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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 any potential hires. A Pre-existing Condition Clause is a limitation of your medical coverage that excludes any benefit for which medical advice, diagnosis, care, or treatment (including treatment with prescription drugs) was recommended or received by this new members 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. This 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:

Three months uninsured before joining the new medical plan = three 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. and 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.

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