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Preexisting Condition

What Is a Preexisting Condition?

Preexisting condition is a term that refers to a known illness, injury, or health condition that existed before someone enrolls in or begins receiving health or life insurance. This includes illnesses such as heart disease, diabetes, cancer, and asthma. The majority of these conditions are generally considered to be long term and/or chronic.

Insurance companies could deny individuals coverage or increase the cost of their premiums based on any preexisting conditions. The Affordable Care Act (ACA) made it illegal for insurance companies to deny coverage to, or charge more for, people with preexisting conditions of any kind.

Understanding 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.

The preexisting-coverage rule does not apply to legacy health insurance policies—policies purchased on or before March 23, 2010, that weren’t changed to reduce benefits or increase costs to consumers.4

Special Considerations

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.

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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.

54 million

The number of Americans—or 27% of all adults under age 65—who have preexisting health conditions, according to the Kaiser Family Foundation.

Repealing Obamacare: 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.9 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.10 In June 2021, the U.S. Supreme Court struck down Texas’ challenge to the ACA.

The Bottom Line

When it comes to health and life insurance, a preexisting condition is any known illness, injury, or health condition that existed before someone enrolls in their insurance plan. Before 2010, insurance companies could deny individuals coverage or increase the cost of their premiums based on these preexisting conditions. 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. This means that 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.

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