Pre-Existing Condition Exclusion Period

Before the Affordable Care Act (ACA) reformed health insurance in the US, pre-existing conditions often played a significant role in the health insurance coverage that people were able to obtain.

This article will explain what pre-existing condition exclusions are, how they affected health insurance prior to the ACA, and when they still apply today.

Before the ACA's rules took effect in 2014, health insurance sold in the individual/family market (non-employer-sponsored) was medically underwritten in all but six states. This meant that a policy could exclude pre-existing conditions altogether, come with higher premiums based on an applicant's medical history, or simply be unavailable at any cost if the pre-existing conditions were serious enough.

In the employer-sponsored market, individual employees who were otherwise eligible for the employer's coverage couldn't be declined or charged additional premiums based on their medical history (although both large and small groups' premiums could be based on the group's overall medical history in many states).

But employees who couldn't prove that they'd had continuous coverage were subject to pre-existing condition exclusion periods that varied in length depending on how long the employee had been previously uninsured.

Now that the ACA has been implemented, most people are no longer subject to pre-existing condition exclusion periods.

Although as discussed below, grandmothered and grandfathered plans in the individual market have different rules, and Medigap plans can also impose pre-existing condition exclusion periods in some cases. And plans that are not regulated by the ACA, such as short-term health plans, generally do not cover pre-existing conditions.

Pre-Existing Conditions

A pre-existing condition is a health problem that already existed (officially diagnosed or just symptomatic) before you apply for a health insurance policy or enroll in a new health plan.

Practically any medical issue could fall under the umbrella of a pre-existing condition in the pre-ACA days. Pre-existing conditions could range from something as common as asthma to something as serious as heart disease, cancer, and diabetes. Such chronic health problems that affect a large portion of the population were all considered to be pre-existing conditions.

How Pre-Existing Condition Exclusions Worked Before the ACA

Prior to 2014, when the ACA significantly overhauled the health insurance industry, some health plans would accept new enrollees but with a pre-existing condition exclusion period. This was a waiting period before coverage would be provided for anything related to the pre-existing condition.

This was more common for employer-sponsored plans than individual market plans, as individual market plans tended to take a more draconian approach to pre-existing conditions—excluding them indefinitely, charging higher premiums, or declining the application altogether. But some individual market plans did come with pre-existing condition exclusions for only a limited time.

If you had a pre-existing condition exclusion period, you didn't have coverage for any care or services related to your pre-existing condition for a predetermined amount of time, despite paying your monthly premiums. This meant that any new, non-related health issues that arose during that time were covered by the health insurance company, but any health issues that were related to the pre-existing condition were not covered until the end of the pre-existing condition exclusion period.

Under HIPAA (the Health Insurance Portability and Accountability Act of 1996), employer-sponsored (group) plans were allowed to impose pre-existing condition exclusion periods if a new enrollee didn't have at least 12 months of creditable coverage (ie, had been uninsured prior to enrolling in the group plan) without gaps of 63 or more days. Eighteen months of creditable coverage could be required if the person was enrolling in the group plan late, after his or her initial enrollment window had passed.

The plan was allowed to look back at the previous six months of the person's medical history, and exclude pre-existing conditions that were treated during that six months, with the exclusion period lasting no more than 12 months. The length of the pre-existing condition exclusion period was reduced by the number of months the person had had creditable coverage during the previous 12 months. So an enrollee who had been uninsured for four months could have a four-month pre-existing condition exclusion period with the new plan, assuming he or she had been treated for a pre-existing condition in the last six months.

Some states limited pre-existing conditions beyond HIPAA's limitations, but they were generally something that people had to contend with if they experienced a gap in coverage before enrolling in a new plan prior to 2014. 

In the individual market, HIPAA's restrictions generally didn't apply. Insurers in many states often looked back at five or more years of applicants' medical history, and could exclude pre-existing conditions for generally unlimited amounts of time.

Affordable Care Act

The Affordable Care Act altered the way pre-existing conditions are handled in the United States. In the individual/family market (ie, plans that people purchase on their own, as opposed to obtaining from an employer), health insurers are no longer allowed to take your health history into account when deciding whether or not to sell you a health insurance policy.

This has been the case since 2014, when the bulk of the ACA was implemented. Health plans cannot exclude a pre-existing condition from coverage, nor can they charge you more because you have a pre-existing condition.

The same is true for the employer-sponsored market. So group health plans no longer have pre-existing condition exclusion periods, regardless of whether the enrollee has a history of continuous coverage and/or pre-existing conditions. As soon as the enrollee's coverage becomes effective, the person is fully covered under the terms of the health plan, with no exceptions for pre-existing conditions.

Note that the ACA does still allow employer-sponsored health plans to have waiting periods of up to three months before an employee's coverage takes effect, so a new employee may have to work for a few months before being eligible to be covered under the employer's plan. But once the plan takes effect, it cannot impose an additional waiting period on pre-existing conditions.

And the ACA also allows large group plans (but not small group plans) to have premium rates that are based on the group's overall medical history. So individual employees cannot be singled out for higher rates based on their pre-existing conditions, but the overall medical history of the group can be taken into account to set the overall premiums for the group.

(In most states, "large group" means 51 or more employees, but there are four states where small group plans are sold to employers with up to 100 employees, and the large group market begins at 101 employees. Also note that large employers tend to self-insure rather than buy health insurance from an insurance company.)

Grandmothered and grandfathered plans purchased in the individual market are different though. They do not have to adhere to the ACA's rules about covering pre-existing conditions and can continue to exclude members' pre-existing conditions.

Grandfathered individual market plans have not been able to enroll new members since March 2010, and grandmothered individual market plans have not been able to enroll new members since late 2013 (employers have not been able to purchase these plans since those same times, but existing group plans can continue to add newly-eligible employees). But if an existing enrollee already had a pre-existing condition exclusion, it can continue to apply indefinitely.

Pre-Existing Condition Exclusions and Medicare

Medicare covers pre-existing conditions, with no waiting periods. But Medicare supplemental insurance (Medigap) can impose pre-existing condition waiting periods in some cases.

As soon as you're 65 and enrolled in Medicare Part B (as well as Medicare Part A), your six-month initial enrollment window for Medigap will begin. During those six months, you can pick any Medigap plan available in your area. The insurer has to accept you regardless of any medical conditions you might have, and cannot charge you a higher premium based on your medical history.

But if you haven't had continuous coverage before enrolling in Medicare (ie, if you had a gap in coverage of more than 63 days before your Medicare plan took effect), the Medigap insurer can impose a waiting period of up to six months before the plan will pay benefits for pre-existing conditions.

There's no annual open enrollment period for Medigap like there is for Medicare Advantage and Medicare Part D. So if you apply for a Medigap plan after your initial enrollment period ends, the insurer can look at your medical history to determine whether or not to accept your application, and how much to charge you (note that some states prohibit this, but most do not).

There are limited situations that trigger guaranteed-issue windows, during which you can sign up for certain Medigap plans and the insurer can't reject you based on medical history. But even if you're enrolling with a guaranteed-issue right and you didn't have coverage in the 63 days before enrolling, the Medigap insurer can impose a waiting period of up to six months before the plan will cover your pre-existing conditions.

Pre-Existing Conditions Under Health Coverage Not Regulated by the ACA

There are various types of health coverage that aren't regulated by the Affordable Care Act (or simply aren't health insurance at all) and are thus not considered minimum essential coverage. This includes short-term health plans, fixed indemnity plans, healthcare sharing ministry plans, direct primary care plans, and Farm Bureau plans in some states.

If you enroll in any of these types of coverage, you're likely to find that pre-existing conditions are excluded. With any health plan, it's always a good idea to carefully read the fine print. But that's especially true if you're buying a plan that's not considered minimum essential coverage.

Summary

A pre-existing condition exclusion period is a window of time, after a health plan takes effect, when a pre-existing condition (or multiple pre-existing conditions) will not be covered by the plan. This was common prior to the Affordable Care Act, but most health plans can no longer impose pre-existing condition exclusions now that the ACA has been implemented.

A Word From Verywell

If your health plan is fully compliant with the ACA and obtained in either the individual/family market or the employer-sponsored market, you no longer need to worry about pre-existing condition exclusion periods.

But you do still need to be aware of how they work if you're enrolling in Medicare and a Medicare Supplement plan. And if you're considering a health plan that isn't regulated by the ACA, it's likely that the plan won't cover pre-existing conditions at all. This is one of the many reasons for sticking with plans that are fully compliant with the ACA, as the regulations that apply to these plans are designed to protect consumers and ensure that coverage is there when they need it.