What you need to know about pre-existing conditions and health insurance
If you have caught a few news stories about the Affordable Care Act or have bought health insurance for yourself in the past few years, you probably know that Obamacare made it illegal for health insurance companies to deny coverage to or discriminate against people with pre-existing conditions. This made it possible for more than 50 million Americans to get health insurance that was once off-limits or exorbitantly expensive. Healthcare policies in the United States are constantly up for debate, however, and the stability of protections for those with pre-existing conditions isn’t certain. Here’s what you need to know about pre-existing conditions and health insurance.
What was considered a pre-existing condition before Obamacare?
A pre-existing condition is a health issue that exists before you apply for or enroll in a health insurance plan. To understand how many people the Affordable Care Act gave health insurance access to, it’s important to first look at some pre-existing condition examples. Some of the most common ones were:
- Heart disease
- Mental disorders
- Sleep apnea
Previously, people with pre-existing conditions like those would either be: 1. Denied individual insurance coverage. 2. Only be given a policy that did not provide coverage for their condition(s). 3. Or be required to have a waiting period before coverage for their condition(s) began. Those who could get coverage were often charged significantly more for their insurance and healthcare, and often the higher costs made it unfeasible for them to actually buy health insurance.
Health insurance companies also used to decline coverage to many people because of the medications they used. The ACA requires that insurers cover at least one drug in each category. However, in the past, these were among the types of medications that would warrant a denial of coverage:
- Anti-arthritis medications
- Anti-cancer drugs
- Anti-diabetic medications
- Medications for hepatitis
- Medications for HIV/AIDS
Note: Age and tobacco usage are not considered pre-existing conditions. Insurers are allowed to charge up to 3x as much for older people than for younger individuals and up to 50% more for tobacco users.
What type of health insurance covers pre-existing conditions?
All health insurance plans bought through an Affordable Care Act Marketplace such as HealthSherpa will cover pre-existing conditions. You can’t be denied coverage because of your condition and your rates can’t be raised because of your health needs. And coverage for any pre-existing condition starts as soon as your health insurance plan goes into effect. These protections also apply to off-exchange (non-Marketplace) health insurance plans. Whether you choose an on-exchange or an off-exchange plan, keep in mind the annual Open Enrollment Period. That’s the only time you’ll be able to enroll in one of these plans unless you qualify for a Special Enrollment Period at another time of the year.
Medicaid and the Children’s Health Insurance Program (CHIP) both cover pre-existing conditions. Employer-based health insurance plans also must cover them from day one. Previously, many had waiting periods of up to a year before pre-existing conditions were covered. Since COBRA plans are continuations of employer-based plans, they also must cover pre-existing conditions.
So which types of health coverage don’t have to provide these protections for those with pre-existing conditions?
Short-term health insurance plans don’t. They also don’t have to provide the minimum essential coverage required by the ACA, which means they don’t count as qualified health plans. You would be liable for the individual mandate tax penalty if the only coverage you have is from short-term health insurance plans.
Grandfathered plans, which are individual and family health insurance policies bought before March 23, 2010, also do not have to cover pre-existing conditions (or provide other ACA benefits). If you have a grandfathered plan and it does not cover pre-existing conditions or is otherwise lacking, you can switch to a Marketplace plan during Open Enrollment or when your grandfathered plan year ends.
Another type of coverage that doesn’t have to cover pre-existing conditions is healthcare sharing ministries. While healthcare sharing ministries technically are not insurance, they do exempt you from paying the individual mandate tax penalty. But they don’t have to accept individuals with pre-existing conditions or cover things like birth control.
Lastly, Medicare Part A and Medicare Part B cannot deny you coverage due to pre-existing conditions, but Medicare Advantage can deny you if you have End-Stage Renal Disease (ESRD). For Medicare Supplement (Medigap) plans, you could be denied coverage due to pre-existing conditions, be made to have a waiting period, or be charged more, depending on when you enroll.
What’s happening with pre-existing conditions under the Trump administration?
When President Donald Trump and the Republican-controlled Congress came into office, one of their key initiatives was the repeal of the Affordable Care Act.
The American Health Care Act of 2017, as the House Republican healthcare bill was called, did not directly eliminate protections for those with pre-existing conditions. But amendments to the bill would allow states to request a waiver that would effectively make it okay for insurance companies to charge higher premiums to those with pre-existing conditions.
In the Senate, this bill became the Better Care Reconciliation Act of 2017. The bill would effectively create two parallel health insurance markets: one with deregulated health plans and one with ACA-compliant plans. The deregulated health plans would be cheaper because they could have skimpier coverage and not include the minimum essential coverage mandated by the ACA. Plus, insurers would be able to deny coverage to those with pre-existing conditions or charge them more. This bill did not pass.
Instead, in late 2017, Republicans repealed the individual mandate provision of the ACA as part of the Tax Cuts and Jobs Act of 2017. The individual mandate required almost all Americans to have qualified health plans. Once this repeal goes into effect in 2019 and there’s no longer a tax penalty to consider, experts expect more healthy people to forego health insurance or opt for non-ACA compliant plans. The exodus of healthier people would cause premiums to rise. Therefore, hurting people who have pre-existing conditions and need more comprehensive health insurance. This change would especially hurt those who don’t qualify for any ACA subsidies.
In addition, Trump issued an executive order in late 2017 to increase access to alternative coverage options, including short-term health insurance plans. New regulations based on that executive order were proposed in February 2018 and would allow short-term health insurance plans to be underwritten for up to 364 days, versus the current 90-day maximum. Short-term health insurance plans do not have minimum essential coverage and can discriminate against those with pre-existing conditions. Similar to the effects of the individual mandate repeal, experts expect that higher availability of short-term health insurance plans will cause healthier people to leave ACA Marketplaces, thus increasing premiums for those who must stay because they need more comprehensive coverage.