insurance in California
Pre-existing conditions and eligibility
California Health Insurance and Pre-Existing
Individual Family plans are medically underwritten until Jan 1st 2014
Children are guaranteed issue but their rates can go up based on health
Effects of Health Reform on Californian's with
pre-existing conditions (detail below)
MRMIP, AIM, and Medi-Cal are programs for uninsurable (detail below)
Almost everyone has one....that dreaded term in
California health insurance called pre-existing conditions. Every
now and then, we'll get an application that is completely clean with
no health history and our first inclination is to assume that the
applicant forgot something. Having no real health history to speak of
does happen but for the rest of it, but we are likely to enter the
health insurance market with existing issues. This affects our
options on the market and that relationship is changing quite a bit
right now. Let's look at the current set-up and take a look at how
it will change very shortly due to health reform.
Definition of pre-existing condition for
First, what is a pre-existing condition. The
hard definition is a medical condition, illness, injury, or medical
services which has occurred in the last 6 months. The 6 months is
important for one effect of pre-existing conditions (on waiting
periods) but does not hold for medical underwriting which can look
at a longer duration depending on the severity of the issue. Let's
break pre-ex affects into two categories.
What can the carriers do based on a
The most important concern is how pre-existing
conditions affect the ability to qualify for health insurance. From
now to Jan 1st, 2014, the health insurance carrier can look at your
pre-existing conditions to approve, decline, or increase the "tier"
or rate offered to you. This does not apply to
children as of
10/23/2012 as they are guaranteed issue (they cannot be declined
based on health) but they can still have their monthly premiums
increased based on health and by quite a sizable amount. Based on
our experience, roughly 70-80% of applications are approved based on
medical underwriting. Some are given
higher tiers but it's not as
dire as many new shoppers for health insurance expect. So this is
how pre-x can affect your ability to qualify for pre-65 individual
health insurance (does not affect group or Medicare). Come Jan 1st,
2014, pre-existing conditions will no longer affect the ability to
qualify for coverage as the coverage should be guaranteed issue
regardless of health to the rest of the pre-65 population.
Waiting periods in California for pre-existing
Now, there's another consideration with
pre-existing conditions called waiting periods. Generally, if you
have a pre-existing condition when approved (assuming we're
approved) and you did not have qualified coverage in the past 6
months without a recent lapse of coverage of 62 days, the California
health carrier will not pay out for treatment related to that
condition for 6 months. Let's look at an example. Let's say you had pneumonia March 1st. You are applying for coverage April 1st of
that same year. Let's say that you haven't had coverage since June
1st of the prior year. If you're approved on April 1st, you will
have a waiting period of six month before the carrier will pay out
for services related to the pneumonia. Now if you break a bone,
that will be covered. New issues (not pre-existing) will not be
subject to the waiting period. HMO's may not have waiting periods
but always double check.
Can pre-existing conditions be excluded
for California health insurance?
California is somewhat unique among the States
in that the carriers are not allowed to exclude certain pre-existing
conditions as they will do in other States. For example, let's say
you're in good health except for high cholesterol. Some States will
allow carriers to offer a policy for other covered benefits but
exclude payment for services related to the cholesterol only for a
certain period of time. California State law prevents the carriers
from excluding specified pre-existing conditions which sounds great
but what is really means is that it then becomes all or none. The
carriers are then forced to decline coverage altogether instead of
approving for everything but the excluded condition. It's the law
of unintended consequences.
Can a person be approved but have rates
go up based on pre-existing conditions?
So we have two ways that pre-existing
conditions really affect California health insurance option.
Currently, they can be the cause of our application to be declined
or approved at a higher rate on the individual family market.
This is called rating tiers. Separately, they can be the cause of a waiting period up to 6 months
if we lapsed prior coverage for more than 62 days.
How will health reform affect
Californians with pre-existing conditions?
Jan 1st, 2014,
individual and family California health insurance will be
guaranteed issue which means a person cannot be declined due
to health. Rating tiers will also not be allowed.
The trade off is that the rates are expected to rise
unless you qualify for subsidies based on income. We
have written extensively about the coming changes but how
carriers treat pre-existing conditions is one of the biggest
changes to come as a result of the law.
Guide to how health affects
underwriting for California
Rating tiers based on health
Guaranteed Issue and Health Reform Jan
Programs available for people who are