Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 14, 2021

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A pre-existing condition is any medical condition or issue a person has prior to applying for and obtaining a healthcare insurance policy.

Many individuals believed this was one of the biggest holes in the U.S. healthcare system, which ushered in the federal government’s passage of the Affordable Care Act (ACA) in early 2010. Issuers offering health insurance coverage on the ACA Marketplace must cover those with pre-existing conditions.

Marketplace coverage makes health insurance more affordable for everyone, including those with pre-existing medical conditions.

What is a pre-existing condition?

Examples of a pre-existing condition include cancer, diabetes, pregnancy, kidney disease, heart disease, high blood pressure, and even depression.

In the past, if you had been medically documented as having any of these conditions, health insurance companies were less likely to accept you as a candidate for a policy, or charged you much higher premiums than the average person.

Pre-ACA, when you obtained a healthcare policy with a pre-existing condition, your insurance company would force you to undergo a waiting period prior to them paying insurance claims resulting from your pre-existing condition.

For example, a 12-18 month waiting period wasn’t uncommon. It protected insurance companies from issuing a policy to an individual who purchased it with the sole intent of receiving immediate medical care due their pre-existing condition.

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Why do insurers avoid covering those with pre-existing conditions?

It’s important to remember that insurance companies, like any other company, are out there to make money.

They accomplish this by pooling money together from a large number of people via monthly premiums and trying to avoid paying claims.

If a person only uses their health insurance coverage for preventive care, that person costs the insurer very little money.

A pre-existing condition goes against this principle because there is almost a guarantee the insurer will pay claims on your health insurance policy.

And the claims will likely outweigh the premium you’re being charged.

Depending on where you lived at that time, it may have also been possible to join a high-risk insurance program funded by admitted carriers selling insurance products within your state.

High-risk programs were designed specifically for those who are likely to have claims. There are high-risk programs for homeowner’s insurance and auto insurance policies as well.

Before the ACA passed, the Health Insurance Portability and Accountability Act, or HIPAA, served to ensure an individual couldn’t be turned down for insurance when switching jobs if a pre-existing condition was present.

This law was often misunderstood to mean that insurers couldn’t deny coverage for those who were currently uninsured. This was not the case. If you were uninsured, HIPAA wouldn’t do you any favors. Denial of coverage was common, and many private insurance companies had pre-existing condition exclusions built into their policies.

What do you need to know about grandfathered health plan limitations?

Today, you can still run into issues with pre-existing conditions if you have a grandfathered health insurance plan.

Some of these legacy plans may not cover pre-existing conditions, which may force you to switch to a Marketplace plan during Open Enrollment.

It’s also possible to buy a Marketplace ACA-compliant plan outside Open Enrollment when your grandfathered plan year comes to an end, as you’ll qualify for a Special Enrollment Period.

So pay special attention to this date to avoid any unwanted surprises.

What if you don’t qualify for Special Enrollment?

If you can’t get a Marketplace plan right now, you may wish to look into short-term health plans. This type of plan will cover you for a short period of time until you can sign on with a new insurer. Not all short-term health plans offer coverage for persons with pre-existing conditions, but some do.

Short-term plans do not offer comprehensive coverage, but they do cover most routine health insurance functions, like filling prescription medication, routine doctor visits, physical therapy, maternity care, and mental health care. They offer more affordable coverage than COBRA if you have recently lost your job and your employer-sponsored health insurance.

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What’s the bottom line?

You may want to contact an independent insurance agent to determine if you can obtain healthcare coverage with your pre-existing health condition.

He or she will potentially be able to offer you multiple options in order to find the best available health coverage at the lowest rate.

That said, if you use the Marketplace, you should be able to find a health care plan that will cover you.