Health Insurance Articles
Why Creditable Coverage Is Important When Switching Insurance Providers
2011-08-27
Creditable coverage is a main concern whenever you plan to switch insurance providers. Whether you are switching because of an employer or simply because you decided that you wanted to save money by going with another company, you can always do so. However, if you have pre-existing conditions, an insurance company can choose to exclude that. That is, unless you show that you have been covered under another plan.
Every time that you switch insurance companies, you need to prove that you were covered under a previous one. Otherwise, they can choose not to cover any pre-existing conditions that you have or even increase your premiums. The reason for this is that if you didn't have insurance in the past, the chances of your medical exams and health being in perfect condition is unlikely.
When you switch, you need to show creditable coverage. You can do this by showing that you have been covered by another insurance provider for at least one full year. In addition, during the transition between companies, you need to make sure that you have not had a break in the coverage for more than 63 days.
As long as you can show the creditable coverage, a health insurance company must include your pre-existing conditions because you are legally entitled to it. If, however, you have let your health insurance lapse for longer than 63 days, the insurance company can choose to exclude the conditions and there is nothing that you can do about it. This is why Cobra and other supplemental health insurance plans exist - to help you maintain coverage.
The creditable coverage can come in the form of a letter. This will be from your past insurance company stating the times that you were previously covered. It can also come in the form of an inquiry from your current provider to your past provider. It is always a good idea to get the letter in writing for your own records. This way, you are protected in the case that your current provider decides to ever drop you or not cover pre-existing conditions; you have a legal leg to stand on.
Pre-existing conditions, such as diabetes or heart conditions, can be expensive for insurance companies to cover because of the prescriptions and doctor visits that go along with them. It is for this reason that many providers try to exclude them however, they can. The less they have to pay for, the more that they make. You do have rights, though, and it's important to know what they are. Soon insurance companies won't even be able to exclude preexisting conditions thanks to the new health care law.
