Medical Insurance Coverage of Preexisting Conditions

by Dale Bye

A pre-existing condition refers to any health condition you had before your first day of coverage on a medical insurance plan. Pre-existing conditions can result in higher premiums, coverage exclusions or complete rejection of insurance coverage. If you're searching for an individual health insurance policy, a pre-existing condition's effect on your health insurance depends on various regulations. If you're joining a group plan, you can't be denied acceptance, but a pre-existing condition might be excluded from coverage for up to 12 months. The Patient Protection and Affordable Care Act of 2010 prohibits insurers from using pre-existing conditions to exclude or deny coverage, but a four-year delay on full implementation of that portion of the plan was built into the law.

Brief History

The McCarran-Ferguson Act of 1945 left insurance regulation to state laws, and the Employee Retirement Income Security Act of 1974 exempted large group health insurance plans from state regulation. Most states put some limits on pre-existing condition exclusions for smaller nonexempt group plans, but the Health Insurance Portability and Accountability Act of 1996 (HIPAA), applied a 12-month exclusion limit to all group insurance plans. HIPAA does not cover individual plans, which are typically far more restrictive concerning pre-existing conditions.

Group Plan Coverage

States maintain jurisdiction over smaller group plans, and some legislatures have enacted laws that shorten or eliminate the exclusion period. However, all employer-sponsored group plans must at least satisfy HIPAA regulations. The 12-month exclusion limit does not apply if you switch to a different plan carried by the same employer, or if you can have creditable coverage without more than a 63-day interruption for one year before joining a new group plan. If you switch employers, time on the previous company's plan can be used to satisfy an exclusion period on the new employer's plan.

Individual Coverage

In most states, insurance companies can charge you higher rates, impose stiff exclusion periods or deny you coverage because of pre-existing conditions or lifestyle choices. For example, smokers or persons with DUI arrests can be denied coverage or charged higher premiums. At least 13 states have laws prohibiting insurance companies from denying coverage or imposing rate penalties because of pre-existing conditions, but every state allows exclusion periods. Massachusetts, which has a state law similar to the Affordable Care Act, and Oregon are the most generous with no coverage denial, flat rates and only a six-month exclusion period.

Chronic Illnesses

If you've received medical treatment or advice within six months before joining an employer's group plan for a chronic illness, such as diabetes, heart disease, asthma or allergies, you could face a pre-existing condition exclusion for up to 12 months. New Hampshire allows insurers to review only the three-month period before you apply for your new policy to look for pre-existing conditions. States permit a wide variety of review periods for pre-existing conditions on individual polices, from New Hampshire's three months to 11 states that allow companies an unlimited look back at your medical history.

Pre-existing Conditions Exemptions

The Affordable Care Act immediately ended pre-existing conditions exclusions for children younger than 19. HIPAA eliminated pregnancy, genetic disposition to an affliction and conditions present in a newborn from group insurance as circumstances subject to exclusions, but all three still were subject to penalty in individual policies.

Pre-existing Condition Insurance Plan

The Affordable Care Act established a Pre-Existing Condition Insurance Plan (PCIP) for persons who have been deemed high risk: uninsured for at least six months and denied insurance because of a pre-existing condition. PCIPs are divided nearly evenly between state and federal programs. The law says the premiums must be set at a standard rate, although premiums can be up to four times higher based on your age. Premiums for tobacco users can be hiked 50 percent over those for people who do not use tobacco.

About the Author

Dale Bye has spent more than 40 years in journalism, including 25 supervising reporters and editors at metropolitan newspapers and eight years as senior managing editor at a national sports magazine. He directed five newspaper-sponsored personal finance fairs. His fields of expertise include business and personal finance, sports, fitness and theater. Bye holds a Bachelor of Journalism from the University of Missouri.

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