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Small Business Employee Benefits and HR Blog

Can Health Insurance Companies Charge More for Preexisting Condition?

January 27, 2012
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The answer is yes in most cases.  The real answer depends on two things:

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  1. What state you reside in, and
  2. What type of policy you are purchasing

A personal health insurance policy, sometimes called an "individual" or "family" health insurance policy, covers you and your designated family members.  Personal health policies are the fastest growing form of U.S. health insurance. The number of personal health policies grew from 12 million members in 2002, to 24 million members in 2008, and is expected to reach 50 million members by 2012. In contrast, the number of people covered by employer group policies has substantially declined—less than 40% of U.S. small employers now offer group policies.

In 46 states, the price of a personal health policy is based on your age and your health at the time of application—but once insured, your premium cannot be increased because you become ill.

Once you obtain a personal health insurance policy, in most states:

    • You and your covered family members are guaranteed the right to renew your personal policy until age 65, independent of employment.

    • Your renewal premium may not be substantially increased due to your claims experience—even if your carrier pays a claim for you of $1 million or more.

    • Your renewal premium will increase when you enter a higher age band (typically every 5 years) or with general medical inflation—based on the claims of a very large group of people in your state who purchased similar personal policies.

    • Some states set limits on annual increases regardless of medical inflation. Depending on your state, you should expect your premium to increase 5% to 15% each year from an initial price much lower than group coverage.  See your local licensed agent for detailed information on your state.

    • If you are healthy and don't like your proposed annual renewal premium, you can always shop around for a new policy just like you do with auto or homeowners insurance. Nationally, more than 300 different carriers, including 76 Blue Cross Blue Shield companies, offer personal polices.

 

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