insurance lapse...

July 7, 2005 11:32 AM

U.S. insurance law: I've been told that, after having group coverage through an employer, if that coverage lapses for more than three months, the next insurer can declare anything previously covered to be a pre-existing condition (and so not covered.) Is this correct? Thanks.
posted by Shane to work & money (15 comments total)

Yes, this is most certainly true. I think the time period varies by state. In Utah, its 63 days. Never let your health insurance lapse. Paying high prices for COBRA is a bargain compared to having to pay for emergency medical treatment out-of-pocket.
posted by neilkod at 11:35 AM on July 7, 2005

Yes, it's absolutely true -- and the 63-day lapse in coverage rule is nationwide (it's part of the 1996 HIPAA law). I've babbled at length about it here.
posted by scody at 11:39 AM on July 7, 2005

Thanks, neilkod. Exactly: high-priced Cobra it is. *sigh*
posted by Shane at 11:39 AM on July 7, 2005

Woops! I guess I asked a duplicate question, scody. What if it has been over 63 days, but Cobra will still cover me? I think for some reason I'm still eligible for the same Cobra rates I was eligible for when my last group coverage expired last April 30th.
posted by Shane at 11:42 AM on July 7, 2005

Shane, mess around with the COBRA and you're likely to get stung.


/me groans


Seriously, you will never know what can happen to you the second you drop coverage. Without the lapse in coverage you will not have any waiting periods and are eligible to receive benefits immediately when signing on with a new insurance policy. Its really not worth it.
posted by neilkod at 11:43 AM on July 7, 2005

scody nice job on the other thread.
posted by neilkod at 11:47 AM on July 7, 2005

If you do get COBRA also check out the terms and conditions; you'll probably receive less coverage. You have no choice w/ COBRA; but don't make any decisions based on the assumption that your present coverage will continue.
posted by carter at 11:51 AM on July 7, 2005

Okay! So:

A) Double Post.

B) I'm screwed!

Thanks, though ;-)
posted by Shane at 11:56 AM on July 7, 2005

63 days is the period after which exclusions for pre-existing conditions may be applied by a new carrier, but keep in mind that there are some restrictions on that:

1. Pregnancy is never a pre-existing condition and claims related to pregnancy can never be denied based on an exclusion for pre-existing conditions.

2. The requirement is that the specific condition in question must have been treated within the period of time in which the carrier is allowed to check. This "look back" period is the six months immediately previous to the effective date of coverage, and if no treatment for a condition was given during that six-month period then that condition may not be considered pre-existing. So an insurer cannot simply deny all coverage during the pre-existing period; instead they must investigate each eligible diagnosis to determine whether it represents a pre-existing condition.

3. Exclusions for pre-existing conditions may only be applied during the first twelve months of effective coverage, or during the first eighteen months if you were enrolled late.

4. True emergency treatment is extremely unlikely to be denied for a pre-existing condition; anything with a root accidental cause or acute onset is unlikely to be investigated by an insurer as possibly pre-existing. When I worked in insurance, the rule of thumb was that most anything with the word 'acute' in the diagnosis was not to be investigated. There were some exceptions, but not many.

5. Many people get confused about the reason for denials related to pre-existing conditions. There are two reasons why an insurer will deny a claim: one is if the condition is eligible for denial as pre-existing and has been shown to have been treated during the "look back" period. The other, and this is far more common, is temporary denial because a physician has not responded to a request for history of treatment, or because the physician who originally treated the condition cannot be identified. In these cases the denial statement will mention an investigation of pre-existing conditions and state that the claim will be reviewed when the necessary information has been received by the insurer. Most people, though, just gloss over it, see the phrase 'pre-existing', and jump to the wrong conclusion. Moral of the story: read the statements your insurance company sends you, and if you don't understand them call customer service and ask someone to explain it.
posted by ubernostrum at 12:07 PM on July 7, 2005

Shane, I think you've only got an additional month to elect COBRA coverage after group coverage ends -- you should check with your (former) plan administrator to make sure, though.

on preview: ubernostrum is a god.
posted by scody at 12:12 PM on July 7, 2005

ubernostrum is dead. --Nietzsche
posted by OmieWise at 12:53 PM on July 7, 2005

So, out of curiosity is "acid-reflux" a preexisting condition? I mean if you drop out of coverage will they no longer cover Zantac and the ilk?
posted by geoff. at 1:39 PM on July 7, 2005

scody and ubernostrum are a goddess and a god respectively. Great answers!
posted by grouse at 2:13 PM on July 7, 2005

COBRA prices stink, you can almost always do a lot better with an independent broker. If you're in the North VA area email me and I'll give you the name of the fellow who I bought BlueCross/BlueShield from when I was self employed. Or maybe you should do what my over-60 parents did - my mother went to work at Starbucks. She likes it and they offer insurance coverage to people at the part-time level if they're over (I think) 25 hours a week on average. They get a quality and level of coverage that would otherwise be beyond their ability to pay for in retirement.

If you're not concerned about coverage beyond not having to worry about pre-existing conditions down the road, there's a lot of catastrophic care kinds of coverage you can buy. If you're a member of a professional organization like the ACM there may be group plans you can be on.
posted by phearlez at 3:17 PM on July 7, 2005

Also keep in mind that if you're losing coverage because you're out of work, you may qualify for some sort of low cost state-subsidized health care if your income falls below a certain level. In Vermont it's $1100 or so per month. I was making a difficult decision about COBRA recently and found that as long as I kept my extremely-low-paying job and didn't file for unemployment from my previous job, I could pay $39/mo for health care instead of $417. Check with your state health agency to see if your state has a similar program.
posted by jessamyn at 3:25 PM on July 7, 2005