Pre-Existing Condition

A pre-existing condition is a health problem a person had before the date a new insurance policy or plan begins. HealthCare.gov defines it as "A health problem, like asthma, diabetes, or cancer, you had before the date that new health coverage starts." The term matters because of what an insurer may do with it: a pre-existing condition exclusion limits or excludes benefits for a condition because it existed before enrollment.

Federal law spells the word without a hyphen. Section 2704 of the Public Health Service Act, at 42 U.S.C. 300gg-3, provides that "A group health plan and a health insurance issuer offering group or individual health insurance coverage may not impose any preexisting condition exclusion with respect to such plan or coverage." That sentence is the protection most people mean when they say insurers can no longer turn them down for a pre-existing condition, and its reach is exactly the coverage it lists.

What the statute forbids. It defines a preexisting condition exclusion as "a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date." The last clause matters: an exclusion is forbidden even for a condition nobody had diagnosed or treated before the coverage began. Under the Affordable Care Act's rating rules, insurers in the individual and small-group markets may also not charge a person more because of one: premiums there may vary only by a short list of factors, and health is not among them.

When it started. The ban took effect for plan years beginning on or after January 1, 2014. For enrollees under 19 it applied from plan years beginning six months after the law was signed on March 23, 2010.

Where exclusions still exist. The statute binds group health plans and issuers of group or individual health insurance coverage, so anything outside those categories can still exclude a prior condition:

• Short-term health insurance. Federal law defines individual health insurance coverage to exclude short-term limited duration insurance, so none of the individual-market protections reach it, and the insurer may medically underwrite the application.
• Grandfathered individual policies. Under 45 CFR 147.140, the ban does not apply to grandfathered health plans that are individual health insurance coverage. Grandfathered group plans became subject to it in 2014.
• Health care sharing ministries, which are not insurance at all.
• Medicare Supplement Insurance. During the six-month Medigap open enrollment window an insurer must sell the policy, but federal law still lets it exclude benefits for a condition treated or diagnosed in the six months before the policy starts, for up to six months, shortened by any prior continuous creditable coverage.
• Travel and pet insurance, which may carry exclusions of their own.

Beyond health coverage. Life and disability insurance are not bound by the health insurance rules and price or decline applicants through underwriting, and some policies carry their own exclusion for conditions treated shortly before coverage began. A home warranty uses the same idea for appliances and systems that were already failing when the contract started. In each case the contract's own definition decides what counts.

1. Identify the coverage type. A plan through work, a Marketplace plan or other individual major medical coverage is bound by the federal ban. A short-term policy, a sharing ministry, a grandfathered individual policy and travel or pet coverage are not.
2. If the ban applies, the plan must cover treatment for the condition on the same terms as anything else it covers, from the first day of coverage, and may not raise one person's premium because of it.
3. If the ban does not apply, read the exclusion clause: how far back it looks, whether a symptom without a diagnosis counts, and how long the exclusion lasts.
4. For Medigap, count months of prior continuous creditable coverage, which shorten or remove the six-month exclusion.

Consider an example: Omar, who has been treated for a heart condition, needs $9,000 of cardiology care in his first month of new coverage. Under a Marketplace plan the claim is processed like any other, so with a $2,000 deductible and 20% coinsurance he pays $2,000 + 20% x $7,000 = $3,400, and the plan pays $5,600. Under a short-term policy that excludes conditions treated before the start date, the plan pays nothing and Omar owes all $9,000.

Pros

• For ACA-regulated health coverage, a known health problem no longer blocks enrollment, limits benefits or raises the individual premium.
• The protection does not depend on income, a subsidy or buying through the Marketplace. Employer plans are bound by it too.
• The ban also reaches a condition that was present but undiagnosed when coverage began.

Cons

• The protection follows the coverage type, not the person. A cheaper short-term policy can exclude exactly the condition its buyer most needs covered.
• Medigap's six-month exclusion still applies to a buyer without enough prior coverage, even inside the open enrollment window.
• Life, disability and long-term care insurance can still decline an applicant or charge more because of health history.