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California Child-Only Health Insurance Refresher

Apparently there is a great deal of confusion with regard to child-only individual health insurance policies in California. I thought it would be a good idea to review it here.

Under SB 2244, all children in California under age 19 are eligible to purchase a child-only health insurance plan and they cannot be denied coverage for pre-existing conditions.

It is very important to understand that there is no guaranteed-issue application nor pricing level for children as a direct purchase. Children under 19 applying for individual health coverage must apply for underwritten coverage just like everyone else. If the insurance carrier determines that the child is an acceptable risk then they will issue coverage at the appropriate rating level relative to the risk.

Only if the child is DECLINED for coverage through underwriting do the guaranteed-issue rules come into play. It's not like HIPAA or Major Risk (PCIP or MRMIP) with direct guaranteed-issue pricing and application. Children MUST be underwritten first and declined for coverage before any rules about guaranteed-issue coverage are on the table.

IF the child is declined for coverage through medical underwriting, then the guaranteed-issue rate provisions are utilized to issue coverage on the child.

The rates for declined children who are issued under the child-only guaranteed-issue rules are as follows:

1. Late Enrollee - if a child is considered a late enrollee then the guaranteed-issue rate for that child after a denial from underwriting would be set at approximately double (2X) the standard premium for the plan

2. Not a Late Enrollee - if child is not considered to have late enrollee status and is not in birth month, then the guaranteed-issue rate for the child after denial from underwriting can range from about 350% to 450% above the standard premium for the plan

3. Surcharge - if the child has any gap in coverage between the date of last creditable coverage and the application submission date of the new coverage, the carrier will access a 20% surcharge for one full year above whatever premium rate applies to the child.

I hope this helps to clear up the confusion regarding this issue. Children in California under age 19 are guaranteed-issue in the sense that they cannot be denied coverage. However, the cannot just apply for guaranteed-issue coverage and skip the medical underwriting process. Guaranteed-issue for children in California only applies to children who are denied coverage through medical underwriting.



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