One of the most misunderstood terms in insurance contracts is “pre-existing condition.” It’s one of the biggest factors insurance companies look at when they decide whether or not you’re eligible for coverage and how much you’re going to pay for that coverage. It’s also one of the biggest reasons I see people getting their claims denied. What most people don’t know is that having a pre-existing condition DOES NOT preclude you from getting coverage, even long-term disability (LTD) insurance.
Under an employer-provided group plan, every qualified employee is eligible for coverage — regardless of his or her pre-existing conditions. That’s one of the (few) benefits of the ERISA law; everyone can get insured. Specific to LTD insurance, not only are you able to get coverage, you can even go out on disability for the pre-existing condition! There’s only one catch, and it’s pretty simple to understand. Yet I see hundreds of people fall victim to the fine print year after year.
Here’s a standard clause: “Pre-Existing Condition Limitation: We will not pay Disability Benefits for any period of Disability which is caused by, or contributed to, or results from a Pre-Existing Condition.” That seems pretty simple, and would probably discourage some people from getting coverage at first glance. But then, you move on a couple sentences and find, “This limitation will not apply to a period of Disability that begins more than 12 months after your most recent effective date of insurance.”
Quite simply, the policy provision is saying that if you have a pre-existing condition, you have to be covered under the plan for one full year before you can make a claim based on that pre-existing condition. If you have a completely unrelated illness or injury you can go out on disability in that first year, but to make a claim for your pre-existing injury you just have to make it past one year.
It is always devastating to have to tell someone with a perfectly legitimate disability that had they tried to stick it out a little bit longer, they would have been entitled to disability benefits. We have spoken to people who left work with less than two weeks to go before the year is up and had to tell them there was nothing that could be done for them. Don’t become one of those people. Read your policy, and make yourself aware of these types of restrictions and limitations. If you have a pre-existing condition, and it becomes clear that you’re going to have to go out on disability for it, do whatever you can to get through that year or you’ll be left out in the cold. MH, AK 12/08