§ 54.9801-3T - Limitations on preexisting condition exclusion period (temporary).

(a) Preexisting condition exclusion—(1) In general. Subject to paragraph (b) of this section, a group health plan may impose, with respect to a participant or beneficiary, a preexisting condition exclusion only if the requirements of this paragraph (a) are satisfied. (See PHSA section 2701 and ERISA section 701 under which this prohibition is also imposed on a health insurance issuer offering group health insurance coverage.)

(i) 6-month look-back rule. A preexisting condition exclusion must relate to a condition (whether physical or mental), regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the enrollment date.

(A) For purposes of this paragraph (a)(1)(i), medical advice, diagnosis, care, or treatment is taken into account only if it is recommended by, or received from, an individual licensed or similarly authorized to provide such services under State law and operating within the scope of practice authorized by State law.

(B) For purposes of this paragraph (a)(1)(i), the 6-month period ending on the enrollment date begins on the 6-month anniversary date preceding the enrollment date. For example, for an enrollment date of August 1, 1998, the 6-month period preceding the enrollment date is the period commencing on February 1, 1998 and continuing through July 31, 1998. As another example, for an enrollment date of August 30, 1998, the 6-month period preceding the enrollment date is the period commencing on February 28, 1998 and continuing through August 29, 1998.

(C) The rules of this paragraph (a)(1)(i) are illustrated by the following examples:

Example 1.

(i) Individual A is treated for a medical condition 7 months before the enrollment date in Employer R's group health plan. As part of such treatment, A's physician recommends that a follow-up examination be given 2 months later. Despite this recommendation, A does not receive a follow-up examination and no other medical advice, diagnosis, care, or treatment for that condition is recommended to A or received by A during the 6-month period ending on A's enrollment date in Employer R's plan.

(ii) In this Example 1, Employer R's plan may not impose a preexisting condition exclusion period with respect to the condition for which A received treatment 7 months prior to the enrollment date.

Example 2.

(i) Same facts as Example 1 except that Employer R's plan learns of the condition and attaches a rider to A's policy excluding coverage for the condition. Three months after enrollment, A's condition recurs, and Employer R's plan denies payment under the rider.

(ii) In this Example 2, the rider is a preexisting condition exclusion and Employer R's plan may not impose a preexisting condition exclusion with respect to the condition for which A received treatment 7 months prior to the enrollment date.

Example 3.

(i) Individual B has asthma and is treated for that condition several times during the 6-month period before B's enrollment date in Employer S's plan. The plan imposes a 12-month preexisting condition exclusion. B has no prior creditable coverage to reduce the exclusion period. Three months after the enrollment date, B begins coverage under Employer S's plan. Two months later, B is hospitalized for asthma.

(ii) In this Example 3, Employer S's plan may exclude payment for the hospital stay and the physician services associated with this illness because the care is related to a medical condition for which treatment was received by B during the 6-month period before the enrollment date.

Example 4.

(i) Individual D, who is subject to a preexisting condition exclusion imposed by Employer U's plan, has diabetes, as well as a foot condition caused by poor circulation and retinal degeneration (both of which are conditions that may be directly attributed to diabetes). After enrolling in the plan, D stumbles and breaks a leg.

(ii) In this Example 4, the leg fracture is not a condition related to D's diabetes, even though poor circulation in D's extremities and poor vision may have contributed towards the accident. However, any additional medical services that may be needed because of D's preexisting diabetic condition that would not be needed by another patient with a broken leg who does not have diabetes may be subject to the preexisting condition exclusion imposed under Employer U's plan.

(ii) Maximum length of preexisting condition exclusion (the look-forward rule). A preexisting condition exclusion is not permitted to extend for more than 12 months (18 months in the case of a late enrollee) after the enrollment date. For purposes of this paragraph (a)(1)(ii), the 12-month and 18-month periods after the enrollment date are determined by reference to the anniversary of the enrollment date. For example, for an enrollment date of August 1, 1998, the 12-month period after the enrollment date is the period commencing on August 1, 1998 and continuing through July 31, 1999.

(iii) Reducing a preexisting condition exclusion period by creditable coverage. The period of any preexisting condition exclusion that would otherwise apply to an individual under a group health plan is reduced by the number of days of creditable coverage the individual has as of the enrollment date, as counted under § 54.9801-4T. For purposes of § 54.9801-1T through § 54.9801-6T, the phrase “days of creditable coverage” has the same meaning as the phrase “aggregate of the periods of creditable coverage” as such phrase is used in section 9801(a)(3) of the Internal Revenue Code.

(iv) Other standards. See § 54.9802-1T for other standards that may apply with respect to certain benefit limitations or restrictions under a group health plan.

(2) Enrollment definitions—(i) Enrollment date means the first day of coverage or, if there is a waiting period, the first day of the waiting period.

(ii)(A) First day of coverage means, in the case of an individual covered for benefits under a group health plan in the group market, the first day of coverage under the plan and, in the case of an individual covered by health insurance coverage in the individual market, the first day of coverage under the policy.

(B) The following example illustrates the rule of paragraph (a)(2)(ii)(A) of this section:

Example.

(i) Employer V's group health plan provides for coverage to begin on the first day of the first payroll period following the date an employee is hired and completes the applicable enrollment forms, or on any subsequent January 1 after completion of the applicable enrollment forms. Employer V's plan imposes a preexisting condition exclusion for 12 months (reduced by the individual's creditable coverage) following an individual's enrollment date. Employee E is hired by Employer V on October 13, 1998 and then on October 14, 1998 completes and files all the forms necessary to enroll in the plan. E's coverage under the plan becomes effective on October 25, 1998 (which is the beginning of the first payroll period after E's date of hire).

(ii) In this Example,E's enrollment date is October 13, 1998 (which is the first day of the waiting period for E's enrollment and is also E's date of hire). Accordingly, with respect to E, the 6-month period in paragraph (a)(1)(i) would be the period from April 13, 1998 through October 12, 1998, the maximum permissible period during which Employer V's plan could apply a preexisting condition exclusion under paragraph (a)(1)(ii) would be the period from October 13, 1998 through October 12, 1999, and this period would be reduced under paragraph (a)(1)(iii) by E's days of creditable coverage as of October 13, 1998.

(iii) Late enrollee means an individual whose enrollment in a plan is a late enrollment.

(iv) (A) Late enrollment means enrollment under a group health plan other than on—

(1) The earliest date on which coverage can become effective under the terms of the plan; or

(2) A special enrollment date for the individual.

(B) If an individual ceases to be eligible for coverage under the plan by terminating employment, and then subsequently becomes eligible for coverage under the plan by resuming employment, only eligibility during the individual's most recent period of employment is taken into account in determining whether the individual is a late enrollee under the plan with respect to the most recent period of coverage. Similar rules apply if an individual again becomes eligible for coverage following a suspension of coverage that applied generally under the plan.

(v) Examples. The rules of this paragraph (a)(2) are illustrated by the following examples:

Example 1.

(i) Employee F first becomes eligible to be covered by Employer W's group health plan on January 1, 1999, but elects not to enroll in the plan until April 1, 1999. April 1, 1999 is not a special enrollment date for F.

(ii) In this Example 1, F would be a late enrollee with respect to F's coverage that became effective under the plan on April 1, 1999.

Example 2.

(i) Same as Example 1, except that F does not enroll in the plan on April 1, 1999 and terminates employment with Employer W on July 1, 1999, without having had any health insurance coverage under the plan. F is rehired by Employer W on January 1, 2000 and is eligible for and elects coverage under Employer W's plan effective on January 1, 2000.

(ii) In this Example 2, F would not be a late enrollee with respect to F's coverage that became effective on January 1, 2000.

(b) Exceptions pertaining to preexisting condition exclusions—(1) Newborns—(i) In general. Subject to paragraph (b)(3) of this section, a group health plan may not impose any preexisting condition exclusion with regard to a child who, as of the last day of the 30-day period beginning with the date of birth, is covered under any creditable coverage. Accordingly, if a newborn is enrolled in a group health plan (or other creditable coverage) within 30 days after birth and subsequently enrolls in another group health plan without a significant break in coverage, the other plan may not impose any preexisting condition exclusion with regard to the child.

(ii) Example. The rule of this paragraph (b)(1) is illustrated by the following example:

Example.

(i) Seven months after enrollment in Employer W’s group health plan, Individual E has a child born with a birth defect. Because the child is enrolled in Employer W’s plan within 30 days of birth, no preexisting condition exclusion may be imposed with respect to the child under Employer W’s plan. Three months after the child's birth, E commences employment with Employer X and enrolls with the child in Employer X’s plan 45 days after leaving Employer W’s plan. Employer X’s plan imposes a 12-month exclusion for any preexisting condition.

(ii) In this Example, Employer X’s plan may not impose any preexisting condition exclusion with respect to E’s child because the child was covered within 30 days of birth and had no significant break in coverage. This result applies regardless of whether E’s child is included in the certificate of creditable coverage provided to E by Employer W indicating 300 days of dependent coverage or receives a separate certificate indicating 90 days of coverage. Employer X’s plan may impose a preexisting condition exclusion with respect to E for up to 65 days for any preexisting condition of E for which medical advice, diagnosis, care, or treatment was recommended or received by E within the 6-month period ending on E’s enrollment date in Employer X’s plan.

(2) Adopted children. Subject to paragraph (b)(3) of this section, a group health plan may not impose any preexisting condition exclusion in the case of a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. This rule does not apply to coverage before the date of such adoption or placement for adoption.

(3) Break in coverage. Paragraphs (b)(1) and (2) of this section no longer apply to a child after a significant break in coverage.

(4) Pregnancy. A group health plan may not impose a preexisting condition exclusion relating to pregnancy as a preexisting condition.

(5) Special enrollment dates. For special enrollment dates relating to new dependents, see § 54.9801-6T(b).

(c) Notice of plan's preexisting condition exclusion. A group health plan may not impose a preexisting condition exclusion with respect to a participant or dependent of the participant before notifying the participant, in writing, of the existence and terms of any preexisting condition exclusion under the plan and of the rights of individuals to demonstrate creditable coverage (and any applicable waiting periods) as required by § 54.9801-5T. The description of the rights of individuals to demonstrate creditable coverage includes a description of the right of the individual to request a certificate from a prior plan or issuer, if necessary, and a statement that the current plan or issuer will assist in obtaining a certificate from any prior plan or issuer, if necessary.