There are several occasions in health insurance requiring you to wait for a certain period of time before benefits are available to you. As an applicant for health insurance you must wait for your application to be processed and approved, which can take many months in some cases. Common instances of waiting periods for medical coverage include employer waiting periods, exclusions for pre-existing conditions, and affiliation waiting periods. Each of these depends completely on the specific scenario surrounding your type of insurance.
Waiting on Group Benefits
Beginning a new job at a large or small business, you may be offered the option of receiving health insurance coverage as an employee benefit. Usually, health plans are given by larger businesses – those with over 50 employees – as they fall in the category of large group insurance, which is less expensive to provide. Plans provided through the workplace typically have a lower premium, as the employer pays it partially. Group coverage does not deny anyone for medical problems or age, though their rates may increase.
Every employee must wait for their application to be approved for a certain amount of time. In addition to approval, group plans do not issue benefits until one to six months after they have enrolled as a precaution. This period of time is in place to prevent people from simply acquiring a job in order to gain health insurance to cover their illness. When a high-risk individual or someone with a medical condition joins the plan, the group rate increases. This means every other employee, and the employer are subject to an elevated premium.
Rate hikes can also occur if one such individual leaves the company after joining and immediately taking advantage of the health benefits to a drastic degree. If they spend all, or nearly the entirety of their benefits, then quit the job, the employer is left in poor standing and the insurance company will rate them up.
Pre-Existing Condition Exclusion Periods
If an individual with a pre-existing condition is accepted for health insurance on the private market, they are susceptible to an exclusion period. An insurance company can issue an exclusion for treating the enrollee’s condition for a certain number of months dictated by state law. In most states, the limit is 12 months, in others it can be as much as 24. Once the exclusion period is over, the insurance company has to cover the pre-existing condition as they do any other benefit, at a percentage of coinsurance decided by your plan.
During the exclusion period, the policyholder has access to other benefits covered by the plan, but has to pay for the condition out-of-pocket. In certain states, when you switch carriers and have had a positive record with your previous insurer, you can use your prior coverage as a credit to cover qualified expenses during the exclusion period. Elimination riders act as a permanent exclusion period, which allows the insurer to never pay for care related to your pre-existing condition as long as you have their coverage.
If your group health plan offers coverage through an HMO contract, an affiliation period is the length of time an HMO may make you wait before you can begin using your benefits. While this is occurring, members cannot be charged a premium. Under HIPAA, an affiliation period may no last longer than two months, and three months for late enrollees. Affiliation periods must begin on the date the member enrolled under the group health plan. Another detail to note: if you switch to HMO coverage more than three months after your enrollment date, the HMO is unable to impose an affiliation period.
Additionally, this type of waiting period is an alternative to the pre-existing condition exclusion period in a group plan. Therefore, an HMO cannot impose both, limiting the withholding of benefits to the pre-existing exclusion length of time, not adding an extra two months. Similarly to an employer plan, the HMO wishes to avoid abuse and therefore has set up a screening process and waiting period to protect the organization.