Relief – and New Options – for High Risk Pool Enrollees

As readers of this blog know, high risk pool enrollees face particular challenges transitioning to new coverage if their state-based high risk pool closes, as many have done, or will soon. States are closing their high risk pools because the ACA has ushered in new protections for people with pre-existing conditions, making better, more affordable coverage available to people with significant health care needs. Enrollees in the federal Pre-existing Condition Program (PCIP) will also have to make the transition to new coverage when those pools close, but an announcement this week put off that day another two months. Previously, PCIP was slated to close January 31st, which provided a one month extension. With this week’s announcement, PCIP will now close March 31, 2014, to allow individuals more time to enroll in other coverage.  Individuals will have to enroll by March 15th in order to have coverage start April 1 and avoid a gap in coverage.

As we reviewed in an earlier blog, this transition period may be particularly challenging for Medicare beneficiaries who are under 65 years of age and enrolled in a state-based high risk pool to gain wrap-around coverage for high out-of-pocket costs. These individuals often have chronic, costly health conditions such as ESRD, hemophilia or HIV. A gap in their coverage could be financially catastrophic and even life-threatening. When their high risk pool coverage ends, these individuals will need to find other coverage to supplement their Medicare. However, under a long standing Medicare rule, no insurer can sell an individual health insurance policy to someone with Medicare. While this rule was designed to protect against beneficiaries inadvertently buying duplicate coverage, the usual options for buying Medicare supplemental coverage to reduce Medicare cost-sharing are limited for those under 65 years of age, and Medicare Advantage plans aren’t available to people with ESRD.

To address this problem, CMS released new guidance last week providing temporary relief from the Medicare prohibition on insurers selling other coverage to Medicare beneficiaries. Specifically, the guidance states that HHS and the Department of Justice will not enforce Medicare’s anti-duplication rule in the following circumstances:

  • The state is closing its high risk pool;
  • There is no state-guaranteed right for Medicare beneficiaries under 65 to purchase Medicare supplemental coverage; and
  • The individual purchasing the coverage is a Medicare beneficiary under age 65 who is losing their state high risk pool coverage and has ESRD or a disability.

CMS has indicated that this relief will apply from January 10, 2014 to December 31, 2015. In addition, HHS will ensure high risk pool enrollees who lose coverage will be notified that they may have other options available through a Medicare supplemental policy, Medicaid or a Medicare Advantage plan, and that these may be less expensive for some. The notice will also alert beneficiaries that coverage under the individual policy may overlap with Medicare and that individuals may want to consider protections available through a marketplace plan.

The guidance provides – but does not guarantee – an alternative coverage option for those high risk pool enrollees who would otherwise be without an option to buy supplemental coverage. This temporary relief from enforcement of the anti-duplication rule does not mean issuers are required to sell policies to Medicare beneficiaries under age 65. And depending on state law, Medicare supplemental policies may not be available to all beneficiaries who are under 65. However, the guidance gives states time to enact protections for Medicare beneficiaries who are under 65, including guaranteed issue of Medicare supplemental policies to this group. And that may be the best option for these individuals, if available, since Medicare supplemental policies are designed to coordinate with Medicare cost-sharing and avoid duplication of coverage, so that premiums are likely to be lower than premiums for individual market policies.

Check out our Navigator Resource Guide, which includes FAQs that address coverage issues for high risk pool enrollees. And stay tuned to CHIRblog for more updates on the transition issues for this population.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.