The Pre-Existing Condition Clause

Nov 03, 2014

Insurance contracts are filled with language that most people do not necessarily understand and spend little time understanding it. One of these “fine print” details in group insurance is pre-existing conditions. The pre-existing condition clause refers to any condition where the plan member has already received medical advice or treatment prior to enrolment in a group benefits plan.

It is most common in reference to the long term disability benefit, however the critical illness benefit has this limitation and to some extent so does the out of country travel insurance benefit. The condition limitations depend on the benefit.

For the long term disability benefit, the typical pre-existing condition limitation states that benefits are not payable for a disability which commences during the first 12 months of plan member’s coverage, if the disability results from any sickness or injury for which the plan member was treated or attended to by a physician, or for which prescribed drugs were taken or the dosage changed within 90 days prior to the effective date of the plan member’s coverage.

It is understandable why group disability plans contain this standard provision of pre-existing conditions. This provision is designed to protect benefit plans from the negative cost impact of additional claims that could result if a plan member with a pre-existing condition joins the benefit plan or chooses to join the plan upon becoming disabled.

The group critical illness benefit also has a pre-existing condition clause but it is usually much longer than the disability criteria. Normally it requires being insured for 24 months before being able to make a claim if the plan member had a change in their health in the 24 months before to joining the plan which resulted in the critical illness.

Although not commonly stated as a pre-existing condition clause in group insurance contracts, it is interesting to note that the out of country travel insurance benefit does have a similar clause. Coverage under this benefit is available for sudden and unexpected emergencies while travelling. What some plan members are not aware of is the fact that if you do require medical assistance while travelling but had seen a doctor or had a change in medication or dosages within 30 to 60 days of departure that is related to the emergency, you may be considered unstable and the claim may be denied. The key to out of country travel coverage is stability prior to leaving the country.

The pre-existing condition clause is often not very well understood or taken into consideration until a claim is submitted and subsequently denied because of it. This can be a source of great frustration to the plan member. Understanding policy provisions does go a long way to lessening road blocks at the time of claim.

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