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: Jul 19, 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 Affordable Care Act (ACA) in early 2010.

What Is a Pre-Existing Condition?

Examples of a pre-existing condition include cancer, diabetes, pregnancy, and even depression.

In the past, if you had been medically documented as having any of these conditions, health insurers 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 insurer 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 Insurers Didn’t Like 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 and trying to avoid paying claims.

A pre-existing condition goes against this principle because there is almost a guarantee the insurer will pay claims on your 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 woudn’t do you any favors.

Watch Out for 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 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.

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