There are not many Washington-based insurance companies offering individual health insurance policies and that number is shrinking by one in the months ahead.
The company that is leaving the market is KPS Health Plans and it will affect approximately 2,900 residents of the state. That is not a huge number, but it is very important if you or someone you know will be affected. This decision only affects those holding individual policies. This does not affect any other plans the company offers, including Medicare, large employer or federal employee plans.
Formerly known as Kitsap Physicians Service, KPS is a Bremerton-based nonprofit health care service contractor that was founded in 1946 by the physicians of the Kitsap County Medical Society. Over the years many similar county-based organizations consolidated into what is known as Regence BlueShield.
KPS retained its independence until late 2005 when it became a wholly owned subsidiary of Group Health Cooperative (GHC), the large Seattle-based HMO or managed care organization.
Cathie Valentine-McKinney, who is the director of public relations and communications for KPS, stated that the two companies are acting as totally separate entities and each enjoys an independent board of directors.
One aspect of the Affordable Care Act (ACA) that took effect in 2011 was the removal of lifetime maximums. Previously most individual plans had a lifetime maximum of $1 million. Now with the cap removed, it can have serious consequences for smaller companies. For example a company with a small number of individual members means a few very large claims can have an adverse affect on the whole group.
The cost of cancer and other serious conditions easily can exceed $1 million and with no limits on expenses this poses a potential problem for smaller insurance companies without a large pool of consumers to spread the risk over.
This could be an unintended consequence of the ACA that may be repeated across the country in the future.
Common sense would say that if you are losing your coverage, you just go out and buy another plan. Unfortunately it is not that simple.
In Washington, you have to complete the Standard Health Questionnaire, a 26-page form with 220 questions, unless you qualify for one of the 10 exceptions.
Having your insurance company cancel your coverage currently is not one of the listed exceptions.
Each of the 220 questions is assigned a point value and if you score over a total of 325 points, you are not eligible for an individual plan, but you would qualify for the high-risk Washington State Health Insurance Pool program whose premiums are designed to be approximately 50 percent higher than an individual plan.
But wait — that’s not all. Other potential problems that might arise include pre-existing conditions not being covered for nine months, children under age 19, deductibles and out-of-pocket maximums carry over.
The Legislature is well aware of these potential problems and is attempting to rectify them via House Bill 2739 and Senate Bill 6412. The details can be found at the following website. http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6412.
I am sure something will work itself out prior to the July 1 termination date. However, Valentine-McKinney is highly recommending those families with children under the age of 19 review their options during the state-mandated open enrollment period, which runs from March 16-April 30.
KPS states “failure to apply during this time frame may exclude your under-age-19 applicants from coverage until the next OEP, which does not occur until Sept.16-Oct. 31, 2012.”
As I have stated in previous columns, the health insurance industry will be facing unprecedented changes in the coming years that potentially will affect every one of us.
If this change affects anyone you know, make sure they fully understand their options. Advice is available from your friendly local insurance agent or the great folks at SHIBA.
Phil Castell is an independent insurance agent in Sequim. He can be reached at 683-9284 or PhilCastell@msn.com.
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