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Pre-Existing Conditions and Creditable Coverage

Pre-existing conditions are defined as medical problems which people already have at the time of filling for health insurance coverage or when they get approval for coverage. It can be something as serious or as common as high blood pressure, heart disease, type 2 diabetes, cancer and asthma.

These are chronic health problems that have affected millions of people from around the world. Even if a person has minor condition like hay fever or accident injury, insurance companies may not agree to provide you with coverage.

Health insurance companies are concerned about their financial balance sheet, so keeping their best interest in mind they either exclude people who have a known pre-existing condition, put a clause of waiting period before the coverage starts, impose higher premiums and out of pocket expenses.

Exclusion due to Pre-Existing Condition

Health insurance coverage is affected due to pre-existing conditions. Some health insurance companies may agree to cover up a person with pre-existing condition. In some cases the person may not have any coverage for services and care related to pre-existing condition even though the plan accepts him or her and a monthly premium is being paid regularly.

Pre-existing exclusion period is also applicable on people who get insurance in their job, which of course depends on the employer and the health plan offered. However, the limit for exclusion period is twelve months and is only applicable on health conditions whose treatment was done six months prior to signing up for the health plan.

Pre-Existing Conditions and Health Reforms.

One of the major achievements of the Patient Protection and Affordable Care Act signed as law in March 2010 was eliminating requirements of pre-existing condition imposed in Health plans. From September 2010, children under age 19 and having pre-existing conditions can access the health plans of their parents.

On the other hand insurance companies were barred from insuring a child, excluding treatment for children having pre-existing condition. This provision will also be applicable on adults from 2014.

Creditable Coverage and HIPAA

Health Insurance Portability and Accountability Act passed by congress in the year 1996, gives protection to people and their family when they need to change, buy or continue with health insurance. The protections included are:

  • Limited use of pre-existing conditions exclusions.
  • Prevent health plans from differentiating by denying coverage or charging more for the coverage based on a person’s health problems or any of his family member’s.
  • Increased probability of purchasing a health insurance in case the person looses job and also the coverage.
  • Normally guarantees that a person, who purchases a new health insurance, can renew the coverage irrespective of the health condition in the family.

Although HIPAA is not applicable in every situation, but the law may decrease the probability of losing an existing coverage, make it easier to switch health plans, and help buy coverage in case the person looses job related health coverage, particularly in cases where there is no other coverage available.

The Importance of Creditable Coverage

Creditable coverage is the health coverage a person had prior to applying for a new health plan, provided that it was not interrupted for 63 or more days. The time period of creditable health coverage can be used towards pre-existing conditions exclusion period.

If a person had full year of health coverage in previous job and he or she enrolls in new health plan without a lapse of 63 or more days, than the new health plan cannot exclude a person on the basis of pre-existing conditions.

For example: Jack changed his job for better promotion opportunities. He started at his new job four weeks after resigning from his previous job. He was offered the same health insurance plan and he also signed up for family point of service plan. Although he is in good health, one of his children has asthma and his wife has type 2 diabetes.

Certificate of Creditable Coverage

A document that shows prior periods of health plan coverage provided by group health plan, health insurance Company, or HMO.

  • Before losing present coverage: People who plan ahead of leaving a job, can request for a certificate which is free of charge.
  • As coverage ends: a certificate is automatically received upon loss of coverage, even in cases where the person is still eligible for COBRA continuation coverage. In case a new one is required or don’t get one, request for the certificate any time within 24 months as the coverage ends.
  • When COBRA coverage ends: In this case the certificate is automatically received.

Events that can make you in-eligible for coverage

A person can lose eligibility for coverage when:

  • Loss of spouse’s health insurance due to legal separation or divorce.
  • A person is no longer a covered ‘dependent’ under parent’s plan due to age, work or social status.
  • Spouse death leaves a person without coverage under his or her plan.
  • You and your spouse were covered under employer’s health plan and the employment ends.
  • The employer reduces working hours which makes you no longer eligible for health plan.
  • Your plan in itself opts out to cover certain group of individuals (for example people working part time).
  • The person no longer works or lives in HMO’s service area.
  • Health benefits that meet or exceed the lifetime limit on the plan for all benefits.

A dependent or employee must file for enrollment within 30 days of losing coverage or after a birth, marriage, adoption, or placement for adoption.

ht-963-180-02172012

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