Alabama (AL)
Individual Health Insurance Regulations

Learn more about Alabama Individual Health Insurance

A suitable healthcare policy for you and your entire family can provide lifelong protection against financial woes. It becomes imperative to assess your family’s needs along with your budget before deciding the type of policy and the various healthcare services provided by it. If you are a resident of Alabama, you have plenty of health insurance alternatives to choose from. The Alabama Department of Insurance regulates laws under which the Alabama health insurers can provide private-market health insurance coverage to the individuals and families.

Alabama does not require health insurance companies to sell standard policies that are written or regulated by the state. Insurers may design their own health plan options as well as include the benefits, deductible and coinsurance limits that they decide to choose. However, the state law mandates the Alabama health insurance plans to cover cancer screening for breast and post-delivery hospital stays. For individual health plans, the insurance companies have the right to refuse coverage to you based on your present health status or any pre-existing condition. If you have a pre-existing medical condition, the insurance company may take one of three actions, 1) they may decline to offer you coverage altogether, 2) they may offer you coverage but exclude paying for treatment of your condition, or 3) they may accept your coverage and agree to include coverage for your pre-existing condition. As stipulated by the Alabama State of Insurance, the health insurers have the right to decide upon the premiums depending on the medical care costs, your age, the chosen coverage, your health, your smoking habits, your residential location and the optional premium waivers. If you satisfy a pre-existing condition exclusion period under one health insurance policy and then decide to change insurance plan, you are still under the obligation to fulfill the new pre-existing condition exclusion period. Alabama law permits the health insurers to exclude pre-existing conditions for up to 12 months and they are not required to recognize creditable coverage from prior health insurance coverage. The look back period for pre-existing condition determination is 60 months.

Alabama Small Group Health Insurance Regulations

Group health insurance under the Alabama state law is guaranteed issue for small groups of 2 to 50. Therefore, if you are a qualified employee and offered health insurance through your employer, the insurance company may not refuse you coverage, regardless of your health status. Your employer may request a waiting period from your date of hire before you are qualified to join the group health plan. This waiting period must be the same for all employees working for that company. To be defined as a “group”, at least two employees must work for at least 6 months out of the year, and work 20 hours per week. If the individual applicant is uninsured for previous one to six months, a waiting period for coverage of pre-existing conditions may apply. In Alabama, all policyholders in group health plans are protected under the federal law HIPAA. Insurance companies may place an exclusion on pre-existing medical conditions for a specific period of time but they must give credit toward prior health insurance toward this waiting period if that coverage was continuous without a lapse of more than 63 days. The insurers can look back in your previous medical history and impose a 12-month exclusion period for those pre-existing conditions that did not have prior medical coverage. However, the group plans are not permitted to apply a pre-existing exclusion period for newly adopted children, pregnancy, newborns or children placed for adoption. The Family Medical Leave Act applies to companies with more than 50 employees and protects your health insurance coverage under the group plan for 12 weeks. Rates may differ by plus or minus 20 percent of the indexed rate based on the health status of the group.

COBRA and Continuation Coverage

While most states have a “mini-COBRA” provision that extends COBRA benefits to employees who worked for companies with less than 20 employees, Alabama does not have a state mini-COBRA regulation. However, employers with more than 20 employees must recognize federal COBRA laws. To be eligible for COBRA coverage, you must have been enrolled in your employer’s health coverage plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation is offered upon the happening of a qualifying event such as job loss, reduction in hours worked, death, or divorce. You may remain on your previous employers group health plan and receive the same level of coverage for a period of 18 months. However, you will be responsible for paying the premium amount that was previously paid by your employer, plus a 2% administration fee. If the insurance company chooses to raise the premium on your employer’s group plan, you will also be subject to those higher rates. Once you exhaust your COBRA option, and you are not eligible for individual health insurance, you may qualify for coverage under the Alabama Health Insurance Plan.