Here are three very frequent reader questions. Does short-term disability insurance cover pre-existing health conditions? Can the company decline my application for coverage or deny my claim for benefits?

The first part of the answer addresses whether you qualify to buy a new policy when you already have a medical disorder. Some people can, but much more cannot.

The second part of the answer relates to when you can file a claim for benefits. This comes up after you already obtained coverage – either as an individual, through a group, or via a state program.

Your ability to file a claim for a pre-existing medical condition depends on where you got the policy and when it started.

Short-Term Disability Pre-Existing Condition Denials

Can you be denied short-term disability insurance for a pre-existing health condition? Yes, the issuing companies are very likely to decline new applications for coverage and reject claims for benefits with individual policies.

The issuing companies work to avoid adverse selection. Adverse selection occurs when too many people intending to file a claim right away sign up for coverage. There is no safety in numbers to overcome certain losses with individual plans.

New Policy Denial

Insurance companies will deny most new policy applications for individual short-term disability when the person has a pre-existing medical condition. However, some people may be able to squeak by if they have minor health issues – or enough time has elapsed.

You must be healthy enough to qualify for new coverage. The agent will ask a series of medical questions. Expect the most intrusive questions for the highest level of coverage.

Every company utilizes different underwriting criteria. One company may reject an application from a person already suffering from an illness while another might approve a limited policy. Here is a sample application question that “knocks out” any “yes” response.

“In the past 5 years have you received medical advice,
sought treatment, or taken medication for any of the following”

Heart AttackHeart SurgeryHigh Blood Pressure
Heart DiseaseStrokeTransient Ischemic Attack
CancerKidney DiseaseDiabetes
EmphysemaLung DiseaseLiver Disease
HepatitisCirrhosisNeurological Disorder
Multiple SclerosisChronic Fatigue SyndromeFibromyalgia
Intestinal DiseaseAlcohol or Drug Abuse

Waiting Period Denial

The insurance company may approve your policy application yet deny your claim for benefits by invoking a pre-existing health condition waiting period provision. Below is a sample exclusion clause.

  1. “If you become disabled because of a pre-existing condition, we will not pay for any loss if it begins during the first 12 months the policy is in force.
  2. A pre-existing condition means having a sickness or physical disorder for which you were treated, received medical advice, or had taken medication within 12 months before the effective date.”

The language above is an example of a 12/12 exclusion limitation. The first number is the waiting period after coverage begins. The second looks to the time before the policy effective date. Other common combinations are 3/6, 6/12, 6/24.

You may even find a ‘prudent person” clause which targets people who purposely avoid doctors and treatment. In other words, always check the language in the policy that you actually own.

Pre-Existing Pregnancy

The insurance company may also approve your new policy application yet deny your claim for benefits because of a pre-existing pregnancy. Most carriers do not ask any pregnancy-related questions on the application – although some might. Every company is different. Shop around.

However, insurers are very consistent about denying claims for a pre-existing pregnancy. Expect to find specific limitations language similar to this.

  1. “We will not pay benefits for normal labor and delivery including Cesarean that occurs within 9 months of the policy effective date.
  2. Complications of pregnancy will be covered to the same extent as any other covered sickness.”

As you read above, “any other covered sickness” is excluded if the loss begins during the first 12-months of the policy effective date. Every gestation resolves itself about 3 months shy of this critical limitation date.

When Short-Term Disability Covers Pre-Existing Conditions

When does short-term disability insurance cover pre-existing health conditions? Based on the above, the obvious answer is when your loss begins after satisfying the waiting period provision– if you qualify to buy the policy.

Many people must stop working right away because of an ongoing medical problem. This answer provides no help. However, insurers will sometimes waive pre-existing condition exclusion provisions when enrolling a group such as a large employer or the entire state. In addition, they may guarantee-issue new policies to all takers – regardless of health history.

Group Plans

Group short-term disability plans issued through employment will sometimes cover pre-existing medical conditions. Insurance companies may agree to waive their waiting period limitation and guarantee-issue new policies.

Guarantee issue means the company does not perform medical underwriting when taking new applications for coverage. They do this as an incentive to get a large employer to offer the benefit. There is safety for insurers in large numbers.

However, certain restrictions may apply to group policies with these two features.

  • The employer must fund the premium to reach 100% participation on a base plan
  • The group must reach a participation threshold for any buy-up enrollments
  • Only new employees can get coverage for pre-existing conditions
  • Applicants previously waiving their right to enroll must pass full medical underwriting

Therefore, take the deal if offered at your place of employment. Once you turn down the chance to opt-in, the offer is off the table – permanently.

State Programs

State temporary disability insurance programs will usually cover pre-existing medical conditions with no waiting period. Here, we have an extremely large group providing extra safety in numbers – an entire region of workers.

This issue comes up when a person relocates to a state with a program, Or when someone moves from an industry that does not participate to one that does. For example, government workers are frequently exempt from the mandates. Once a government worker shifts to private employment, he or she automatically enroll in the state plan – per the requirement.

Therefore, these programs cover pre-existing conditions favorably in two ways.

  1. No medical exam or health questions to answer when enrolling in the program
  2. No waiting period provision before coverage begins for qualifying reasons

Five states offer temporary disability benefits: California, Hawaii, New Jersey, New York, and Rhode Island. The Washington State program becomes effective in January of 2020.

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