November 3, 2006
PREEXISTING CONDITIONS AND INSURANCE COVERAGE
By: Janet L. Kaminski, Associate Legislative Attorney
You asked if a family that is applying for health insurance coverage can be denied coverage if it is determined that one child has a kidney infection.
Whether a family may be denied health insurance coverage because of the health status of a family member depends on the type of policy (i.e., group or individual) the family wants to purchase. Group plans (insured or self-funded) are subject to federal and state law regarding preexisting conditions and cannot discriminate (e.g., deny enrollment) based on a person's health status. Individual policies are subject to state, but not federal, law. Insurance companies issuing individual policies are permitted to consider health status when deciding whether or not to issue a policy to an applicant and his family. As a result, an insurer may decline to issue a policy to a person whose dependent child has a known medical condition.
GROUP HEALTH PLAN
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was signed into law on August 21, 1996. HIPAA's provisions amend the Employee Retirement Income Security Act of 1974 (ERISA), as well as the Internal Revenue Code and the Public Health Service Act, and place requirements on employer-sponsored group health plans, insurance companies, and health maintenance organizations (HMOs). HIPAA includes provisions that (1) limit exclusions for preexisting conditions (conditions that were present before an individual's enrollment in that plan) and (2) prohibit discrimination against employees and dependents based on their health status.
Group health plans may not have eligibility rules based on “health status related factors.” These factors are health status, medical condition (physical or mental), claims experience, receipt of health care, medical history, genetic information, evidence of insurability, or disability. For example, a person cannot be excluded or dropped from coverage under a group health plan just because he has a particular illness.
Under HIPAA, the only preexisting conditions that may be excluded under a group health plan's preexisting condition exclusion are those for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the person's enrollment date (i.e., the look-back period). If a person had a medical condition in the past, but has not received any medical advice, diagnosis, care, or treatment for it within the six months prior to his plan enrollment date, the condition is not a “preexisting condition” to which an exclusion can be applied. The maximum length of a preexisting condition exclusion period is 12 months after the enrollment date (18 months in the case of a “late enrollee”).
A plan must reduce a person's preexisting condition exclusion period by the number of days of his prior “creditable coverage.” However, a plan is not required to take into account any days of creditable coverage that precede a break in coverage of 63 days or more (“significant break in coverage”). Most health insurance coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), HMO, individual health insurance policy, Medicaid, or Medicare.
Preexisting condition exclusions cannot be applied to pregnancy, regardless of whether the woman had previous coverage. In addition, a preexisting condition exclusion cannot be applied to a newborn, adopted child under age 18, or a child under 18 placed for adoption as long as the child became covered under the health plan within 30 days of birth, adoption, or placement for adoption, and provided the child does not incur a subsequent 63-day or longer break in coverage. Finally, genetic information may not be treated as a preexisting condition in the absence of a diagnosis.
HIPAA does not prohibit a plan from establishing a benefit waiting period. For group health plans, a waiting period is the period that must pass before an employee or a dependent is eligible for coverage under the plan. Some plans have waiting periods and preexisting condition exclusion periods. However, if a plan has both a waiting period and a preexisting condition exclusion period, the preexisting condition exclusion period begins when the waiting period begins.
For a related federal Department of Labor brochure, see http://www.dol.gov/ebsa/pdf/consumerhipaa.pdf.
Connecticut law mirrors HIPAA in most respects for group insurance policies (but does not apply to self-funded plans). However, it imposes a longer “significant break in coverage” requirement for creditable coverage – 120 days (or 150 days if the loss of prior coverage was due to an involuntary job loss) (See, CGS § 38a-476).
INDIVIDUAL HEALTH POLICY
There is no law prohibiting health insurance companies from considering an applicant's medical history when deciding whether to insure a person under a policy written on an individual basis. As a result, an insurer may deny coverage under an individual insurance policy to a person with a pre-existing condition. If an insurer does issue the person a policy, it may include a pre-existing condition coverage limitation. The state's high-risk pool is available to individuals who are unable to obtain insurance in the commercial market because of a pre-existing condition (see http://www.hract.org/hra/).
Connecticut law includes provisions that limit any preexisting condition exclusion that may be included in an individual policy, but it differs from the law that applies to group insurance policies. State law for a group health plan requires no more than a six-month look-back period and 12-month exclusion period. But, for an individual policy, the insurer may impose a 12-month look-back period and a 12-month exclusion period (CGS § 38a-476(b)(2)). The law also requires the exclusion period to be reduced by creditable coverage, so long as there was not a significant gap in coverage (120 days, or 150 if the loss pf prior coverage was due to an involuntary job loss).