Pre-Existing Condition Exclusion Period

Thanks to the ACA, Most nsurers Can No Longer Use Exclusion Periods

Woman using inhaler on the beach
Asthma can be considered a pre-existing condition. Westend61/Getty Images

Before the Affordable Care Act reformed health insurance in the US, pre-existing conditions often played a significant role in the health insurance coverage that people were able to obtain.

In all but six states, health insurance sold in the individual market could exclude pre-existing conditions altogether, come with higher premiums based on an applicant's medical history, or simply be unavailable at any cost if the pre-existing conditions were serious enough.

In the employer-sponsored market, individual employees who were otherwise eligible for the employer's coverage couldn't be declined or charged additional premiums based on their medical history (although a groups' premiums could be based on the overall group's medical history in many states), but employees who couldn't prove that they'd had continuous coverage were subject to pre-existing condition exclusion periods that varied in length depending on how long the employee had been previously uninsured.

Now that the ACA has been implemented, most people are no longer subject to pre-existing condition exclusion periods. Although as discussed below, ​grandmothered and grandfathered plans have different rules. 

How Pre-Existing Condition Exclusions Worked Before the ACA

Prior to 2014, when the ACA significantly overhauled the health insurance industry, some health plans would accept new enrollees but with a pre-existing condition exclusion period (ie, a waiting period).

This was more common for employer-sponsored plans than individual market plans, as individual market plans tended to take a more draconian approach to pre-existing conditions (excluding them indefinitely, charging higher premiums, or declining the application altogether). But some individual market plans did come with pre-existing condition exclusions for only a limited time.

If you had a pre-existing condition exclusion period, you didn't have coverage for any care or services related to your pre-existing condition for a predetermined amount of time, despite paying your monthly premiums. This meant that any new, non-related health issues that arose during that time were covered by the health insurance company, but any health issues that were related to the pre-existing condition were not covered until the end of the pre-existing condition exclusion period.

Under HIPAA (the Health Insurance Portability and Accountability Act of 1996), employer-sponsored (group) plans were allowed to impose pre-existing condition exclusion periods if a new enrollee didn't have at least 12 months of creditable coverage (ie, had been uninsured prior to enrolling in the group plan) without gaps of 63 or more days (18 months of creditable coverage could be required if the person was enrolling in the group plan late, after his or her initial enrollment window had passed).

The plan was allowed to look back at the previous six months of the person's medical history, and exclude pre-existing conditions that were treated during that six months, with the exclusion period lasting no more than 12 months.

The length of the pre-existing condition exclusion period was reduced by the number of months the person had had creditable coverage during the previous 12 months. So an enrollee who had been uninsured for four months could have a four-month pre-existing condition exclusion period with the new plan, assuming he or she had been treated for a pre-existing condition in the last six months.

Some states limited pre-existing conditions beyond HIPAA's limitations, but they were generally something that people had to contend with if they experienced a gap in coverage before enrolling in a new plan prior to 2014.

 

In the individual market, HIPAA's restrictions generally didn't apply. Insurers in many states often looked back at 10 or more years of applicants' medical history, and could exclude pre-existing conditions for generally unlimited amounts of time.

Pre-Existing Condition

A pre-existing condition is a health problem that existed before you apply for a health insurance policy or enroll in a new health plan.

Basically any medical issue could fall under the umbrella of a pre-existing condition in the pre-ACA days. Pre-existing conditions could range from something as common as asthma to something as serious as heart disease, cancer, and diabetes. Such chronic health problems that affect a large portion of the population were all considered to be pre-existing conditions.

Affordable Care Act

The Affordable Care Act altered the way pre-existing conditions are handled in the United States. In the individual market, since 2014, health insurers haven't been able to take your health history into account when deciding whether or not to sell you a health insurance policy. They cannot exclude a pre-existing condition from coverage, nor can they charge you more because you have a pre-existing condition.

The same is true of the employer-sponsored market, and group health plans no longer have pre-existing condition exclusion periods, regardless of whether the enrollee has a history of continuous coverage and/or pre-existing conditions. As soon as the enrollee's coverage becomes effective, he or she is fully covered under the terms of the health plan, with no exceptions for pre-existing conditions.

Grandmothered and grandfathered plans are different though. They do not have to adhere to the ACA's rules about covering pre-existing conditions, and can continue to exclude members' pre-existing conditions.

In the individual market, people have not been able to enroll in grandfathered plans since March 2010, and in grandmothered plans since late 2013.

But in the employer-sponsored market, newly-eligible employees (and those who sign up during their employer's annual open enrollment period) can still enroll in grandmothered and grandfathered employer-sponsored plans, which means there are still some people who are newly-subjected to pre-existing condition exclusion periods. If you have questions about your plan's rules on this, contact your HR department or the insurance plan.

More Information from Dr. Mike

· Pre-Existing Conditions - Understanding Exclusions and Creditable Coverage

Sources:

Centers for Medicare and Medicaid Services. The Health Insurance Portability and Accountability Act (HIPAA) of 1996. Helpful Tips.

Kaiser Family Foundation. Health Insurance Market Reforms: Guaranteed Issue. June 2012.

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