Understanding Health Insurance in New Jersey
- Health insurance laws in New Jersey mandate that "you cannot be denied coverage for any reason including your past or current health condition" (see Reference section) as long as you meet the state's eligibility guidelines. In other states, insurance companies retain the right to entirely deny coverage if they believe you present too high a risk. Compared to neighboring states, New Jersey's guaranteed issue provisions protect people in poor health by eliminating the rights of insurance companies to deny policies.
- New Jersey law prohibits health insurance carriers from basing rates and premiums on your prior medical history. Prices for medical plans remain fixed, regardless of how much treatment you had in the past. Carriers cannot increase your rates because you previously underwent significant or expensive procedures, nor can they increase your rates if you require services or treatment after purchasing a policy.
- New Jersey allows health insurance companies to restrict or otherwise limit benefits for any pre-existing conditions. However, the pre-existing condition limitations only apply if you have been uninsured for more than one month prior to purchasing a new policy. The New Jersey Department of Banking and Insurance defines a pre-existing condition as "an illness or injury which manifests itself in the six months before the enrollment date." If you received medical treatment or prescriptions, or such services were recommended by a doctor, the issue for which those services pertained is considered pre-existing. Insurance companies may refuse to pay for treatment related to those conditions for a period of one year after you buy a new policy.
- As long as you continue to live in the state and make your premium payments on time, health insurance companies in New Jersey may not cancel your policy. The Guaranteed Renewability regulations in New Jersey protect you against finding yourself uninsured due to significant medical expenses. Regardless of how much you use the coverage, your plan will remain in force for as long as you meet the state's eligibility guidelines.
Modified Community Rating
- Since health insurance companies in New Jersey cannot adjust rates based on past medical treatment, they have been authorized to price certain plans based on "Modified Community" data. For all plans except "Basic and Essential" policies, your age is the only factor that effects policy premiums. However, New Jersey health insurance companies also offer cheaper, limited-benefit policies called Basic and Essential plans that cover only the most major incidents and contain significant limitations on covered services. If the carrier's analysis of treatment and claims reveals patterns of increased use and risk in certain geographic regions or within demographic populations, Basic and Essential policy prices for an entire age group, a gender, or consumers living in certain areas may be increased. (See NJDOBI link and HealthInsuranceInfo.net link in Reference section.)
- Without the ability to price health insurance plans based on your medical history, insurance carriers can't anticipate how much money they might have to spend. For people with significant needs, this legislation is an advantage because in states where medical underwriting is permitted, their premiums may be higher. However, "because insurance companies are not allowed to adjust prices on most products for age, gender, smoking habits, and health status, prices tend to be very expensive even for the young and healthy." (See VitalOne.com link in Reference section.) For this reason, health insurance rates in New Jersey are some of the highest in the country.
New Jersey FamilyCare
- For New Jersey residents with low incomes, buying health insurance presents an impossible challenge due to the high rates charged by carriers because they cannot medically underwrite policies. To address this issue, the state manages a health-care program called FamilyCare, consisting of policies issued by AmeriChoice, AmeriGroup, HealthFirst and Horizon Blue Cross Blue Shield. These carriers have developed comprehensive medical insurance programs tailored to meet the needs of the state's low-income families. If you meet the program's income and eligibility guidelines, health insurance plans are available for little or no cost.