Child-only coverage in Texas has been dramatically altered during the past two years. Until then, long-term policies covering only children represented approximately 20% of the health insurance policies written. Once regulations from health care reform were adopted, long-term coverage for children only was greatly reduced.
The reason child-only coverage has such limited availability today is because
coverage must be offered on a guaranteed issue basis, which means that the
application cannot be denied regardless of health history or current health
condition. Regulations went on to mandate that there was no waiting period for
preexisting conditions. All carriers, with the exception of Blue Cross Blue
Shield, withdrew from the child-only insurance market in Texas because they were
concerned about the potential financial risk when a policy must be issued
regardless of health with all benefits available immediately and with a cap on
the amount a premium can be rated up due to health conditions.
With the changes brought on by health care reform, the options for parents looking for child-only coverage in Texas have been reduced to two until Jan 1st, 2014 (which will discuss below).
Blue Cross Blue Shield felt strongly that they needed to continue providing coverage for parents interested in child-only coverage. In response to the regulatory changes, Blue Cross Blue Shield introduced Blue Pathways in 2011. Blue Pathways is a guaranteed issue health insurance policy that uses Blue Cross Blue Shield's Blue Choice network. Enrollment for Blue Pathways is from May 1st to June 30th. If an application is not submitted within the enrollment period, coverage with Blue Cross Blue Shield's Blue Pathways will not be available until May 1st of the following year.
Blue Cross Blue Shield required an established enrollment period to protect against families waiting until their child got sick before securing coverage. This would be an example of adverse selection, which describes a situation in which healthy individuals elect not to purchase health insurance because they believe it is not needed. The unhealthy in this situation wait until the health insurance is needed in order to respond to a serious illness or accident. Adverse selection creates an environment where only unhealthy individuals secure coverage, which means there are no "healthy premium dollars" to offset the "unhealthy premium dollars," and premiums skyrocket. By instituting an enrollment period, all individuals seeking health insurance must make their insurance decision at the same time, which eliminates the ability to delay the purchase until the insurance is absolutely needed.
Blue Pathways is available for individuals under the age of 19. Coverage is available with a $2,500 deductible. Blue Cross Blue Shield will pay a coinsurance percentage 0f 75% for each dollar above deductible. The insured will pay a coinsurance percentage of 25% for each dollar above deductible until a maximum of $3,000 has been paid. Preventative care benefits and state mandated immunizations are available with no deductible and 100% paid by Blue Cross Blue Shield. Blue Pathways includes a prescription benefit subject to the plan's calendar year deductible.
If the enrollment period for Blue Pathways is missed, short-term coverage can be used to fill the gap until the next Blue Pathways enrollment period is available. Short-term coverage can be a suitable option while waiting on Blue Pathways enrollment, but it should not be considered a permanent insurance solution.
The first significant deficiency with short-term coverage is that it will not cover any preexisting condition. Because short-term coverage is not medically underwritten, the coverage does not provide benefits for any medical treatment, including prescription usage, which existed prior to the effective date of short-term coverage.
Short-term coverage will eventually end and new coverage must be secured. Since short-term insurance is not permanent, you find yourself back in the health insurance market every several months. Also, the important aspect to understand is that any benefit received during the short-term coverage will be considered a preexisting condition on the next short-term coverage, and there will be no benefits for that condition. The preexisting condition exclusion is not significant if you are dealing with a minor condition, but if the condition is serious and requires a long-term treatment plan, short-term will only provide benefits during the term of the coverage and will not provide benefits after the completion date. If the condition is extremely serious, the insured may not be able to secure a second short-term policy and will only have the Texas Health Insurance Risk Pool as a coverage option.
The positive aspects of short-term coverage are numerous. A policy can be assigned with an effective date as early as midnight following submission of the application. Premiums for short-term coverage are very cost competitive, especially for individuals under the age of 19. The application process is very simple when the application is submitted online. Depending on the carrier, there are several deductible options ranging from $250 to $2,500.
Health care reform changed forever the child-only market in Texas. With limited options, it is important that parents comply with enrollment requirements and maintain coverage once it is maintained active. However, starting Jan 1st 2014, health insurance in Texas will be guaranteed issue for all Texans including children. This issue should largely go away at that time.
Popular Related Pages:
Qualifying for Texas health insurance
Texas Health Reform Updates
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