State and Federal Governments Begin to Offer Pre-Existing Condition Insurance Plan

As part of this year's landmark health care reform law, the federal government is offering an insurance plan for people who have been denied private insurance due to a pre-existing medical condition. Most states will soon follow with plans of their own. The new plan promises premiums that are affordable for people who do not qualify for other government benefits like Medicaid. In addition, no applicant will be denied coverage based on a pre-existing medical condition. The plan will be especially useful for people with special needs who don't meet the requirements for other types of government health insurance because their income or assets are too high.

As we explained in our summary of the new health insurance reform law, insurance companies are required to provide coverage for everyone, regardless of a pre-existing condition, by 2014, which is also the date that individuals and small businesses will be able to purchase health insurance through health insurance exchanges. In order to provide coverage for the uninsured between now and 2014, the health insurance law requires that state and federal governments set up public insurance plans that will provide health insurance for people with pre-existing conditions. States have the option to provide the coverage through a plan of their own or allow the federal government to manage the program. So far, 21 states have chosen to use the federal plan, while 29 states will use their own programs.

The federal plan, which went into effect in July, will be open to all U.S. citizens or legal permanent residents who have not been able to obtain health insurance for at least six months due to a pre-existing condition. The state plans will mimic this requirement, but may be less restrictive. According to the Department of Health and Human Services, the premiums for the federal plan will be based on the average cost of private health insurance in the beneficiary's state of residence, making it affordable for people with special needs who have higher incomes.

To read the Department of Health and Human Services' press release detailing the new program, click here.

To sign up for the federal program, visit the new health care reform website here.