The topic of short-term disability insurance and pre-existing health conditions is confusing because there is no single correct answer, two key underwriting decision points, and at least three policy types.
For instance, an issuing company might approve your application to purchase a new policy and then deny your claim for benefits if you sought treatment for the physical disorder during the 12 months preceding the effective date.
Then the policy type influences the correct answer. Individual plans bought outside employers have the most stringent criteria, while large-group employer-funded coverage is more lenient, and state-mandated benefits are most generous.
Individual Short-Term Disability Pre-Existing Conditions
Issuing companies can deny individual short-term disability insurance for pre-existing health conditions at two underwriting decision points: buying coverage and filing a claim for benefits.
Individual plans that you buy outside of employers have the strictest rules because they cannot pool risks with other employees or people working in the state.
Issuing companies frequently deny individual short-term disability for pre-existing conditions when a person is attempting to buy coverage. A severe medical issue that has caused problems in the previous five years is the number one reason insurers turn down new policy applications.
For instance, knockout questions translate into automatic declinations for applicants who answer yes to specific questions, such as the one below.
“In the past five years have you received medical advice,
sought treatment, or taken medication for any of the following.”
|Heart Attack||Heart Surgery||High Blood Pressure|
|Heart Disease||Stroke||Transient Ischemic Attack|
|Emphysema||Lung Disease||Liver Disease|
|Multiple Sclerosis||Chronic Fatigue Syndrome||Fibromyalgia|
|Intestinal Disease||Alcohol or Drug Abuse|
Issuing companies also deny individual short-term disability claims due to pre-existing conditions. Chronic medical conditions that flare up within the first 12 months of the policy effective date are a prime reason insurers turn down applications for benefits.
Your health does not have to be perfect to buy coverage, but you probably will encounter a 12/12 pre-existing condition limitation that reads similar to the following.
- 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
- 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
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 own.
Issuing companies routinely deny individual short-term disability claims because of pre-existing pregnancy. Most insurers do not ask pregnancy-related questions on the new policy application, so women expecting a baby can still get approved for coverage.
However, expect to find these two limitations in the legal policy language that the insurer will cite as a declination reason when evaluating claims.
- We will not pay benefits for normal labor and delivery, including Cesarean, within nine months of the policy effective date.
- Complications of pregnancy will be covered to the same extent as any other covered sickness
Disability Insurance that Covers Pre-Existing Conditions
Several types of short-term disability insurance cover pre-existing health conditions when the issuing company or government agency has safety: low-risk profiles or large numbers of insured lives.
Individual short-term disability plans cover pre-existing conditions that do not pose a significant risk to the issuing company. For instance, recent treatment for minor medical issues may not prevent approval on an application for a new policy.
Begin with a quote for a new policy if you are seeking to start coverage. An agent may contact you to review premiums and complete your application, including questions about your medical history and prescription drugs.
Please note, if a health condition begins before the effective date, benefits will not start until after satisfying the 12/12 limitation mentioned above.
State-mandated short-term disability frequently covers pre-existing conditions at both underwriting decision points: obtaining coverage and filing claims for benefits.
- By definition, state-required temporary disability covers millions of workers, most of whom are healthy and unlikely to file a claim. Therefore, the government agency or insurance company can readily approve new policies for the minority of people previously diagnosed with a severe medical condition.
- State-mandatory temporary disability can also approve claims without imposing a 12/12 pre-existing condition limitation because most people have had the coverage continuously for years – it is required.
Short-term disability offered through large employer groups often cover pre-existing health conditions on the first underwriting decision point (buying coverage) and sometimes on the second (filing claims for benefits).
- Issuing companies often offer guaranteed-issue short-term disability for large employer groups meeting a minimum participation percentage (i.e., 50% or more). Guaranteed-issue means the insurer does not perform medical underwriting when taking new applications for coverage, and employees with health conditions that started before the effective date automatically qualify.
- Issuing companies sometimes offer immediate claims payments to employees with health conditions that started before the effective date without a 12/12 limitation (see above). This higher benefit level sometimes happens when the employer funds the premium, ensuring 100% employee participation.