Health Insurance & Pre-Existing Conditions

Health insurance is an important tool for safeguarding your financial, as well as your physical health. Insurance will pay for some or all of the medical costs that you and your family incur. But if you have a pre-existing medical condition that requires treatment or monitoring, you may find it difficult to get health insurance at a reasonable rate.

Background

• Health-insurance providers differentiate between applicants with and without existing medical conditions. They may charge higher rates to anyone with a pre-existing condition or simply deny coverage. While there is no single legal definition of pre-existing conditions, the category includes common diseases that require regular treatment such as diabetes, heart disease and cancer. Some states have laws that further define pre-existing conditions, and insurance providers have their own methods for determination as well.

Benefits

• By refusing to cover individuals with pre-existing conditions, health insurance providers can limit their liability for paying claims. This can help boost profits or allow the insurance company to offer lower, more competitive rates to reasonably healthy customers. Companies that charge more to insure someone with a pre-existing condition can adjust for the added cost of paying for the condition's treatment, as well as other conditions that it may lead to for the patient.

Drawbacks

• Individuals with pre-existing conditions are most in need of health insurance but may face the most difficulty getting coverage. An inability to find coverage elsewhere may force them to seek coverage through a government-subsidized program such as Medicaid, which adds to the financial burden on state governments and taxpayers. A policy that excludes customers with pre-existing conditions also does nothing to prevent an insurance company's current customers from developing conditions that may be just as costly to treat.

Options

• If you have a pre-existing medical condition you still have several options for getting health insurance. If you have end-stage renal disease or are over age 65, you qualify for the federal government's Medicare program, which offers free or low-cost insurance. In addition, health-insurance group plans through an employer generally allow individuals with pre-existing conditions to enroll. Finally, the U.S. Department of Health and Human Services also administers the Pre-existing Condition Insurance Plan, which provides coverage to anyone with a pre-existing condition who has been without insurance for at least six months.

Legislation

• The Health Insurance Portability and Accountability Act of 1996 prevents employers from excluding workers with pre-existing conditions from their employer-sponsored group health-insurance plans. This limits problems in finding health insurance for individuals with a pre-existing condition who are unemployed, work for an employer that doesn't offer a group plan or are self-employed. New health care reform laws in 2010 place further limits on insurance providers and force them to accept customers with pre-existing conditions after 2014.