Common snags in health insurance

If you're buying health coverage on your own, don't be surprised if you encounter a few bumps along the way. This primer will help you sort through the obstacles and terminology that people commonly face.

 

What is a "pre-existing condition"? It's any physical or mental health condition diagnosed or treated before the effective date of a health insurance policy.

 

Is there a waiting period for coverage? If you're buying coverage on your own and you have a pre-existing health condition, you may face a waiting period -- often six months to a year - depending on the state in which you live) --before your policy begins providing benefits for that condition. The law is different for people who get insurance on the job through a group health plan. If you've been insured for 12 months or more and switch jobs, your pre-existing condition will be covered without a waiting period under a new group plan. If you haven't been insured the previous 12 months, the most you'll have to wait for coverage of that condition is another 12 months.

 

What is an "exclusionary medical waiver"? An insurer may amend your individual health insurance policy to exclude coverage for certain medical conditions. For example, many insurers don't offer maternity benefits to people who buy health insurance as individuals.

 

Can an insurer deny coverage because of a pre-existing condition? The simple answer is yes, but each situation is unique and a new application for individual coverage will be fairly evaluated by the insurance company to make a final determination.

 

Do I have a right to renew my existing policy? Health insurance is generally provided for a limited period of time. If your policy contains a "guaranteed renewability" provision, it means you have the right to renew the policy when the coverage period expires. But the premium can change when your policy is renewed. Federal law requires that state-licensed health plans and plans offered by employers make the guarantee that you can renew your policy. If you buy a "non-renewable" policy -- typically a policy designed to provide short-term coverage -- you'll have to reapply at the end of the term if you want to continue that coverage.

 

What happens to my health insurance policy when I get married or divorced? Many life events can affect your health benefit needs and choices. A marriage, a divorce, the birth of a child, an adoption, and your spouse's loss of health insurance if he or she loses their job can trigger a special enrollment period to make the appropriate changes to your coverage.

 

Health plans offered by employers must give you 30 days from the onset of that qualifying event to reflect the change of status. But if you miss the window of opportunity, you'll have to wait until the next open enrollment period, typically once a year.

 

SOURCES: Health Insurance FAQs, National Association of Insurance Commissioners, Kansas City, Mo.; 2004 State Legislators' Guide to Health Insurance Solutions and Glossary, American Legislative Exchange Council, Washington, D.C.; Choosing and Using a Health Plan, Agency for Healthcare Research and Quality, Rockville, Md.; How Private Insurance Works: A Primer (April 2002), The Henry J. Kaiser Family Foundation, Menlo Park, Calif.; Employee Benefits Security Administration, U.S. Department of Labor, Washington, D.C.