Health Insurance: Paying For Pre-Existing Conditions

The words "pre-existing condition" and "experimental procedure" are often bad news for patients in the U.S. Because in many circumstances, health insurance providers are often not required to cover associated costs. In this article we'll explain the terminology to help you avoid the challenges that can arise when your medical needs are not covered by your health insurance.

A pre-existing condition is a medical illness, injury or other condition that existed prior to the date the patient signed up with a health insurance provider. Most insurance companies use one of two definitions to identify such conditions. Under the "objective standard" definition, a pre-existing condition is anything for which the patient has already received medical advice or treatment prior to enrollment in a new medical insurance plan. Under the broader, "prudent person" definition, a pre-existing condition is anything for which symptoms were present and a prudent person would have sought treatment. Pre-existing conditions can include serious illnesses, such as cancer; less serious conditions, such as a broken leg; and even prescription drugs. Notably, pregnancy is a pre-existing condition that will be covered regardless of prior treatment.

While the definitions are fairly easy to understand when you know which one will be applied to your circumstances, it gets more complicated after you factor in the additional rules regarding coverage. Navigating through the bureaucracy begins with an understanding of the Health Insurance Portability And Accountability Act (HIPAA), which provides limited protection for consumers enrolled in group health insurance plans with regard to healthcare coverage and pre-existing conditions. (For more insight, read Fighting The High Costs Of Healthcare.)

Consider the following three scenarios.

Scenario 1: Changing Jobs
The first involves changing jobs. If you were covered under your prior employer's healthcare plan and take a job with a new employer, your new employer's health insurance plan can impose a six-month "look back" period. During that time, you must have had "creditable coverage" with no breaks in excess of 63 days in order to get immediate treatment for a pre-existing condition. Creditable coverage includes group healthcare plans, private health insurance and COBRA coverage; it can also include Medicare or Medicaid.

Calculations of creditable coverage are used to determine whether immediate treatment of pre-existing conditions will be available and how long patients must wait if they are not immediately eligible. If, for example, you worked for your prior employer for 15 months and had continuous healthcare coverage and then moved immediately to the new employer, you would be given credit for 15 months of prior coverage. Any pre-existing conditions would be eligible for immediate treatment.

If, on the other hand, you worked for the prior employer for 15 months, had healthcare coverage for 11 months and then stopped coverage for three months before resuming it for one month, only the last month of coverage would be creditable because the break in coverage was longer than 63 days. Under this scenario, the new employer's healthcare coverage could refuse treatment for pre-existing conditions for a period of 11 months. Some employers further complicate the issue by breaking down healthcare coverage into five additional categories: mental health, substance abuse, prescription drugs, dental and vision. Each category of care is then subject to the six-month look-back period.

If you have not had healthcare coverage in the past 12 months, your new employer's healthcare plan can refuse treatment for pre-existing conditions for up to one year. If you do not enroll in the new plan as soon as you are eligible to do so, late enrollment can extend the delay in coverage to 18 months.

Scenario 2: Purchasing Private Healthcare Insurance
In the second scenario, if you had employer-sponsored healthcare coverage and wanted or needed to purchase private healthcare insurance (because your COBRA ran out, say), HIPAA guarantees that the new insurer will cover pre-existing conditions provided you have had continuous healthcare coverage with no breaks longer than 63 days during the past 18 months. (For more on private insurance, read Buying Private Health Insurance.)

Scenario 3: Switching Insurance Providers
Under the third scenario, if you had an insurance plan that you purchased on your own that is not affiliated with your employer, you may have trouble finding coverage for a pre-existing treatment if you wish to switch insurance providers. Private insurance may be able look back into your medical records and decline to cover you even if the condition that you had was treated many years ago. Keep in mind that insurers make a profit when their customers don't get sick, so taking on a risky customer is not in their best financial interests. With this in mind, if you are currently being treated for a medical condition or had a serious condition in the past, finding a new insurer may be a real challenge.

While getting health insurance coverage when you have a pre-existing condition can be a tough challenge, getting the insurance company to pay for an experimental treatment can sometimes be impossible. Experimental procedures are categorized by a wide variety of definitions.

For example, "not generally accepted by the medical community" is a common phrase used in relation to experimental procedures. These investigative treatments are often part of the effort to develop treatment and cures for serious illnesses, such as cancer. But they are often also quite expensive, so insurers have a financial incentive to refuse coverage. Various stem-cell treatments are an example of the type of procedure that can fall into this category.

To find out which procedures your healthcare provider categorizes as experimental, read your policy information. If you cannot find the details in the materials that you have, contact your provider and ask for a written overview of coverage policies.

If you seek treatment for a procedure that is categorized as experimental and is therefore denied by your insurance provider, you can appeal the decision. If you lose the appeal, you can take the case to court, although the legal system often grinds forward very slowly, which could be detrimental to someone who's seriously ill.

To avoid the complications that come with a pre-existing condition, take all necessary steps to maintain healthcare coverage. When you change jobs, sign up for new coverage immediately (or as soon as your company allows) to avoid a break of more than 63 days. If you lose your job, sign up for COBRA to continue your benefits. If your COBRA coverage ends before you find a new employer, purchase private heath insurance. If all else fails, contact your state insurance commissioner to learn about the state's risk pool insurance program.

For more information, see Intro to Insurance: Health Insurance and Find Secure And Affordable Post-Work Health Insurance.