Insurance for Pastors and Their Families

One of the frightening things about being removed from or forced out of a parish is the thought that the pastor’s family may end up as one of the millions of American families without health insurance. This is especially true for those who have pre-existing health conditions—health conditions that were covered by a group health insurance plan through their church body, but that prevent purchasing individual insurance. Many who have such pre-existing conditions find themselves ‘forced’ to remain in church bodies whose teaching and practice have departed from Scripture…and this concern has caused men to compromise their own integrity by bowing to unscriptural demands within a congregation, simply so that their family will not have to suffer.

Most people seem unaware of the fact that the majority of states actually have insurance programs (run for them by major insurance carriers) set up to take care of those whom the insurance companies usually consider ‘uninsurable’ (diabetics, for example). These are termed “Comprehensive Health Insurance Pools,” and they involve high-deductible insurance, usually in connection with a tax-sheltered Health Savings Account. These vary widely from state to state. The Augustana Ministerium is by no means endorsing any insurance plan by the inclusion of this page on its website, but seeks to put you in touch with options that you may not have known that you have. The information found here is from the website of The National Association of State Comprehensive Health Insurance Plans, as it appeared on 31 August 2009. While we will keep this page updated whenever we become aware of a change, it is recommended that you visit the NASCHIP site for up to the minute information.

First, a statement from NASCHIP as to what their member ‘pools’ do, and then the web addresses and phone numbers for the thirty-five states currently with at least some insurance of this type. Please note that when the NASCHIP article mentions a waiting period for pre-existing conditions, usually if you are coming out of another group insurance program (making you ‘federally HSA-Qualified’), there is no waiting period. Nonetheless, check with your state pool to be sure.

What is a Risk Pool?

Health insurance risk pools are special programs created by state legislatures to provide a safety net for the "medically uninsurable" population. These are people who have been denied health insurance coverage because of a pre-existing health condition, or who can only access private coverage that is restricted or has extremely high rates.

Each of the state risk pool-type programs is different. Generally, the programs operate as a state-created nonprofit Association overseen by a board of directors made up of industry, consumer and state insurance department representatives. The board contracts with an established insurance company to collect premiums and pay claims and administer the program on a day-to-day basis. Insurance benefits vary, but risk pools typically offer benefits that are comparable to basic private market plans -- 80/20 major medical and outpatient coverage, a choice of deductible and co-payments. Maximum lifetime benefits vary by state from as low as $350,000 to $2 million.
 
Generally, there are no exclusions. However, risk pools do have waiting periods for coverage of pre-existing conditions to make sure individuals pay for continual coverage and the program can operate financially sound. Without waiting periods, the concern is that too many people could forego paying for insurance until they had a high cost claim, and the programs could not function financially. However, under the federal portability legislation, people who have had continuous coverage in the group market, not broken by more than 63 days, can access coverage in risk pools without any waiting periods.
 
Risk pool insurance generally costs more than regular individual insurance, but the premiums are capped by law in each state to protect the individual from exorbitant costs. The caps range from as low as 125 percent of the average for comparable private coverage in some states, up to 200 percent of the average or more in other states. Most states offer coverage at less than 150 percent of the average.
 
All state risk pools inherently lose money and need to be subsidized. While the individuals in risk pools pay somewhat higher premiums, roughly 50 percent of overall operating costs need to be subsidized. Subsidy mechanisms also vary from state to state -- some states assess all insurance carriers, HMO's and other insurance providers; others provide an appropriation from state general tax revenue; some states share funding of loss subsidies with the insurance industry using an assessment of insurance carriers and providing them a tax credit for the assessment, or other states have a special funding source, such as a tobacco tax, or a hospital or health care provider surcharge.
 
It is important to note that risk pools are not created expressly to serve the indigent or poor who cannot afford health insurance. Risk pools are designed to serve people who would not otherwise have the right to purchase health insurance protection. The indigent can access coverage through state medical assistance, Medicaid or similar programs. However, some state risk pools do have a subsidy for lower income, medically uninsurable people.
 
For information about your state, see "States That Have Risk Pools" contact your state insurance department.

Rev. Eric J. Stefanski, Dean of Communications
The Augustana Ministerium