Understanding Preexisting Conditions and Their Impact on Health Insurance

What Is a Preexisting Condition?

A preexisting condition is a health condition that a person had prior to applying for health or life insurance. Preexisting conditions can include illnesses such as asthma, diabetes, cancer, and heart disease. Prior to the enactment of the Affordable Care Act (ACA), you could be denied insurance coverage or have to pay higher than normal premiums for coverage if you had a preexisting condition.

Due to the Affordable Care Act (ACA), health insurance companies can’t refuse coverage or charge more for preexisting conditions. As for life insurance, it’s possible to obtain such coverage from some companies if you have a preexisting condition, but premiums may be higher and death benefits may be lower.

In-Depth Look at Preexisting Conditions

A preexisting condition is a health problem, injury, or illness that an individual has before they sign up for or receive health insurance coverage. These conditions include serious illnesses, such as diabetes, cancer, and heart disease, and less serious conditions, such as a broken leg and even prescription drugs.

The ACA, also known as Obamacare, which was signed into law by then-President Barack Obama in 2010, made it illegal for health insurance companies to refuse coverage to individuals or charge them more for having a preexisting condition. The law also mandates that health insurers cannot limit benefits or, when coverage begins, refuse to cover treatment for a preexisting condition. These rules went into effect for plans beginning on or after Jan. 1, 2014.

Prior to the ACA, health insurance companies would not cover preexisting conditions until a specified period of time had passed. In some cases, certain insurers didn’t cover them at all. This left certain individuals without insurance coverage, meaning that they were responsible for covering the full cost of any medical treatment they received. The high cost of serious medical expenses often left previously uninsurable people financially devastated.

Important Considerations for Preexisting Conditions in Insurance

Although the ACA was adapted to prevent health insurance companies from denying coverage to or raising rates for those with preexisting conditions, no such provisions exist for life insurance companies. This means that life insurers are not bound by these rules. As such, you can be denied coverage. Insurance underwriters determine your eligibility based on a number of factors, including your overall health.

But that doesn’t mean that you’re precluded completely. You can still a buy life insurance policy even if one insurer denies you coverage because of a preexisting condition. However, you may be charged a higher monthly premium compared to someone of the same age who is healthy. Your death benefit may be lower, and your policy will also likely include a waiting period.

The Impact of Repealing Obamacare on Preexisting Conditions

In September 2020, then-President Donald Trump signed an executive order allowing preexisting-conditions protections to stay in place if the ACA is repealed. Repealing the law was one of Trump’s central campaign promises, and the administration moved to make that a reality in March 2019. Legal experts, though, maintained that the executive order was not enforceable because it has no authority to regulate the insurance industry.

In a letter to a federal appeals court, officials in the U.S. Department of Justice (DOJ) said they agreed with a federal judge in Texas who declared the healthcare law unconstitutional and added that it would support the judgment on appeal. Other Republican-led states also believe the law is unconstitutional.

That stance changed, though, when Joe Biden won the 2020 presidential election. The Biden administration’s DOJ said it no longer supported the efforts of Texas and 17 other states to overturn the law. In June 2021, the U.S. Supreme Court struck down Texas’ challenge to the ACA.

The Bottom Line

A preexisting condition is any known illness, injury, or health condition that someone has before they enroll in an insurance plan. Before 2010, insurance companies could deny individuals coverage or increase the cost of their premiums based on these preexisting conditions. The passage of the ACA made this illegal.

This change has been popular with most people, even those who are not proponents of the healthcare act itself, which has survived several attempts to overturn it. No one should be denied coverage, or should have to pay more for their health insurance, just because they have long-term or chronic health conditions such as diabetes, cancer, or heart disease, or less serious conditions such as a broken leg or a requirement for prescription drugs.