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Once and for all,
Let’s Understand Pre-existing Conditions

We still routinely hear misconceptions about pre-existing conditions and when they apply in healthcare coverage applications so we want to address this issue yet again. Let’s review when pre-existing conditions ARE NEVER a consideration. With respect to medical coverage, pre-existing conditions have never been a factor in eligibility for group coverage, original Medicare, Medicare Advantage Plans or Medicaid. The confusion about pre-existing conditions stems from the fact that for many years, individual medical coverage in most states did take health status into account.

Prior to 2014, in all but a few states like New York, which did not allow insurers to recognize pre-existing conditions, one had to answer medical questions when applying for medical coverage as an individual and based on the answers, an application could be rated up or rejected. As a result, in most states, for the most part, those covered by individual coverage were a relatively healthy group compared to other risk pools which often included workers, spouses and dependent children with many health issues.

With today’s individual insurance marketplace, as long as you apply for coverage during annual open enrollment or within the window associated with a qualifying event, individual coverage is so-called “guaranteed issue” and does not take health status into account.

Let’s review when pre-existing conditions matter. Individual long-term care coverage remains medically underwritten, meaning health questions are asked and the coverage may not be offered if the insurer’s underwriting guidelines indicate the application should be rejected. Group long-term care coverage is an optional, supplemental offering so whether pre-existing conditions apply with such an offering would depend on what the employer and insurer agreed because such a benefit is typically an exclusive offering.

Medicare supplements can factor pre-existing conditions into the application in many situations. As we’ve discussed before, during the first six months after one’s Medicare Part B effective date, all Medicare supplements in all states are guaranteed issue. In 47 states, after that six-month period, a Medicare supplement application can include health questions and reject an applicant for health reasons. There are some situations where supplements are guaranteed issue after the six months from the Part B effective date such as one’s Advantage Plan or Supplement carrier goes out of business or one moves out of an Advantage Plan’s service area. For most people who don’t relocate, however, a supplement application beyond six months of one’s Medicare Part B effective date will be subject to medical underwriting and the insurer can reject the application.

Three states, New York, Connecticut and Massachusetts, do not allow medical underwriting of Medicare supplements but they have different approaches, typically a waiting period of some sort.

In some states short-term health policies are available. These types of policies were fairly widespread before the reforms of the Affordable Care Act (ACA) took effect in 2014, although some states like New York, did not allow them to be sold. The Affordable Care Act then banned their sale everywhere, the thinking being everyone needs more comprehensive coverage. Since President Obama left office, the environment has changed in many states for short-term health plans and they are available. These are Plans that help bridge the gap if you have missed an open enrollment period or window to enroll with a qualifying event. These plans are not ACA-compliant and applications have health questions and the insurer can reject an applicant for health reasons.

Individual disability policies will always be subject to medical underwriting. Disability policies are “income replacement” rather than medical policies but they relate to one’s medical status so are worth mentioning here.

Finally, should you get some type of solicitation touting a “no pre-existing condition medical policy,” it’s usually time to throw that mailing away or hang up the phone since these tend to be people selling a non-ACA compliant plan that is not a true insurance product.

I hope this helps with understanding pre-existing conditions. The elimination of them in the individual market was wonderful news for many, many people but is also a major factor in why individual insurance is so expensive today unless one qualifies for a premium tax credit.