August 19, 2010

HRB 14 - Pre-existing Condition Insurance Plan (“PCIP”)

Released August 19, 2010I Download as a PDF

August 19, 2010 -- The Patient Protection and Affordable Care Act (PPACA) provides for the establishment of a federal temporary high risk pool to assist individuals who have been denied insurance coverage due to a preexisting condition.  Further, the PPACA prohibits individual and group health plans from imposing preexisting condition exclusions on children younger than 19 (for plan years beginning on or after September 23, 2010), and can no longer impose such exclusion on anyone beginning in 2014.  The Department of Health and Human Services (HHS) has developed a health insurance program to assist such individuals in obtaining insurance coverage through a Pre-existing Condition Insurance Plan (“PCIP”).  The purpose of the PCIP program is to bridge the gap between now and 2014, when the preexisting condition standards are in place in all health plans.

On July 30, 2010, the HHS Office of Consumer Information and Insurance Oversight (OCIIO) released implementation regulations, flushing out the particulars of this Program.  These regulations set forth provisions relating to PCIP administration, eligibility, enrollment, benefits, premiums, appeals and oversight. 


To be eligible to enroll in a PCIP, the individual must meet the following criteria:

  1. Be a US citizen;
  2. Be  a resident of the State that falls within the service area of a PCIP;
  3. Not been covered under creditable coverage (generally defined as most individual or group health plan coverage) during the 6-month period, prior to the date on which the individual is applying for PCIP coverage; and
  4. Have a pre-existing condition. 

Ban on Insurer Dumping

These regulations make it abundantly clear that insurers and employers are not to “dump” high-risk individuals into the PCIP program.  Specifically, if HHS determines that an insurer or group health plan has discouraged an individual from remaining on the plan based on his/her health status, and the individual subsequently enrolls in a PCIP, the insurer or plan will be responsible for any medical expenses incurred by the PCIP relating to such individual.  In addition, the insurer or group health plan also will be referred to appropriate Federal and State authorities for other enforcement actions that may be warranted, based on the behavior at issue.

Each PCIP will establish procedures to identify and report, to the HHS, instances in which insurers or employer-based group health plans are discouraging high-risk individuals from remaining enrolled in their current coverage.  Such method for identifying ‘dumping’ includes:

  • Situations where an enrollee or applicant had prior coverage obtained through a group health plan or insurer, and the individual was provided financial consideration or other reward for disenrolling from his/her coverage, or disincentives for remaining enrolled.
  • Situations where enrollees or applicants had prior coverage obtained directly from an insurer or a group health plan, and either of the following occurred:
    • The premium for the prior coverage was increased to an amount that exceeded the premium required by the PCIP (adjusted, based on the age factors applied to the prior coverage), and this increase was not otherwise explained;
    • The health plan, insurer, or employer otherwise provided money, or other financial consideration to disenroll from coverage, or provided a disincentive to remain enrolled in such coverage. Such consideration includes payment of the PCIP premium for an enrollee or applicant.

Additional Information about PCIPs

The HHS website provides an in-depth overview of what PCIPs are available to individuals, including details relating to eligibility, federal and state-run programs, benefits and premium rates, and FAQs.

Effective date.This regulation is effective on July 30, 2010.  Comments on the regulations must be received by September 28, 2010.

Sunset date.  The PCIP program is scheduled to sunset on January 1, 2014.


About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.


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