months of prior coverage under a group health plan), but you were covered for the condition under prior coverage and that coverage ended no more than 31 days before the effective date of your current individual plan (March 1 in this example), your new coverage will cover the condition, subject to the terms of the new plan.
If you are a federally defined eligible individual, and your prior group coverage ended no more than 63 days before you submitted a substantially complete application for the individual plan (February 12th in this example,) your new coverage will cover the condition, subject to the terms of the new plan.
If you had no prior coverage, or if any prior individual coverage ended more than 31 days prior to the effective date of your new individual plan (March 1 in this example), or your group coverage ended more than 63 days before the application date (February 12th in this example), the new coverage will not cover a pre-existing condition until the end of the required 12-month pre-existing condition limitation period.
Question 2: If I purchase an individual plan with an effective date of March 1 and I am injured on March 3, would I be covered for treatment of the injury?
Yes. Conditions which first manifest themselves after your new coverage begins (March 1 in this example) are covered, subject to the terms of the new plan.
Question 3: Do I have to satisfy another waiting period for a "pre-existing condition" if I change from one individual plan to another or from one carrier to another?
If there is no more than a 31-day lapse in coverage between the date your prior plan ends and the date your new plan begins, there will be no new pre-existing condition waiting period, provided your previous plan also covered you for the condition or you had coverage under the previous plan for at least 12 months, and, therefore, satisfied the 12-month pre-existing condition waiting period. However, if you did not entirely satisfy the 12-month pre-existing condition waiting period under the prior plan, you will be required to satisfy the balance of the waiting period under the new plan. You will have to provide proof of prior coverage to the new plan.
For example, if you bought a plan from one carrier on March 1 and were required to satisfy a 12-month pre-existing condition waiting period, and canceled that coverage on October 1 to buy coverage with another carrier, you would have already satisfied 7 months of the 12-month waiting period. The new carrier would then apply those 7 months to the pre-existing condition waiting period in the new individual plan, so you would have to satisfy just the remainder of 5 months of the waiting period while covered with the new carrier.
Question 4: I have Plan C and my premium is due on May 1. How long do I have to pay that premium? If I do not pay the premium, when will my coverage end?
There is a 31-day grace period, so you have until May 31 to pay the premium. Coverage stays in force during the grace period. If you do not pay the premium by the end of the grace period, coverage ends as of the end of the grace period. If you incur charges during the grace period and submit a claim to your carrier, your benefit will be reduced by the amount of unpaid premium. For the purpose of the portability provision of the plans, however, the permissible 31-day lapse period is measured from the last date coverage is in force on a premium-paying basis, not the end of the grace period. In this example, premiums are paid through April 30, so May 1 would be the beginning of the lapse period.
Question 5: Why do rates for identical standard plans vary from carrier to carrier?
Each carrier evaluates the benefits required to be provided under each of the standard individual plans and determines how much the carrier expects it will cost to provide those benefits to their customers. Carriers must also price plans to comply with a provision of the law which requires them to pay out at least 80 cents in benefits, services or supplies to their covered individuals for every dollar collected in premiums. This 80% requirement is referred to as the medical loss ratio.
Question 6: If I do not submit any claims to my carrier, will my rates remain the same?
No, not necessarily. The rates for any given individual plan are not adjusted only based on your or your family’s utilization of health benefits or lack of utilization. Rather, each carrier reviews its utilization by all persons covered by the same type of individual plan. Any adjustment will apply to everyone covered under the specific plan, not just persons who may have submitted claims.
Question 7: Are rates locked-in for any length of time?
Carriers are not required to "lock-in" or guarantee their rates for any specific amount of time, however, many carriers elect to do so. For more specific information on any available rate guarantee contact the carriers directly.
Question 8: I am thinking about buying a plan now. I am 56 years old. What does the 15% cap mean for me?
As a new purchaser, the rate you’ll be charged for your new plan will be the rate applicable to a 56-year-old purchaser. The 15% rate cap will first affect you next year when your new plan renews. The renewal rate increase will be limited to 15% as compared to the rate you’ll pay as a new purchaser this year.