Denying Insurance Due to Pre-Existing Conditions

As of 2011, health insurers can deny coverage to participants who suffer from a pre-existing condition. Some insurers may provide coverage but exclude the condition from the insurance policy. This creates great difficulty in the lives of individuals who need affordable health care to maintain a healthy lifestyle. Denying insurance due to pre-existing conditions is a form of discrimination and causes millions of people to go uninsured.

Description

• A pre-existing condition is a health condition that was present before an individual applied for or obtained a health insurance plan. Some health carriers also consider previous injuries and illnesses a pre-existing condition. If a plan participant suffered from a heart attack or cancer five years ago, this may be grounds for an insurance denial with some companies. Pregnancy is also considered a pre-existing condition and may be excluded from a health insurance plan.

Purpose

• Insurance companies deny or exclude pre-existing conditions from coverage because they cost the company money. Patients who suffer from a disease or illness have a high probability of filing an insurance claim. On the other hand, healthy people have a very low probability of filing an insurance claim. Insurance companies are obligated to pay the cost of covered health benefits. Treatments for chronic conditions and illnesses are costly. Rather than absorbing these costs, insurance companies do not provide insurance coverage to people who require continuous health services.

Drawbacks

• A major drawback of being denied insurance for pre-existing conditions is the inability to afford the premiums of high-risk policies. People with pre-existing conditions are usually left with no choice but to participate in state-sponsored high-risk health insurance pools because they are the only programs that will insure chronic health conditions. According to the U.S. Department of Health and Human Services, high-risk health insurance pools charge significantly higher rates than companies in the individual market. Individuals who cannot afford to pay premiums often go without the quality health care they need.

Exclusions

• Private health insurers may exclude a pre-existing condition from coverage in lieu of denying the participant insurance entirely. Some private health insurers and guaranteed issue insurance plans put a time limit on how long a condition can be excluded from coverage. Plan participants may be subject to a pre-existing condition exclusion period for newly purchased individual health insurance plans. Exclusion periods last from 60 days to 12 months depending on the type of plan. During the exclusion period, the participant does not have coverage for any health services related to the pre-existing condition but is covered for all other benefits.

Considerations

• Individuals who suffer from pre-existing conditions and have been uninsured for at least six months may qualify for coverage under the federal Pre-Existing Condition Insurance Plan (PCIP). The insurance program was developed under the Patient Protection and Affordable Care Act. It is designed to provide affordable health care to people with chronic health conditions who have been denied coverage elsewhere. Under the Affordable Care Act, all insurance companies will be prohibited from denying or excluding coverage for pre-existing conditions by 2014, giving everyone access to health insurance without discrimination.