Health care reform and my brother's pre-existing condition...trying to understand

Factual Questions
1

I have been priveleged to always have good health care and always have a healthy family. In fact I may have terrible health care, I just have never had to use it. (for this I am very grateful)

I had a brother who was born witha congenital heart defect. It was thought with treatment he would survive and have a reasonable normal life, but he died suddenly at 5 years of age. He would be in his 30s today.

Had he survived, what would his health care/insurace situation look like? for example:

When he was too old to stay on my parents’ plan, what would have been the probable exclusions regrading his heart condition, since it was a pre-existing condition? The Obama plan would allow him to stay on my parents’ plan until 26, but what would happen after that? How about if he were on an employer’s group plan?

After he was of an age where he was required to get his own plan, would it have been prohibitively expensive? Would it have excluded heart related issues?

I really am trying to develop a better understanding of health care reform, and using a real life example of someone I knew is helpful.

Thanks for your input, as always.

2

I’m not an adjuster, and the laws vary by state.

Before Obamacare it was age 18 when kids were taken off their parents health care rolls. Your brother would’ve lost his coverage at age 18.

As far as his pre-existing conditions some states have plans for people with pre-existing conditions. The rates are subsidized in part by taxes and money taken from insurance companies. Indiana, where I live, has a program for people with pre-existing conditions. Premiums for someone in their 30s run about $300-400 a month.

I don’t know if in some states you can get insurance but it doesn’t cover your pre-existing conditions. I wouldn’t be surprised. Like I said, it varies state by state.

Employer group plans are not allowed to discriminate based on pre-existing conditions as far as I know. However a major, major limitation to that system is that when someone is truly sick they usually end up being unable to work, which means they lose their health insurance.

What do I think would’ve happened to your brother? After he turned 18 he would’ve either joined a pre-existing state plan, or he would’ve tried to find a job that offers insurance, or something else. There are other government plans for people with pre-existing conditions, but I don’t know a lot about them. Some people can get on medicaid, some can’t.

However the number of jobs offering health insurance is declining. It was about 75% back in the early 90s, it is closer to 45% now. So A lot fewer jobs even offer health coverage as a benefit.

3

I am not too far off from your brother’s situation. I was born with a pre-existing condition, except it doesn’t really affect me in day-to-day life. I have had 2 minor surgeries in my life to deal with it - both were about 1-hour in the out-patient OR.

Because of this I was declined insurance by every company licensed in my state (Nevada). I am self-employed and was unable to get a group plan as my wife and I are the only employees.

In 2002, lacking other options we left the USA and spent 3 years running from country to country to stay legal (tourists can usually only stay 90 days or less in a foreign country). We finally got legal residency in Dubai and obtained private insurance valid everywhere in the world except the USA.

I’d love to move back to my own country but while it seems I can get insurance under ObamaCare (after going without insurance for 6 month… nt sure I’d be willing to do that), after January I expect that to be revoked.

4

I am a health insurance adjuster (and by extension I know a few things about the legal issues and underwriting.)

Pre-Exist most certainly can factor into employer based coverage. But if the group selects that benefit how it works is rather than globally denying coverage we will refuse to cover any claims relating to a pre-existing condition for a set period of time, from 6-18 months. After that time the exclusing expires and the condition is covered.

If you go out and try to buy an individual policy you may be denied coverage, or offered a policy with a rider, a permanent exclusion for the pre-existing condition. If you are in fact offered a standard policy, the 6-18 month period for pre-existing conditions still applies.

If a person is covered under one policy and immediately upon termination (within 63 days) is added to another policy, pre-exist will not apply under the new policy. (I don’t know if they could simply refuse to issue an individual policy or a individual policy without a rider, but they would most certainly add the person onto another group policy.

Often (Usually?) truly disabled people get covered by Medicare and/or Medicaid which cover all conditions immediately.

5

Or maybe not. Every health plan my parents had (and I believe every health plan I’ve ever had, though I don’t have kids, so I’ve never had to check) covered children as long as they were full-time college students, I think until ~ 23.

6

^^^Yes, it was a real headache for the company I work for constantly verifiying student elligibility, taking dependents on and off the rolls, adjusting claims that were accepted or denied incorrectly because the membership files weren’t up to date. Then Minnesota passed a law saying that all individual and fully-insured groups had to cover single dependents up to age 25 no matter what. Self-insured groups were given a choice as to whether they wanted that benefit and nearly all of them took. More members with coverage, less overhead, and everybody is happy.

Pre-Exist takes considerable amount of overhead too. I don’t think the company I work for is unhappy it’s going away with Obamacare.

7

And every plan I’ve had covered disabled dependents as long as they were dependents, in addition to full-time students up to 23.

8

Coverage is now up to the 27th birthday for dependents and there is no student status required.

9

I thought the rule against considering pre-existing conditions, even for group plans, was a result of Obamacare?

10

I’m not sure what the question is. Obamacare would eliminate pre-exist in all cases. At the present pre-exist only applies if A) The policy has such a clause, all my companies individual plans have it and most of the employers buying coverage for their employees have elected to have that clause, and B) It was more than 63 days before the present policy that the person was covered under another policy by any insurance company, and C) The 6-18 month “look-back” period has not expired.

Lifetime maximums will be eliminated too, another thing we’re not sad to see go. Our production system only keeps claims on file for about two years, when someone’s close to meeting their lifetime max we have to pull printouts and even microfilms from our archives and add every claim for that person up manually. Fewer and fewer policies have lifetime maxes anyway, typically they’re on short term individual policies and supplemental retiree plans and such.

11

I remember a discussion with a consultant from the USA in the mid-90’s and he mentioned the pre-existing problem. He had changed employers, and his wife’s serious ongoing pre-existing condition was not being covered by his new employer’s policy. He had to pay $300/month out of pocket to the old policy to keep her covered for a significant medical condition.

I did not know about timing, but I gathered he went directly from Job A to Job B so I would be surprised if the “more than 63 days” thing kicked in. Very simply, my understanding was - change insurers, your condition is not covered.

Is that something that changed before Obamacare, as a result of, or has been that way for a while now? I have heard it said that better rules on pre-existing conditions, along with things like keeping adult kids on the policy, was a new thing with Obamacare.

12

Only for certain definitions of ‘disabled’. Medicare only covers you after age 65 and for certain diagnoses. Medicaid varies from state to state, but generally one needs to be low-income to qualify, and qualifying can be challenging. There are a lot of folks out there with complicated medical conditions that require lots of medical services and prescriptions and significantly impact their ability to function, yet are not ‘disabled’ enough to qualify for these services. Yet they’re not eligible to get private coverage. Their best bet is to marry someone with good family health coverage, or to have a job the provides good health benefits.

13

That’s what we did in my first marriage, and we still ended up over 50,000 dollars in debt within the first five years.

One thing about the pre-existing conditions coverage is that a lot of states made changes through the years trying to cope with some of it. For example, in Ohio my company had to shorten the period between hire and enrollment to 60 days from 90 to keep from interfering with an employee’s “continuous coverage.” But, of course, if said employee had been out of work for 3 months and couldn’t afford COBRA, they were already considered not to have continuous coverage.

14

It may not have been that way in the mid 1990s, and it may vary from state to state, but I quit a job (to devote my attention to attending school full time) in the early 2000s and was given a certificate of coverage to present within the next 63 days to waive any pre-exist if I became covered under another policy. It should be noted that the process isn’t automatic, sometimes you have to request a certificate instead of being given one automatically by HR, and it’s up to you to send it to your next insurance company. If someone moves to our competition we don’t call our competitor to them to tell them to waive the pre-exist (and in fact we’d have no way of even knowing the person got a new policy).

15

Traditionally, as Mdcastleman says, insurers would frequently deny coverage for the pre-existing condition to new policyholders, even those newly joining an existing employer-sponsored plan. (Although employers or other groups could purchase a plan that did not have such a limitation.)

The Health Insurance Portability and Accountability Act of 1996 (HIPAA, also known as Kennedy-Kassebaum) gave significant protections to those of us with pre-existing conditions such that insurers supplying a group plan could not refuse coverage for the PXC of a member for more than 12 months in most circumstances (sometimese 18). Moreover, if the condition had already been covered under other insurance plans, you could count that against the 12 months. So if your PXC had been covered for a long time, then the insurer had to cover it. But if there had been a gap in coverage of more than 63 days, then it wipes all your previous coverage from the record. Ergo, if you had a PXC, it was very important not to lose coverage for any significant time; if you did, you’d lose it for at least another year on top of that.

Note that this applies to group health plans like the ones you’d get through your employer or AARP, etc. Health plans you can purchase on the open market simply do not offer insurance to individuals with PXC’s, for the most part.

That is the effective state of the law today as well. Under the Affordable Care Act, however, insurers will no longer be permitted to discriminate on the basis of health status – any product they offer, they must offer it to everyone, and at the same price. But that part of the law does not go into effect until Jan. 1, 2014.

So, to review your brother’s case, it sounds like he would have been covered under your parents’ insurance through the pasage of HIPAA (at least if he went to college). If he got a job with insurance coverage before he turned 24, the existing coverage would count and the new group plan would not be permitted to deny coverage of the heart condition.

If your brother ever lost that job, the company decided to discontinue health coverage, or even if he wanted to start his own business he’d be in trouble. If he left but the employer still provided that coverage for its current employees, he could continue in the employer plan for up to two years under COBRA (The Consolidated Budget and Ombibus Reconciliation Act of 1985 – had to look the year up on that one).

One problem is that COBRA can be really expensive because the purchaser has to pay 102% of the cost of the premium. That’s not much if the employer merely bought the group plan and made the employees pay for it. But most employers that offer group health coverage also pay for it, at least in part. (This because it’s a cheap way to compensate employees – they get a tax benefit for purchasing health insurance, so a company can provide $5,000 more salary to an employee for $5,057 (extra $57 due to FICA), but $5,000 worth of health insurance for hundreds, maybe thousands, less, depending on their tax burden. The benefit to the employee is the same, so there’s no economic difference to her.)

Since employers subsidize the cost of insurance as well as providing an employee group to attract the insurer, if you have to go on COBRA you have to cover the whole cost that the company used to pay on your behalf. Especially if the company provided good insurance, you can have a huge out of pocket expense. (Obama pushed through a big COBRA subsidy a couple years ago which alleviated this problem to a very large degree for the last couple years, but I think it lapsed.)

Had your brother been unable or unwilling to pay for COBRA, or if he’d been unemployed/working somewhere without a health plan for more than two years, his coverage could lapse. And again, even if he got coverage again later, his new plan could then refuse to cover his PXC for up to a year and a half. Furthermore, COBRA’s only an option is the plan still exists, but the insured just isn’t in the group anymore. If the employer goes went out of business or just decided to discontinue the health plan, there would have been no recourse.

Had your brother been unable to find coverage in an employer or other group plan, he would have been likely uninsurable. Individually purchased health insurance plans are largely unavailable to anyone who has a PXC – or even had a major illness in the past which is now gone. This would only change were he to survive (tens of thousands of the uninsured die annually because of lack of access to care) until insurers lose the right to refuse coverage to the sick in 2014.

The flip side is that your brother would no longer be permitted to refuse to purchase insurance – everybody (sorta) has to have it. Those that have trouble affording insurance will be subsidized.

–Cliffy

16

Cite? As far as I understand it, employer plans are INDEED allowed to discriminate, unless you have had coverage until just before getting hired. For example if you change jobs and had coverage under the old job, then the new one must cover you (with some exclusions regarding size of employers, self-insured etc.). If you’d been self-employed or whatever, the employer plan might well exclude coverage for preexisting conditions.

Newcrasher’s brother might well have been considered fully disabled, and eligible for Social Security and (I think) Medicare coverage at age 18. In addition, most employer plans allow you to keep an adult child covered if the child was fully disabled prior to age 18.

17

Yeah, Wesley is wrong here – as discussed by various posters incl. me, group plans can refuse to cover new entrants’ PXC’s for 12-18 months if those conditions had not previoulsy been covered. But there are group plans available that don’t have that limitation.

–Cliffy