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If I switch jobs, will my new group health insurance plan have to cover my pre-existing condition?

June 18, 2007

I have group health insurance and have been diagnosed with cancer. If I switch jobs, will my new group health insurance plan have to cover my pre-existing condition? Is there a law on this?

Jennifer, New York

Dear Jennifer,

Yes, the law is called HIPAA, which stands for the Health Insurance Portability and Accountability Act. HIPAA imposes limits on the extent to which some group health plans can exclude coverage for pre-existing conditions. For instance, if you've had "creditable" health insurance for 12 straight months, with no lapse in coverage of 63 days or more, and you switch to a new group health plan, it cannot invoke any pre-existing condition exclusions. The new plan must cover your medical problems as soon as any routine "waiting period" has elapsed — typically 30 to 90 days after you begin your job.

If you don't have 12 months of prior creditable coverage when you enroll in your new group plan, your new insurer can refuse to pay for any of your existing medical problems (except pregnancy, if the plan has maternity coverage), but only for a maximum of 12 months. Your new health plan must give you "credit for time served" — the amount of time you were enrolled in your previous plan — and deduct it from the exclusion period. For example, if you only had prior creditable coverage for eight months, you can be subject to only a four-month exclusion period when you switch jobs. Read HIPAA: Your rights to health insurance portability.

In order to keep your coverage continuous, you can't let it lapse for more than 63 days. That's where COBRA can help. If you leave one company before starting with another, consider buying COBRA coverage to keep your coverage continuous. Note, however, that waiting periods do not count as a lapse in health coverage, and thus you would not be penalized under HIPAA. Still, it's never a good idea to go without coverage. See Know your COBRA rights.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.

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