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Child Only Health Insurance Coverage

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Parts of the new  health care legislation have already taken affect, but there is quite a bit of confusion over the guaranteed issue status for children under the age of 19 years old. (Editor’s note: Some of the information below is outdated – please contact us to discuss a child-only health insurance application.)

As of September 23, 2010 the new law requires that all children under age 19 must be offered health insurance regardless of their medical history. As of 2014, all insurance carriers must accept child-only policies.

Child Only Health Insurance Restrictions and Risk Tiers

At present, it seems that most if not all insurance companies will only offer coverage to children under age 19 as long as at least one parent or legal guardian also applies for coverage on the same policy.  Should the parent or guardian be declined for any reason, then the child would also be declined.

Health insurance providers are also creating new risk tiers as they expect to be insuring children with potentially significant health concerns. Thus, some parents might find that their portion of the policy premiums are reasonable, but the cost for a child with preexisting conditions is very expensive.

Open Enrollment Ruling by the Ohio Dept. of Insurance

In an attempt to provide clarity on the issue, the Ohio Department of Insurance recently enacted an “emergency rule” providing for open-enrollment windows for all children applying for coverage without an adult.

However, insurance companies may still have the right to decline child-only applications. Put another way, there is no legislation at this time that forces an insurance carrier to accept an application for a child-only policy.

The open enrollment window ruling by the Ohio Department of Insurance requires insurers offering child-only policies to accept applications at the same time and for the same length of time each year.  Initially, the open enrollment window will run from September 23, 2010 to November 15, 2010.  In 2011 and beyond, open enrollment will occur twice a year and include the entire months of July and January only.

Issues with Adverse Selection and Child Health Insurance

The emergency rule is designed to help alleviate fears of adverse selection with the large medical insurance providers.  Adverse selection allows children to jump in and out of health insurance coverage only when they might need expensive care.  The insurance companies worry that they will have a disproportionate amount of unhealthy children in their pool of applicants resulting in unfair financial risks.

As there are no penalties for refusing to purchase coverage, parents could enroll and dis-enroll their sick or injured children as often as they wished.  Open enrollment windows might cause those who are trying to game the system to second guess this decision if they understand that coverage will not be available for a child only policy but twice a year or when applying with an adult.

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At present, very few companies are accepting child only health insurance policies and are requiring acceptance of a parent or guarding on the same policy.

Undoubtedly, this will create issues for parents who have coverage elsewhere, but these are some of the unintended consequences of health care reform.  This particular rule has no bearing on group health insurance coverage.

Hyers and Associates, is a full service, independent life and health insurance agency offering medical coverage in several states.  Please contact us to discuss your needs or to request child only health insurance quotes.

Category: Health Care Reform, Health Insurance