Is There a Preexisting Condition Clause on Health Insurance?

Preexisting conditions have a reputation of being an insurance company's "Get Out of Jail Free" card. They are medical conditions that first manifested themselves before you were insured with the company. High blood pressure is a common preexisting condition for many people. The amount of time that an insurance company will look back to see if a preexisting condition exists varies from company to company.

Why Insurance Companies Don't Like Preexisting Conditions

• A person with a preexisting condition is more likely to file a claim than a healthy person. Also, a person with a preexisting condition is more likely to seek insurance than a young, healthy person. This means that people with preexisting conditions cost the companies more to insure. Because of this, insurance companies typically charge their customers with preexisting conditions more to be insured, if they cover the preexisting conditions at all.

The Clause

• Insurance companies try to control their costs by using the preexisting clause. The clause states that if a condition existed before the customer was insured, the insurance company does not have to cover any claims related to the condition. Insure.com explains the rationale for the preexisting condition clause this way: "If you were to purchase car insurance and your windshield was cracked before you bought your coverage, you can't expect your new car insurer to replace it."

Group Insurance

• Customers with preexisting conditions are protected by the Health Insurance Portability and Accountability Act (HIPAA) when purchasing group health insurance. HIPAA limits group health plans from using eligibility rules based on health status, medical history, genetic information or disability. If a customer has had "creditable" health insurance during the previous year with no lapse in coverage of more than 63 days, then group health plans cannot exclude preexisting conditions. Prior to HIPAA, preexisting conditions did not have to be covered.

Affordable Care Act

• Under the Affordable Care Act signed into law in 2010, private companies are no longer able to exclude preexisting conditions from coverage. This coverage went into place for children in 2010. It begins for adults in 2014. The Affordable Health Care Act also prohibits the insurance companies from charging higher premiums because of the preexisting conditions.