Pre-existing Conditions Under the New Health Insurance Law: Health Insurers are Prohibited from Denying Health Insurance Coverage

By Jacob W. Gent, Attorney at Law

A pre-existing condition in the realm of health insurance is a medical condition that existed before someone applies for or enrolls in a new health insurance plan.  It can be something as prevalent and serious as heart disease or cancer.  Or it may be less life-threatening such as hay fever or asthma.  Pre-existing conditions also frequently include personal injuries and traumatic injuries caused by the negligence of another in a motor vehicle collision, such as back injury, neck injury, traumatic brain injury, etc.

I.  Background

Historically, individuals with “pre-existing conditions” have had difficulty obtaining affordable health insurance, and many are unable to obtain any coverage at all.  Insurance companies would frequently use a person’s prior medical condition against him/her to deny coverage, charge higher premiums, or simply refuse to cover specific, necessary medical treatment.

The initial attempt to address this unfairness and grant those in need of access to necessary health care was done by Congress when it included provisions in the Health Insurance Portability and Accountability Act of 1996 (HIPAA).   The rules established a look-back period to limit the application of any pre-existing condition exclusion only to those conditions for which an individual sought treatment or advice within six months prior to his or her enrollment date.  For those conditions meeting the look-back requirement, a plan could exclude benefits for 12 months from the enrollment date, or 18 months for late enrollees.  The exclusion period was reduced or eliminated for individuals who were able to produce a “certificate of creditable coverage” as evidence that the individual had, until recently, been covered by another health plan (known as the ‘portability exclusion’). While state and federal law restricted the use of pre-existing condition exclusions for group health plans, no government restrictions applied to pre-existing condition exclusions in individual health plans.

II.  New Law on Total Prohibition Pre-Existing Condition Exclusions from Health Insurance Effective January 1, 2014

The Patient Protection and Affordable Care Act (or “Obamacare”) passed in 2010 simplifies the pre-existing condition exclusion rules by banning those exclusions outright in both group plans and individual policies.  Currently, no health plan may impose pre-existing condition exclusions on individuals under 19 years old. However, beginning January 1, 2014, pre-existing condition exclusions will be prohibited for individuals of any age.  The prohibition on pre-existing condition exclusions extends to the denial of specific benefits normally available under a plan, as well as to the complete exclusion of an individual from the plan or coverage.

Stated another way, insurance companies will be prohibited from refusing coverage because of someone’s medical history or health risk, regardless of the severity of the prior condition.  Insurance companies will be required to renew any policy as long as the policyholder pays the premium in full.  Insurance companies will no longer be allowed to refuse to renew coverage because someone became sick or injured.  Also, insurance companies can no longer drop or limit coverage for those who are or become ill or injured.

Although the ban on pre-existing condition exclusions for all individuals does not come into effect until 2014, health care reform includes the creation of state high-risk benefit pools (also known as pre-existing condition insurance plans or “PCIPs”) that can be administered by each state or the state can turn this over to the federal government.  These high-risk benefit pools are intended to provide coverage for people unable to obtain coverage elsewhere.  PCIP’s have been available since July 1, 2010 to individual citizens or legal residents of the United States who have had difficulty obtaining health insurance due to a pre-existing condition, and who have been uninsured for at least six months prior to application to the benefit pool.  Washington state chose to administer its own PCIP, called PCIP-WA, beginning in 2010.  The plan provided coverage to eligible individuals with pre-existing condition who had been uninsured for at least six months. PCIP-WA coverage ended effective June 30, 2013, and enrollees are now permitted to transition their coverage to the federal PCIP program.  Enrollment in the federally-run PCIP is handled by the National Finance Center.

III.  Conclusion

As with any significant change to laws, there will be issues to work through as the law unfolds and implementation begins.  The new health insurance laws represent a significant change for all consumers/patients related to access to coverage.  Having adequate health insurance coverage is vital to an individual’s access to care particularly when an acute condition arises from an urgent medical need as with traumatic injuries.

We encourage anyone who does not currently have health insurance to learn about the changes and coverage options available under the federal Patient Protection and Affordable Care Act.