The Dreaded Pre-Existing Condition Clause

Fall 1999 CSANews Issue 33  |  Posted date : Mar 03, 2007.Back to list

I want to start off by telling you that the pre-existing clause is, normally, a wonderful thing!! What your insurer is telling you is that they WILL cover claims resulting from your existing health condition but, and there always seems to be a 'but,' you must meet the conditions they set out in the Pre-Existing Condition Clause first. Many people believe that if a policy has a Pre-Ex clause, that means they are not covered for that condition at all. THIS IS NOT TRUE. In fact, you are more likely to have no coverage if you CANNOT find a Pre-Ex clause in your policy.

In very simple terms, the Pre-Ex clause is your insurer's way of finding out if your health condition is stable and under control. If it is stable, then your chances of having a claim are very predictable and insurance companies love things that they can predict because they can then work out very accurate prices to charge us. Let me give you an example: if John had a heart attack a few years ago and has had no further symptoms since, but his doctors do have him on continuing medication, John's heart condition is considered stable and under control. The insurer knows that John's chances of having a heart-related claim are perhaps 100% greater than someone who has not had a heart attack. That's simple – they obviously will charge John twice as much premium as a 'normal' person. Should John have another heart attack while he is away, the insurer will pay his claim. After all, they charged him extra because of the higher risk they had taken.

Now, we must examine the actual words of the Pre-Ex clauses the different insurance companies use. The Pre-Ex clause actually defines what is 'stable and under control,' and there can be vast differences from one policy to another. The primary part of the definition is usually a time period (sometimes called an Elimination Period) during which there must be no change in your condition (i.e. it is stable). That means no new symptoms, no change in medications or dosage, and no treatment, other than the routine drugs you have been taking during this time period. Medipac's policy has a 90-day time period and this is the shortest time period of which I am aware. Other policies have 180-day, 12-month, five-year, and even lifetime pre-existing time periods.

When you have a claim, the first thing the insurance company does is get all your medical records from all of your doctors and specialists to determine if you met their Pre-Ex condition clause. Did you change your drugs, did you require increased or decreased amounts of your normal drugs, did you have any new symptoms, and did you receive any additional treatment for your condition' If so, your claim will be denied if any of these things happened in the Pre-Ex time period. The shorter the time period, the better it is for you!

In my opinion, you should never, ever buy a policy with a lengthy Pre-Ex time period. Some companies will go to extraordinary lengths to find your old medical records, especially when a lot of money is at stake. I, personally, have no idea why I went to a doctor, even as recently as one year ago, and sitting in my medical records could be a 'smoking gun.' For example, I may have had chest pain, probably caused by heartburn – will my future heart attack be covered' I really don't know! Who is going to make that decision' Will the claims examiner make the right decision, for me, when it may cost his or her employer $2-300,000.U.S.' The longer the Pre-Ex time period, the worse the policy is. And the worst policy is the one with a lifetime Pre-Ex time period. Remember what we said at the beginning – the Pre-Existing Condition clause states under what circumstances the insurer will pay your claim for a health condition you already have. The lifetime Pre-Ex says that if you have EVER had a health condition, you are NOT covered for that condition. No wonder there is so much confusion about Pre-Existing Condition clauses.

Did you know that questions on your application have nothing to do with the Pre-Existing Condition clause' The questions are to determine if you are eligible to buy the insurance policy itself. If you are eligible, then other questions on the application are asked, to determine what price you will pay. John, our test subject, has to pay twice the normal price because of his answers relating to his previous heart attack. Lots of companies will sell John an insurance policy and the medical questions on the application may be very simple to answer. John can definitely find a lower price, but when he reads the Pre-Ex clause carefully, John may find out that he is covered for everything but the thing most likely to happen – a heart problem.

This article has only dealt with one of the many factors found in pre-existing condition clauses, and we will review other areas of concern in later issues. Please understand your insurance policy before you travel, and don't mistake an advertisement or a promotional brochure for the real thing.