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HHS Issues New Guidance On Kids' Insurance Policies

Oct 13, 2010

Health insurers can't have different rules for when individual policies are sold for children with medical problems than for healthy kids, the Department of Health and Human Services said today.

Some insurers want to allow healthy children to enroll year-round but only have a limited "open season" for ones with pre-existing conditions. Not so fast, HHS Secretary Kathleen Sebelius said in a letter to the National Association of Insurance Commissioners. Such an approach is legally questionable and "inconsistent with the language and intent" of the health care law, Sebelius wrote.

But, as Sebelius acknowledged in her letter, rates can "be adjusted for health status as permitted by state law," until 2014, when the federal law prohibits such variation. Since some states do not place limits on how much can be charged for coverage, parents trying to buy an individual policy for a sick child may still face availability and cost challenges. 

For policies that begin after Sept. 23, the new health law bars insurers from denying coverage to children up to 19 with pre-existing medical conditions. While HHS had previously said that insurers and states could have a limited enrollment period, today's letter offered additional guidance: insurers can't have a window of enrollment for some kids and not others. 

Insurers reacted to the letter, claiming HHS "has created a powerful incentive for parents to defer purchasing coverage until after their children need it – which could significantly raise costs and cause disruptions for families whose children are currently covered by child-only policies," said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, a trade group representing insurers.

Some insurers, worried about an influx of sick children who would be expensive to cover, have dropped out of the child-only individual market entirely.

In a conference call Wednesday with reporters, Jay Angoff, director of the HHS Office of Consumer Information and Insurance Oversight, said that HHS could establish a uniform open-enrollment period for child-only policies. "And if that would result in companies who stopped writing child-only business starting again to write child-only business, that’s something that makes a lot of sense." 

States, however, can often move faster, Angoff said. Beth Sammis, Maryland’s acting insurance commissioner, told reporters that after she established a uniform open enrollment period – which the Maryland legislature must approve -- two insurers said they would continue to sell child-only insurance policies in the state.  

Consumer advocates praised the guidance. In a written statement, Georgetown University’s Center for Children and Families said that "While only a small number of families are in need of individual insurance coverage for their children, they are a particularly vulnerable group" who often make too much to qualify for Medicaid or the Children’s Health Insurance Program. Child-only policies make up about 8 to 10 percent of the individual insurance market.

For years, insurers – principally those in the individual insurance market -- have denied coverage to children, as well as adults, with medical conditions. In some cases, they have accepted them but refused to cover their preexisting conditions for a set period.

HHS has estimated that 31,000 to 72,000 uninsured children with pre-existing conditions will gain coverage due to the provision between now and 2013. And 90,000 insured children will get coverage for pre-existing conditions that have been excluded from coverage, the department estimates. In 2014, no one can be denied coverage due to a medical condition and people will be required to buy insurance or pay a fine.

Some states, including Maine, Massachusetts, New Jersey, New York and Vermont, already prohibit insurers from excluding coverage of pre-existing medical conditions and about a dozen states allow families to purchase coverage through the Children’s Health Insurance Program. Uninsured children may also be able to obtain coverage through another program in the health law created to help people with pre-existing medical conditions who have been denied coverage, Angoff said. 


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