The idea of a waiting period in the world of health insurance may seem simple enough: It's the period of time specified in a health insurance policy which must pass before some or all of your health care coverage can begin. However, the definition is just the tip of the iceberg. Underneath are the types of waiting periods, the rules of each and how they apply to a given type of health insurance plan.
In general, there are three main types of waiting periods that you encounter in health insurance:
- employer waiting period
- affiliation period
- pre-existing condition exclusion period
The most common is referred to as the employer waiting period and is found in an employer group plan in which a new employee must wait a given time period, often within three months, before being eligible for health care services. This waiting period is imposed by the employer and is usually done to avoid "hit and run" behavior by their new employees, in which they file a large claim right after joining and then quickly leave the company.
A waiting period that is imposed by a HMO, and not an employer, is referred to as an affiliation period. This type of waiting period can't last longer than three months and has specific rules attached to it. A pre-existing condition exclusion period is a type of waiting period that involves those who have a condition during the six months prior to signing up for health insurance. This type of waiting period means that your insurance coverage can be limited or excluded for any pre-existing condition. The length of this type of waiting period can vary from one to 18 months.
Let's find out more about the specific situations in which each of these waiting periods are used and what rules they each have. First, we'll find out more about the employer waiting period.
Employee Waiting Periods and Affiliation Periods
Employer Waiting Periods
As discussed in the last section, an employer waiting period is defined as a period set up by the employer that requires a new employee to wait a given time period before beginning their employee benefits, which can include pensions and life insurance in addition to health insurance. In contrast to affiliation periods and pre-existing condition exclusions, employer waiting periods have relatively few restrictions. For example, the length of an employer waiting period can be entirely determined by the employer and therefore can last over a year if they choose. However, in order to remain competitive to potential employees, most employer waiting periods usually range from one to three months.
There's one rule that does apply to employer waiting periods and it deals with pre-existing condition exclusion periods. If you've received a pre-existing condition exclusion period from your health insurance company, then your employer waiting period can't add to this period. Instead, these two waiting periods are served concurrently, with both your employer waiting period and your pre-existing exclusion period beginning on the same day.
Because you have absolutely no employee benefits during this waiting period, it's important to have additional health care in place until your new benefits kick in. Many times this means that you simply continue your COBRA benefits from your former job for an additional one to three months. If your COBRA benefits are exhausted, getting an individual plan may be an option if you're in relatively good health.
If you have an HMO plan, you may encounter an affiliation period before being able to use your HMO benefits. Unlike the employer waiting periods, an affiliation period is regulated by the Health Insurance Portability and Accountability Act, or HIPAA, and can't exceed two months from your enrollment date, or three months for late enrollees. During this period, the HMO doesn't provide you with benefits and you don't provide them with premiums. HIPAA was passed on July 1, 1997, and has had a profound effect on the availability of health care in this country.
The benefit of having an HMO that requires an affiliation is that they can't impose a pre-existing condition exclusion period on you. In fact, if an HMO plan has an affiliation period, they can't deny you coverage based on your pre-existing conditions. If this wasn't a regulation, it would be tempting for a group HMO plan to pick and choose those who would get an affiliation period and those who receive the often longer pre-existing condition exclusion period.
Pre-Existing Condition Exclusion Period
A pre-existing condition is defined by health insurance companies as a health condition or illness that you've had at least six months before your first day of coverage on a new plan. If you or a family member suffers from such a condition, your insurance plan may require you to wait a certain amount of time before you can get full coverage of that condition. These exclusion periods are generally found only in group health insurance plans because they're the only type of insurance plans that are required to provide insurance to those with pre-existing conditions. If you applied for an individual health care plan with a pre-existing condition, they're allowed to turn you down completely. Many individual plans make offers with exclusions.
While the idea of a pre-existing condition exclusion period can be daunting to those in need of health care, thanks to HIPAA there are rules and regulations that can work in your favor. In the case of pre-existing condition exclusion periods, HIPAA helps govern the maximum length of time an exclusion can be applied as well as the ways which you can reduce or eliminate this exclusion time period all together. Under the HIPAA guidelines, the maximum amount of time that you have to wait in order to get coverage for your pre-existing condition can't exceed 12 months, or 18 months for late enrollees.
Before you freak out about having to wait a year to get medical coverage for your condition, there are ways to reduce or even eliminate the exclusion period through credible coverage. This term refers to any health care insurance you had prior to your new insurance plan, as long as it wasn't interrupted by a period of time, usually 63 or more days. This time period can be longer depending on your state laws and the type of insurance plan you were on before. Once you have proven that you've had uninterrupted insurance prior to your current plan, this insurance coverage can be added up and credited toward any pre-existing condition exclusion you may have.
For more information on benefit waiting periods, health insurance and related topics, check out the links on the next page.
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More Great Links
- About.com: HIPAA http://careerplanning.about.com/cs/legalissues/a/hipaa.htm
- Department of Labor, elaws: Waiting Period http://www.dol.gov/elaws/ebsa/health/glossary.htm?wd=Waiting_Period
- Lehrman Group: Health Insurance FAQs http://www.lehrmangroup.com/faq.php
- U.S. Department of Labor: Affiliation Period vs. Pre-Existing Condition Periodhttp://www.dol.gov/dol/allcfr/Title_29/Part_2590/29CFR2590.701-7.htm