Does short-term disability cover pre-existing conditions? The answer depends on a variety of factors, including the type of condition, length of time you’ve had the condition and its prognosis. Disability insurance coverage is different than health insurance when it comes to pre-existing conditions.
The purpose of disability insurance, whether long or short-term, is to protect your income when you’re sick or injured. You’ll pay a premium, either monthly or yearly, for coverage. The amount you pay depends on your general health and lifestyle, your age, the amount of insurance coverage you want, and the duration of the coverage.
In the insurance business, a pre-existing condition is any medical issue, illness, injury, or chronic condition, which occurred prior to the insurance coverage you want to obtain. Under the Affordable Care Act (ACA or Obamacare), no one can be denied health insurance due to a pre-existing condition. However, disability and life insurance are different; pre-existing conditions are taken into consideration when issuing a policy. Your pre-existing condition will be assessed based on the treatment you have received or are receiving. The treatment will be included in your medical records and you can be sure the insurance company will be looking closely for anything that could compromise your health.
Disability insurance is meant to safeguard your income in the event of an injury or illness that prevents you from working. If you have a pre-existing condition, there is an increased chance you will need to collect a disability benefit — something the insurance company would like to avoid. The same thinking applies to life insurance: a condition that increases your chance of dying may prevent you from getting life insurance coverage.
Some insurance companies will automatically deny you any coverage if you have a pre-existing condition. If they offer you insurance, there are two other coverage options they may exercise. The rules vary from company to company.
If you apply for disability coverage, your insurance company may create a provision, or rider, in your policy that excludes your pre-existing condition from disability coverage. This is an exclusion. If you become sick or disabled because of the pre-existing condition, you will not receive a benefit. If your illness or disability is caused by a different condition, you will be eligible for a benefit.
Exclusions are designed to protect insurance companies from writing policies for people after they’re already sick. Insurance is meant to protect you from future events, not those which have already occurred. Conditions that are not permanent are not considered by an insurance company when you apply for a policy. Chronic or more serious illnesses such as cancer would be closely scrutinized for the stage, treatment, length or remission, etc.
If there is an exclusion rider on your policy, you can still obtain coverage for other conditions. For example, if you have a back injury which occurred prior to the start date of your policy, any claims related to your previous back injury would not be covered. However, if you injure your back in a different way — after you were insured — that claim would be covered.
Illness or injury are not the only reasons your policy may have an exclusion. High-risk activities or hobbies could also result in a coverage exclusion. Disability benefits for conditions arising from risky activities would be denied.
Another option for insurance companies is to charge a higher rate for your policy if you have a pre-existing condition. The premium rate is determined by your risk and the higher the risk, the higher the premium.
Risk is calculated based on the amount of the benefit you need, the duration, your age, occupation, medical history, and lifestyle (for example, do you smoke?). If your condition is still active when you apply for disability insurance, you’ll be denied benefits. There are instances when you may be able to get insurance if your condition has been in remission for a pre-determined time frame. Cancer is one example of this practice.
Generally speaking, once you have an exclusion rider on your insurance policy, it lasts for the duration of the policy. However, if you recover from a condition, you can ask your insurance company to reconsider the rider on your policy.
The reconsideration period lasts a few years after your policy begins. If your condition is resolved and you are symptom-free for two years, the insurance company may remove the rider.