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What is a pre existing condition clause?  As an employer who sponsors a group health plan, you should be able to explain what a pre existing limitation is and how it applies to a new hire you are thinking about taking on.  

A Pre Existing Condition Clause is a limitation of coverage to exclude under your medical coverage, any “benefit for which medical advice, diagnosis, care, or treatment (including treatment with prescription drugs) was recommended or received  by this new employee during the 6 months immediately preceding  the enrollment date.”  This exclusion lasts until the new coverage has been in effect for 12 consecutive months, or for someone entering late, 18 consecutive months.  However, credit is  given  for each month of continuous qualifying prior coverage prior to enrollment in the new  plan., if provided.

O.K. then, what does that mean?  It means that if your employee went without coverage for more than a 63 days (63 days = COBRA Election period) they do not have coverage for anything they were treated for, within the prior 6 months.  That limitation can last as long as 12 months (18 mos. late entrants), with credit being applied against the limitation for  coverage within that previous 12 months.  For example; 3 months uninsured before joining the new medical plan = 3 Months of  Pre Existing Conditions Limitation.  

Why do the insurance companies have pre-existing limitations?  Well, look at it like this; if the pre existing conditions clause didn’t exist,  people would only purchase insurance when it was necessary and then cancel it when there was no longer a need.  The concept of insurance no longer works under those circumstances.  It would be like trying to buy homeowners insurance when your house was on fire or auto insurance after you totaled your car.  An insurance company that faces this type of situation will not be in business very long, and certainly not able to serve your needs.

The pre-existing limitation applies to everything from prescription drugs, to doctors visits, etc, so knowing how to explain the limitation to your new hires or an employee who thinks insurance is just too expensive, is a valuable asset.

As always we are here to answer any questions or concerns you, or your prospective/current employees may have on this subject.

In the News

SENIOR GROUP NIXES RX TRIPS TO CANADA Minnesota senior citizens' group that for a dozen years organized regular trips north to Canada to buy cheaper prescription drugs may have made its last run. On Friday, the Minnesota Senior Federation's bus ferried 26 customers to a pharmacy in Winnipeg, where government controls keep prices lower than in the United States. But a new Medicare drug benefit for older and disabled Americans, plus a stronger Canadian dollar, have slashed in half what had been $1 billion in annual cross-border sales. Half of Canada's 140 or so mail-order pharmacies have gone out of business. Still, Senior Federation executive director Lee Graczyk said people "are still getting gouged on drug prices." Federation members could still see the benefits when they picked up their orders at a storefront pharmacy: Three months worth of 42 prescriptions, bought for $6,605 -- a savings, they estimate, of about 40 percent from Twin Cities retail prices. The bus trips started in 1995, but became a hot ticket in 2001 when newly elected U.S. Sen. Mark Dayton, D-Minn., pledged his Senate salary to fund them. There were about 30 trips in the past six years. The money ended when Dayton didn't seek reelection last year. Friday's trip cost $10,000, with no charge to riders, and was paid for with funds left over from Dayton's largesse. Graczyk said there's some money left, but no new trips are scheduled. "You know, these trips are not cost-effective," Graczyk said. "It's far cheaper to use the federation website to order drugs. But we've done them to make a point: Given the vast wealth of the United States, you shouldn't have to drive eight hours to buy affordable drugs." For some seniors, the new Medicare drug benefit has made trips to Canada unnecessary. But its so-called "doughnut hole" in coverage, the portion of plans where the user must pick up the whole cost of prescriptions, continues to make Canadian suppliers attractive to some Americans. One bus rider, 74-year-old Adrienne Ratliff of Minneapolis, filled only her four most expensive prescriptions in Canada, leaving the rest to be covered by her UCare Minnesota insurer. "I've got to try to keep those costs down," she said. "Last year I financed the last of my doughnut hole costs on my credit card, and I really don't want to do that this year." Drug manufacturers have tried to shut down the Canadian pharmacies serving Americans, many of them online. The U.S. Food and Drug Administration has warned such drugs could be fake or tainted, but so far there have been no reports of either problems. When U.S. drugmakers threatened to cut off supplies to wholesalers who sold to the Internet pharmacies, the pharmacies looked abroad for drugs and have taken orders from the United Kingdom, Germany, Israel, Australia, New Zealand and Spain. Connie Rance, 67, of Minneapolis, will be affected by the doughnut hole in a few months and said she was glad to save $200 on two drugs she bought in Canada. "I don't know if this is the last federation bus trip or not," Rance said. "I hope not. But I'm glad I came. And when I go home, I know some friends who should hear about this drug business with Canada. -Jul 1, 2007 12:30 pm US/Central. WCCO.COM

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