Overview: Pre-existing condition provisions were among the most consequential and controversial features of health insurance for decades. This section traces how they worked historically, why they were considered necessary by insurers, and how the Affordable Care Act fundamentally changed the rules.

Historical Practice: How Pre-Existing Conditions Restricted Coverage

Before the ACA, individual health insurance was underwritten based on the applicant's health status — a process called medical underwriting. Insurers reviewed an applicant's medical history, sometimes looking back five to ten years, and used several mechanisms to limit their exposure to people who already had health problems:

Outright denial. In most states, insurers in the individual market could simply refuse to issue a policy to anyone with a significant pre-existing condition. Conditions as varied as cancer, diabetes, a prior C-section, depression, or even acne could make an applicant "uninsurable" in the individual market.

Exclusionary riders. If the insurer was willing to offer coverage, it might attach a rider permanently excluding all care related to a specific condition or body part. A person with a history of knee problems might get a policy that covered everything except their knee.

Premium loading (rate-ups). An insurer could charge significantly elevated premiums to higher-risk applicants — sometimes double or triple the standard rate.

Pre-existing condition waiting periods. Even when coverage was offered without exclusionary riders, insurers commonly imposed waiting periods during which no claims related to a pre-existing condition would be paid. In employer-sponsored group plans, HIPAA (1996) provided some protection: group plans could only look back 6 months and could impose a pre-existing condition exclusion for no more than 12 months (18 months for late enrollees). Critically, an employee with prior continuous coverage — "creditable coverage" with no gap of more than 63 days — could use that prior coverage to offset the waiting period. But these HIPAA protections applied to the group market only; the individual market remained largely unprotected.

The ACA's Changes

The Affordable Care Act (major provisions effective January 1, 2014) fundamentally restructured these rules for individual and small-group markets:

Guaranteed issue requires every insurer to accept any applicant during open or special enrollment periods, regardless of health status or medical history. Insurers cannot deny coverage.

Community rating prohibits insurers from charging higher premiums based on health status, medical history, or gender. Premiums can vary only based on age (capped at a 3:1 ratio between the oldest and youngest adults), geographic area, family size, and tobacco use.

Ban on pre-existing condition exclusions makes it illegal to use exclusionary riders, waiting periods, or any mechanism that excludes or delays coverage for conditions that existed before the policy began. Coverage for all conditions begins on day one of the policy.

Essential health benefits require all individual and small-group plans to cover ten categories of care — including maternity, mental health, prescription drugs, and preventive services. This prevents insurers from complying with the letter of the pre-existing condition ban while gutting the benefits sick people actually need.

Ban on lifetime and annual dollar limits for essential health benefits removes the cap that previously allowed insurers to stop paying once a policyholder hit, say, a $1 million lifetime limit — a cap that routinely devastated people with chronic or catastrophic conditions.

One important distinction survives the ACA: employer eligibility waiting periods — the time before a new employee is allowed to enroll in a company's group health plan — are still permitted but capped at a maximum of 90 calendar days. This is an enrollment waiting period, not a pre-existing condition exclusion. Once coverage begins after that 90-day window, all conditions must be covered immediately.

These protections apply to ACA-compliant major medical plans. They do not apply to short-term health insurance, grandfathered individual plans purchased before March 23, 2010, or health-sharing ministry arrangements, which may still impose pre-existing condition restrictions.