When Do Pre-existing Conditions on Insurance Get Reversed?

Chronic physical conditions, such as arthritis, diabetes and heart problems, can make it difficult to obtain quality health insurance once an existing coverage plan runs out. Fortunately, laws put in place by the federal government provide certain protections and rights for people with pre-existing conditions who need continued healthcare coverage. As a result, under some circumstances, insurance providers must reverse the effects of pre-existing conditions on eligibility when certain conditions are met.

HIPAA Law

• One of the ways health insurance providers reduce costs is by restricting or excluding coverages for people who have pre-existing conditions. This approach can leave many people ineligible for health insurance coverage once an existing plan expires. In order to protect an employee's ability to get or keep insurance coverage, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, requires group health insurance plans to cover employees under certain circumstances regardless of pre-existing conditions. In effect, HIPAA laws make it possible for employees to change jobs without fearing the loss of health insurance benefits.

Creditable Coverage Provisions

• Whenever a person changes jobs, employer-sponsored health providers reserve the right to instate a 12-month waiting period in cases where an employee has a pre-existing condition. Under HIPAA law, insurance providers must reverse the required waiting period for pre-existing conditions when employees can show proof of prior, creditable coverage. Creditable coverage consists of any prior health insurance coverage held within the previous 63 days. So, if an employee had coverage for a period of eight months prior to applying for a new plan, an insurance provider must reduce the waiting period time to four months for any pre-existing conditions. In effect, the amount or length of creditable coverage reduces the waiting period time by an equal amount or length.

Types of Coverage

• HIPAA law defines creditable coverage as any group health plan offered by a company that has a minimum of two employees participating in the plan. This rule also applies to companies that self-insure their health insurance plans. Other types of creditable coverage include state-run high-risk insurance pools, military-issued health plans and Medicare and Medicaid insurance. When switching between any one of these types of health coverage, insurance providers must reverse waiting period time requirements for pre-existing conditions based on prior creditable coverage periods as long as any lapses in coverage don't exceed 63 days.

Individual Insurance Plans

• Individual insurance plans work differently than group health plans where HIPAA guidelines are concerned. State laws can vary in terms of whether insurance carriers have to reverse pre-existing conditions for HIPAA eligible individuals. In some states, insurance can refuse to cover individuals with pre-existing conditions. In states that do allow for reversals, waiting periods for pre-existing conditions are reversed in cases where a person has exhausted available COBRA insurance options -- the option to continue coverage after termination of employment -- and carried a minimum of 18 months of creditable coverage under a group health plan, according to Insure.com. As state laws set the final guidelines for insurance regulations, certain states may have additional requirements for people who switch from group health to individual insurance plans. Should the Affordable Care Act of 2010 remain in effect, individual plans will be required to cover pre-existing conditions as of 2014.