Tag: Virginia

Clearing a High Health Insurance Hurdle: the Pre-Existing Condition Insurance Plan (PCIP) Program

There is a new option for those who are uninsured because of a pre-existing condition—the Pre-Existing Condition Insurance Plan (PCIP) program. Created by the Patient Protection and Affordable Care Act (the health reform law), the PCIP is designed to make health coverage available to those with pre-existing conditions. Importantly, the PCIP does not cost enrollees more just because of their medical condition.

The U.S. Department of Health and Human Services runs the PCIP program in twenty-three states and is contracting with a national insurance plan to administer the program. These states are: Arizona, Alabama, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nevada, Nebraska, North Dakota, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, Wyoming, as well as the District of Columbia.

The remaining states are running their own pre-existing condition insurance plan programs. As a result, application procedures, costs and benefits for these state-run programs may differ not only from the federally-run PCIP, but also from other states.

Under the federally-run PCIP program, a broad range of health benefits are covered, including primary and specialty care, hospital care and prescription drugs. Benefits provided by these PCIPs are available even if they are used to treat a pre-existing condition.

To qualify for coverage under the PCIP program, a person:

  • Must be a United States citizen or legal resident;
  • Must have been without health coverage for at least the previous six months; and
  • Must have a pre-existing condition or have been denied coverage because of health a condition.

The PCIP program offers three plan options:

  • The Standard Plan;
  • The Extended Plan; and
  • The HSA Plan.

Each plan has its own premiums, calendar year deductibles, prescription deductibles, and co-payment requirements. However, all three plans pay for preventive care at 100%, with no deductible when a preventive diagnosis is indicated by an in-network doctor. Preventive care includes annual physicals, flu shots, routine mammograms, and cancer screenings. For non-preventive care, insureds staying in-network will pay 20% of their medical costs after satisfying the deductible.

Despite being a federally-run program, PCIP premiums may vary by state. For example, premiums are higher in Texas than they are in Florida.

In Florida, the monthly premiums for people 18 years old or younger are $118 for the Standard Option, $158 for the Extended Option, and $122 for the HSA Option. In Texas, the premiums are $133 for the Standard Option, $179 for the Extended Option, and $138 for the HSA Option. Similarly, those living in Florida ages 35 to 44 years old will pay $211 for the Standard Option, $284 for the Extended Option, and $220 for the HSA Option. In Texas, the monthly premiums are $239 for the Standard Option, $323 for the Extended Option, and $248 for the HSA Option.

Under this program, the first premium payment is due within 30 calendar days from the date an approval letter is received; otherwise the application will be cancelled. The effective date of coverage depends on the date the application and all supporting documents are received by the PCIP. If the documentation is received on or before the 15th of the month, coverage will be effective on the first day of the next month. If documentation is received after the 15th of the month, coverage will be effective on the first day of the second month.

If an application for coverage under the PCIP is denied, the applicant will receive a letter explaining the reasons for such denial. These applicants have 45 days to file an appeal of their denial, if they so desire. Otherwise, they are free to re-apply for PCIP coverage upon meeting the eligibility requirements.

The PCIP program is only available until 2014. This is because in 2014, insurance companies will be prohibited from refusing to sell coverage or renew policies because of a person’s pre-existing condition. Additionally, in 2014, individuals whose employers don’t offer them insurance will be able to buy insurance directly in a health insurance exchange.

For those who have been unable to get health insurance due to a pre-existing condition, the PCIP program may be the solution they have been looking for. However, given the disagreement and uncertainty surrounding health care reform, even after the Supreme Court upheld nearly every provision of the law, only time and experience will tell if the PCIP program is in fact what it was designed to be.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the rapidly changing health care landscape. Be sure to check back with us periodically for future informational updates. In the meantime, if you have specific questions about health care reform or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

But I Don’t Even Live in California! The Case for Earthquake Insurance Coverage

On August 23, 2011, a 5.8 magnitude earthquake centered near Mineral, Virginia was felt from Alabama to Ontario. Many of those affected did not know that earthquakes could happen in places like New York City, Washington D.C., or Philadelphia. These people held the common, but mistaken belief that earthquakes generally occur only on the West coast of the United States, particularly in California. Unfortunately, the reality is that earthquakes pose a national threat.

According to the United States Geological Survey (USGS), the federal agency responsible for nationwide recording and reporting of earthquake activity, earthquakes pose a significant risk in 39 states. This risk affects more people than ever before because a majority of the population lives in seismically active urban areas, including New York City, Boston, St. Louis, Memphis, and Boise. Consequently, the number of people who face some risk of experiencing an earthquake is significantly higher than generally understood.

Those having the misfortune of experiencing an earthquake can expect property damage caused by ground vibration or shaking, landslides, and ground failure, as well as secondary disasters, like fires, dam failures, avalanches and tsunamis. Losses may be direct, such as damage to buildings, contents, machinery, and equipment, or indirect, such as business interruption losses, loss of property value, loss of rental income, and additional living expenses.

Unfortunately, as with most natural disasters, earthquakes vary in terms of severity, so the extent of any property damage is difficult to predict. However, as seen in Haiti, the damage caused by a powerful earthquake can be complete. And, as witnessed in Japan, devastating property damage can result despite the strictest of building codes and retrofitting requirements.

The inability to prevent property damage caused by a powerful earthquake means that rebuilding and replacing property is often the most effective way of dealing with earthquake-related damage. As a result, insurance coverage may be the best way to adequately deal with property losses caused by an earthquake.

Regardless of the importance of earthquake insurance, most standard residential property insurance policies do not cover damage or loss occasioned by an earthquake. Standard commercial/business insurance policies similarly exclude earthquake losses. Those seeking insurance to cover earthquake-related structural damage or losses of personal property must usually purchase it separately.

Earthquake coverage can be purchased as an endorsement to standard residential and commercial policies. Alternatively, earthquake coverage can be purchased as a separate policy. Regardless of the manner in which earthquake insurance obtained, an insured’s particular situation must be evaluated before deciding on specific coverages and limits. In addition to situation-specific considerations, an insured needs to understand various aspects of earthquake insurance policies which could affect or undermine the effectiveness of the policy.

The cost of an earthquake policy is dependent upon various factors, such as the age of the property, the type of construction, such as wood frame or brick, the existence of any earthquake resistant construction or retro-fitting features, the financial strength of the insurance company, and the deductible. Additionally, the location of the property in an area that is particularly prone to earthquakes will significantly increase the cost of the insurance coverage.

As with other types of insurance, earthquake insurance policies carry deductibles which must be paid by the insured before the insurance company is required to respond to a claim. Since earthquake insurance deductibles can range anywhere from 2 percent to 20 percent of the coverage limit, care must be taken to find the appropriate balance between reduced premiums and unaffordable deductibles. Any coinsurance provisions must also be examined to avoid the imposition of a penalty in the event of a claim.

Residential earthquake insurance policies can protect an insured’s dwelling, contents, garages, pools, fences, and various temporary/additional expenses. Additionally, an earthquake policy may cover any increased rebuilding costs necessitated by updated ordinances or laws which govern the manner in which construction must be undertaken.

On the commercial side, insureds can obtain earthquake insurance to cover various risks, including:

  • risks related to manufactured goods in transit or at permanent locations;
  • builder’s risks involving damages to property in the course of construction;
  • earthquake sprinkler leakage coverage;
  • mortgage insurance for default losses to protect against losses caused by defaulting borrowers who default on their mortgage obligations following property damage; and
  • consequential loss coverage, which includes coverage for business interruption, extra expense, additional living expenses, rent or rental value, and leasehold interests.

As this list indicates, purchasing earthquake insurance for a business can be significantly more complicated because it requires a comprehensive risk assessment of an insured’s operations to ensure that any possible gaps are covered. Additionally, the failure to consider coverages provided by other standard business insurance policies may result in unnecessary duplication of coverage.

For example, a standard commercial automobile policy would likely cover damage to a work vehicle that is caused by falling debris, even though an earthquake was the cause of the falling debris. Similarly, an employee injured while at work by a collapsing wall would be covered under the employer’s workers’ compensation insurance policy, even though the wall collapsed during an earthquake.

These examples illustrate the benefit of being familiar with the nature, scope, and applicability of various lines of insurance. To enjoy the benefits of such knowledge, insureds should seek the advice of a trusted insurance agent who has experience with the kinds of insurance being sought, and knowledge about the insured’s specific business and industry. In any event, given the seriousness of the risks posed by earthquakes, insureds must be thorough when evaluating and purchasing earthquake insurance.

According to the USGS, 2010 saw 21,545 earthquakes worldwide—8,493 of those were located in the United States. Unfortunately, earthquakes not only have the potential to be the most devastating of all natural disasters, but they are virtually impossible to predict. Cause for concern is only increased by the fact that most states face the risk of earthquakes, and that those at risk of experiencing an earthquake outnumber those who are not. For many, these facts were not fully understood until the Virginia quake in 2011 shook the ground in areas that some believed to be earthquake-free zones. Accordingly, when deciding the need for earthquake planning and preparation, more people are reciting the mantra that is often associated with natural disasters: It’s not if, but when.

If you would like to learn more about earthquake coverage, or if you have any questions regarding your insurance needs, please contact us.