Pre-existing conditions

One of the more confusing and talked-about aspects of the health insurance industry is the bugaboo known as “pre-existing conditions.” Many people have them. These can range from common issues like asthma or high cholesterol to serious diseases such as cancer or diabetes. How will pre-existing conditions affect your search for health insurance?

It’s important to note that not all pre-existing conditions are treated equally. Some are more serious and carry more weight than others. I’ll show you what I mean.

If you’re applying for individual health insurance, pre-existing conditions could limit your ability to even get coverage. Individual health insurance policies are “individually underwritten.” An applicant can be declined based on a number of risk factors, including where one falls on the insurance company’s height/weight tables. There are certain diseases or conditions that are automatic deal-breakers. These typically include diabetes, Crohn’s disease, most forms of cancer within the last 5 years, and a host of other conditions. In this situation, your best bet is to get onto an employer-sponsored group health insurance plan if you can. Otherwise your best bet is to get a limited-benefit plan, which will give you help with medical expenses, but will not provide catastrophic coverage.

But there are many pre-existing conditions that will not lead to you being declined for coverage. Many of these, however, could result in a “rider” to your policy, excluding coverage for a particular condition. Often there is a provision that will allow you to ask the company to remove the rider after a set period of times. In this scenario, you may be offered coverage, with a rider excluding coverage for something like acne, allergies, or depression. Sometimes the insurance company will give you the chance to remove a rider in exchange for a higher premium.

For these and other reasons, it will be helpful for your insurance broker to know about pre-existing conditions before you apply. Some companies are more flexible in their underwriting than others in certain areas.
With employer-sponsored group health insurance, your application will not be declined, assuming you meet the usual participation requirements and such. If you’ve not had continuous health insurance coverage, your pre-existing conditions will typically not be covered for a year. Beyond that, there are no riders on group plans. In a small-employer situation (under, say, 25 employees), the medical history of those on the plan could result in the underwriting department “rating up” your premiums. Depending on your state, there are limits to how high they can raise the premiums over the base quote. In South Carolina, for example, the “rate up” cannot be more than 66% higher than the initial quote, so you can multiply that base quote by 1.66% to get your worst-case scenario. A good broker will usually pre-screen your case with the carrier you choose in order to get a more firm grasp on what kind of rate-up you can expect.

If you’re in South Carolina, Georgia, or surrounding states, contact AC Forrest to discuss your health insurance needs and how they may be impacted by pre-existing conditions.