(a) Preexisting condition exclusion--(1) Defined--(i) A preexisting
condition exclusion means a limitation or exclusion of benefits relating
to a condition based on the fact that the condition was present before
the effective date of coverage under a group health plan or group health
insurance coverage, whether or not any medical advice, diagnosis, care,
or treatment was recommended or received before that day. A preexisting
condition exclusion includes any exclusion applicable to an individual
as a result of information relating to an individual's health status
before the individual's effective date of coverage under a group health
[[Page 638]]
plan or group health insurance coverage, such as a condition identified
as a result of a pre-enrollment questionnaire or physical examination
given to the individual, or review of medical records relating to the
pre-enrollment period.
(ii) Examples. The rules of this paragraph (a)(1) are illustrated by
the following examples:
Example 1. (i) Facts. A group health plan provides benefits solely
through an insurance policy offered by Issuer S. At the expiration of
the policy, the plan switches coverage to a policy offered by Issuer T.
Issuer T's policy excludes benefits for any prosthesis if the body part
was lost before the effective date of coverage under the policy.
(ii) Conclusion. In this Example 1, the exclusion of benefits for
any prosthesis if the body part was lost before the effective date of
coverage is a preexisting condition exclusion because it operates to
exclude benefits for a condition based on the fact that the condition
was present before the effective date of coverage under the policy.
(Therefore, the exclusion of benefits is required to comply with the
limitations on preexisting condition exclusions in this section. For an
example illustrating the application of these limitations to a
succeeding insurance policy, see Example 3 of paragraph (a)(3)(iv) of
this section.)
Example 2. (i) Facts. A group health plan provides coverage for
cosmetic surgery in cases of accidental injury, but only if the injury
occurred while the individual was covered under the plan.
(ii) Conclusion. In this Example 2, the plan provision excluding
cosmetic surgery benefits for individuals injured before enrolling in
the plan is a preexisting condition exclusion because it operates to
exclude benefits relating to a condition based on the fact that the
condition was present before the effective date of coverage. The plan
provision, therefore, is subject to the limitations on preexisting
condition exclusions in this section.
Example 3. (i) Facts. A group health plan provides coverage for the
treatment of diabetes, generally not subject to any lifetime dollar
limit. However, if an individual was diagnosed with diabetes before the
effective date of coverage under the plan, diabetes coverage is subject
to a lifetime limit of $10,000.
(ii) Conclusion. In this Example 3, the $10,000 lifetime limit is a
preexisting condition exclusion because it limits benefits for a
condition based on the fact that the condition was present before the
effective date of coverage. The plan provision, therefore, is subject to
the limitations on preexisting condition exclusions in this section.
Example 4. (i) Facts. A group health plan provides coverage for the
treatment of acne, subject to a lifetime limit of $2,000. The plan
counts against this $2,000 lifetime limit acne treatment benefits
provided under prior health coverage.
(ii) Conclusion. In this Example 4, counting benefits for a specific
condition provided under prior health coverage against a lifetime limit
for that condition is a preexisting condition exclusion because it
operates to limit benefits for a condition based on the fact that the
condition was present before the effective date of coverage. The plan
provision, therefore, is subject to the limitations on preexisting
condition exclusions in this section.
Example 5. (i) Facts. When an individual's coverage begins under a
group health plan, the individual generally becomes eligible for all
benefits. However, benefits for pregnancy are not available until the
individual has been covered under the plan for 12 months.
(ii) Conclusion. In this Example 5, the requirement to be covered
under the plan for 12 months to be eligible for pregnancy benefits is a
subterfuge for a preexisting condition exclusion because it is designed
to exclude benefits for a condition (pregnancy) that arose before the
effective date of coverage. Because a plan is prohibited under paragraph
(b)(5) of this section from imposing any preexisting condition exclusion
on pregnancy, the plan provision is prohibited. However, if the plan
provision included an exception for women who were pregnant before the
effective date of coverage under the plan (so that the provision applied
only to women who became pregnant on or after the effective date of
coverage) the plan provision would not be a preexisting condition
exclusion (and would not be prohibited by paragraph (b)(5) of this
section).
Example 6. (i) Facts. A group health plan provides coverage for
medically necessary items and services, generally including treatment of
heart conditions. However, the plan does not cover those same items and
services when used for treatment of congenital heart conditions.
(ii) Conclusion. In this Example 6, the exclusion of coverage for
treatment of congenital heart conditions is a preexisting condition
exclusion because it operates to exclude benefits relating to a
condition based on the fact that the condition was present before the
effective date of coverage. The plan provision, therefore, is subject to
the limitations on preexisting condition exclusions in this section.
Example 7. (i) Facts. A group health plan generally provides
coverage for medically necessary items and services. However, the plan
excludes coverage for the treatment of cleft palate.
(ii) Conclusion. In this Example 7, the exclusion of coverage for
treatment of cleft palate
[[Page 639]]
is not a preexisting condition exclusion because the exclusion applies
regardless of when the condition arose relative to the effective date of
coverage. The plan provision, therefore, is not subject to the
limitations on preexisting condition exclusions in this section.
Example 8. (i) Facts. A group health plan provides coverage for
treatment of cleft palate, but only if the individual being treated has
been continuously covered under the plan from the date of birth.
(ii) Conclusion. In this Example 8, the exclusion of coverage for
treatment of cleft palate for individuals who have not been covered
under the plan from the date of birth operates to exclude benefits in
relation to a condition based on the fact that the condition was present
before the effective date of coverage. The plan provision, therefore, is
subject to the limitations on preexisting condition exclusions in this
section.
(2) General rules. Subject to paragraph (b) of this section
(prohibiting the imposition of a preexisting condition exclusion with
respect to certain individuals and conditions), a group health plan, and
a health insurance issuer offering group health insurance coverage, may
impose, with respect to a participant or beneficiary, a preexisting
condition exclusion only if the requirements of this paragraph (a)(2)
are satisfied.
(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 (or such
shorter period as applies under the plan) ending on the enrollment date.
(A) For purposes of this paragraph (a)(2)(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)(2)(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)(2)(i) are illustrated by the
following examples:
Example 1. (i) Facts. Individual A is diagnosed with a medical
condition 8 months before A's enrollment date in Employer R's group
health plan. A's doctor recommends that A take a prescription drug for 3
months, and A follows the recommendation.
(ii) Conclusion. In this Example 1, Employer R's plan may impose a
preexisting condition exclusion with respect to A's condition because A
received treatment during the 6-month period ending on A's enrollment
date in Employer R's plan by taking the prescription medication during
that period. However, if A did not take the prescription drug during the
6-month period, Employer R's plan would not be able to impose a
preexisting condition exclusion with respect to that condition.
Example 2. (i) Facts. Individual B is treated for a medical
condition 7 months before the enrollment date in Employer S's group
health plan. As part of such treatment, B's physician recommends that a
follow-up examination be given 2 months later. Despite this
recommendation, B does not receive a follow-up examination, and no other
medical advice, diagnosis, care, or treatment for that condition is
recommended to B or received by B during the 6-month period ending on
B's enrollment date in Employer S's plan.
(ii) Conclusion. In this Example 2, Employer S's plan may not impose
a preexisting condition exclusion with respect to the condition for
which B received treatment 7 months prior to the enrollment date.
Example 3. (i) Facts. Same facts as Example 2, except that Employer
S's plan learns of the condition and attaches a rider to B's certificate
of coverage excluding coverage for the condition. Three months after
enrollment, B's condition recurs, and Employer S's plan denies payment
under the rider.
(ii) Conclusion. In this Example 3, the rider is a preexisting
condition exclusion and Employer S's plan may not impose a preexisting
condition exclusion with respect to the condition for which B received
treatment 7 months prior to the enrollment date. (In addition, such a
rider would violate the provisions of Sec. 2590.702, even if B had
received treatment for the condition within the 6-month period ending on
the enrollment date.)
Example 4. (i) Facts. Individual C has asthma and is treated for
that condition several
[[Page 640]]
times during the 6-month period before C's enrollment date in Employer
T's plan. Three months after the enrollment date, C begins coverage
under Employer T's plan. Two months later, C is hospitalized for asthma.
(ii) Conclusion. In this Example 4, Employer T's plan may impose a
preexisting condition exclusion with respect to C's asthma because care
relating to C's asthma was received during the 6-month period ending on
C's enrollment date (which, under the rules of paragraph (a)(3)(i) of
this section, is the first day of the waiting period).
Example 5. (i) Facts. Individual D, who is subject to a preexisting
condition exclusion imposed by Employer U's plan, has diabetes, as well
as retinal degeneration, a foot condition, and poor circulation (all of
which are conditions that may be directly attributed to diabetes). D
receives treatment for these conditions during the 6-month period ending
on D's enrollment date in Employer U's plan. After enrolling in the
plan, D stumbles and breaks a leg.
(ii) Conclusion. In this Example 5, the leg fracture is not a
condition related to D's diabetes, retinal degeneration, foot condition,
or poor circulation, even though they may have contributed to the
accident. Therefore, benefits to treat the leg fracture cannot be
subject to a preexisting condition exclusion. However, any additional
medical services that may be needed because of D's preexisting diabetes,
poor circulation, or retinal degeneration that would not be needed by
another patient with a broken leg who does not have these conditions may
be subject to the preexisting condition exclusion imposed under Employer
U's plan.
(ii) Maximum length of preexisting condition exclusion. 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 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; the 18-month
period after the enrollment date is the period commencing on August 1,
1998 and continuing through January 31, 2000.
(iii) Reducing a preexisting condition exclusion period by
creditable coverage--(A) 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 Sec.
2590.701-4. Creditable coverage may be evidenced through a certificate
of creditable coverage (required under Sec. 2590.701-5(a)), or through
other means in accordance with the rules of Sec. 2590.701-5(c).
(B) The rules of this paragraph (a)(2)(iii) are illustrated by the
following example:
Example. (i) Facts. Individual D works for Employer X and has been
covered continuously under X's group health plan. D's spouse works for
Employer Y. Y maintains a group health plan that imposes a 12-month
preexisting condition exclusion (reduced by creditable coverage) on all
new enrollees. D enrolls in Y's plan, but also stays covered under X's
plan. D presents Y's plan with evidence of creditable coverage under X's
plan.
(ii) Conclusion. In this Example, Y's plan must reduce the
preexisting condition exclusion period that applies to D by the number
of days of coverage that D had under X's plan as of D's enrollment date
in Y's plan (even though D's coverage under X's plan was continuing as
of that date).
(iv) Other standards. See Sec. 2590.702 for other standards in this
Subpart B that may apply with respect to certain benefit limitations or
restrictions under a group health plan. Other laws may also apply, such
as the Uniformed Services Employment and Reemployment Rights Act
(USERRA), which can affect the application of a preexisting condition
exclusion to certain individuals who are reinstated in a group health
plan following active military service.
(3) Enrollment definitions--(i) Enrollment date means the first day
of coverage (as described in paragraph (a)(3)(ii) of this section) or,
if there is a waiting period, the first day of the waiting period. If an
individual receiving benefits under a group health plan changes benefit
packages, or if the plan changes group health insurance issuers, the
individual's enrollment date does not change.
(ii) First day of coverage means, in the case of an individual
covered for benefits under a group health plan, 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 or contract.
(iii) Waiting period means the period that must pass before coverage
for an employee or dependent who is otherwise eligible to enroll under
the terms
[[Page 641]]
of a group health plan can become effective. If an employee or dependent
enrolls as a late enrollee or special enrollee, any period before such
late or special enrollment is not a waiting period. If an individual
seeks coverage in the individual market, a waiting period begins on the
date the individual submits a substantially complete application for
coverage and ends on--
(A) If the application results in coverage, the date coverage
begins;
(B) If the application does not result in coverage, the date on
which the application is denied by the issuer or the date on which the
offer of coverage lapses.
(iv) The rules of paragraphs (a)(3)(i), (ii), and (iii) of this
section are illustrated by the following examples:
Example 1. (i) Facts. 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 on October 14, 1998 E 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) Conclusion. In this Example 1, 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 permissible 6-month period in paragraph (a)(2)(i) is the period
from April 13, 1998 through October 12, 1998, the maximum permissible
period during which Employer V's plan can apply a preexisting condition
exclusion under paragraph (a)(2)(ii) is the period from October 13, 1998
through October 12, 1999, and this period must be reduced under
paragraph (a)(2)(iii) by E's days of creditable coverage as of October
13, 1998.
Example 2. (i) Facts. A group health plan has two benefit package
options, Option 1 and Option 2. Under each option a 12-month preexisting
condition exclusion is imposed. Individual B is enrolled in Option 1 on
the first day of employment with the employer maintaining the plan,
remains enrolled in Option 1 for more than one year, and then decides to
switch to Option 2 at open season.
(ii) Conclusion. In this Example 2, B cannot be subject to any
preexisting condition exclusion under Option 2 because any preexisting
condition exclusion period would have to begin on B's enrollment date,
which is B's first day of coverage, rather than the date that B enrolled
in Option 2. Therefore, the preexisting condition exclusion period
expired before B switched to Option 2.
Example 3. (i) Facts. On May 13, 1997, Individual E is hired by an
employer and enrolls in the employer's group health plan. The plan
provides benefits solely through an insurance policy offered by Issuer
S. On December 27, 1998, E's leg is injured in an accident and the leg
is amputated. On January 1, 1999, the plan switches coverage to a policy
offered by Issuer T. Issuer T's policy excludes benefits for any
prosthesis if the body part was lost before the effective date of
coverage under the policy.
(ii) Conclusion. In this Example 3, E's enrollment date is May 13,
1997, E's first day of coverage. Therefore, the permissible 6-month
look-back period for the preexisting condition exclusion imposed under
Issuer T's policy begins on November 13, 1996 and ends on May 12, 1997.
In addition, the 12-month maximum permissible preexisting condition
exclusion period begins on May 13, 1997 and ends on May 12, 1998.
Accordingly, because no medical advice, diagnosis, care, or treatment
was recommended to or received by E for the leg during the 6-month look-
back period (even though medical care was provided within the 6-month
period preceding the effective date of E's coverage under Issuer T's
policy), Issuer T may not impose any preexisting condition exclusion
with respect to E. Moreover, even if E had received treatment during the
6-month look-back period, Issuer T still would not be permitted to
impose a preexisting condition exclusion because the 12-month maximum
permissible preexisting condition exclusion period expired on May 12,
1998 (before the effective date of E's coverage under Issuer T's
policy).
Example 4. (i) Facts. A group health plan limits eligibility for
coverage to full-time employees of Employer Y. Coverage becomes
effective on the first day of the month following the date the employee
becomes eligible. Employee C begins working full-time for Employer Y on
April 11. Prior to this date, C worked part-time for Y. C enrolls in the
plan and coverage is effective May 1.
(ii) Conclusion. In this Example 4, C's enrollment date is April 11
and the period from April 11 through April 30 is a waiting period. The
period while C was working part-time, and therefore not in an eligible
class of employees, is not part of the waiting period.
Example 5. (i) Facts. To be eligible for coverage under a
multiemployer group health plan in the current calendar quarter, the
plan requires an individual to have worked 250 hours in covered
employment during the previous quarter. If the hours requirement is
satisfied, coverage becomes effective on the
[[Page 642]]
first day of the current calendar quarter. Employee D begins work on
January 28 and does not work 250 hours in covered employment during the
first quarter (ending March 31). D works at least 250 hours in the
second quarter (ending June 30) and is enrolled in the plan with
coverage effective July 1 (the first day of the third quarter).
(ii) Conclusion. In this Example 5, D's enrollment date is the first
day of the quarter during which D satisfies the hours requirement, which
is April 1. The period from April 1 through June 30 is a waiting period.
(v) Late enrollee means an individual whose enrollment in a plan is
a late enrollment.
(vi) (A) Late enrollment means enrollment of an individual under a
group health plan other than--
(1) On the earliest date on which coverage can become effective for
the individual under the terms of the plan; or
(2) Through special enrollment. (For rules relating to special
enrollment, see Sec. 2590.701-6.)
(B) If an individual ceases to be eligible for coverage under the
plan, and then subsequently becomes eligible for coverage under the
plan, only the individual's most recent period of eligibility 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.
(vii) Examples. The rules of paragraphs (a)(3)(v) and (vi) of this
section are illustrated by the following examples:
Example 1. (i) Facts. 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 a later annual open enrollment period,
with coverage effective January 1, 2001. F has no special enrollment
right at that time.
(ii) Conclusion. In this Example 1, F is a late enrollee with
respect to F's coverage that became effective under the plan on January
1, 2001.
Example 2. (i) Facts. Same facts as Example 1, except that F
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) Conclusion. 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, and a health insurance issuer offering group health
insurance coverage, may not impose any preexisting condition exclusion
on a child who, within 30 days after birth, is covered under any
creditable coverage. Accordingly, if a child 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 (as described in Sec. 2590.701-
4(b)(2)(iii)), the other plan may not impose any preexisting condition
exclusion on the child.
(ii) Examples. The rules of this paragraph (b)(1) are illustrated by
the following examples:
Example 1. (i) Facts. Individual E, who has no prior creditable
coverage, begins working for Employer W and has accumulated 210 days of
creditable coverage under Employer W's group health plan on the date E
gives birth to a child. Within 30 days after the birth, the child is
enrolled in the plan. Ninety days after the birth, both E and the child
terminate coverage under the plan. Both E and the child then experience
a break in coverage of 45 days before E is hired by Employer X and the
two are enrolled in Employer X's group health plan.
(ii) Conclusion. In this Example 1, because E's child is enrolled in
Employer W's plan within 30 days after birth, no preexisting condition
exclusion may be imposed with respect to the child under Employer W's
plan. Likewise, Employer X's plan may not impose any preexisting
condition exclusion on E's child because the child was covered under
creditable coverage within 30 days after birth and had no significant
break in coverage before enrolling in Employer X's plan. On the other
hand, because E had only 300 days of creditable coverage prior to E's
enrollment date in Employer X's plan, Employer X's plan may impose a
preexisting condition exclusion on E for up to 65 days (66 days if the
12-month period after E's enrollment date in X's plan includes February
29).
Example 2. (i) Facts. Individual F is enrolled in a group health
plan in which coverage is provided through a health insurance issuer. F
gives birth. Under State law applicable to the health insurance issuer,
health care expenses incurred for the child during the 30
[[Page 643]]
days following birth are covered as part of F's coverage. Although F may
obtain coverage for the child beyond 30 days by timely requesting
special enrollment and paying an additional premium, the issuer is
prohibited under State law from recouping the cost of any expenses
incurred for the child within the 30-day period if the child is not
later enrolled.
(ii) Conclusion. In this Example 2, the child is covered under
creditable coverage within 30 days after birth, regardless of whether
the child enrolls as a special enrollee under the plan. Therefore, no
preexisting condition exclusion may be imposed on the child unless the
child has a significant break in coverage.
(2) Adopted children. Subject to paragraph (b)(3) of this section, a
group health plan, and a health insurance issuer offering group health
insurance coverage, may not impose any preexisting condition exclusion
on a child who is adopted or placed for adoption before attaining 18
years of age and who, within 30 days after the adoption or placement for
adoption, is covered under any creditable coverage. Accordingly, if a
child is enrolled in a group health plan (or other creditable coverage)
within 30 days after adoption or placement for adoption and subsequently
enrolls in another group health plan without a significant break in
coverage (as described in Sec. 2590.701-4(b)(2)(iii)), the other plan
may not impose any preexisting condition exclusion on the child. This
rule does not apply to coverage before the date of such adoption or
placement for adoption.
(3) Significant break in coverage. Paragraphs (b)(1) and (2) of this
section no longer apply to a child after a significant break in
coverage. (See Sec. 2590.701-4(b)(2)(iii) for rules relating to the
determination of a significant break in coverage.)
(4) Special enrollment. For special enrollment rules relating to new
dependents, see Sec. 2590.701-6(b).
(5) Pregnancy. A group health plan, and a health insurance issuer
offering group health insurance coverage, may not impose a preexisting
condition exclusion relating to pregnancy.
(6) Genetic information--(i) A group health plan, and a health
insurance issuer offering group health insurance coverage, may not
impose a preexisting condition exclusion relating to a condition based
solely on genetic information. However, if an individual is diagnosed
with a condition, even if the condition relates to genetic information,
the plan may impose a preexisting condition exclusion with respect to
the condition, subject to the other limitations of this section.
(ii) The rules of this paragraph (b)(6) are illustrated by the
following example:
Example. (i) Facts. Individual A enrolls in a group health plan that
imposes a 12-month maximum preexisting condition exclusion. Three months
before A's enrollment, A's doctor told A that, based on genetic
information, A has a predisposition towards breast cancer. A was not
diagnosed with breast cancer at any time prior to A's enrollment date in
the plan. Nine months after A's enrollment date in the plan, A is
diagnosed with breast cancer.
(ii) Conclusion. In this Example, the plan may not impose a
preexisting condition exclusion with respect to A's breast cancer
because, prior to A's enrollment date, A was not diagnosed with breast
cancer.
(c) General notice of preexisting condition exclusion. A group
health plan imposing a preexisting condition exclusion, and a health
insurance issuer offering group health insurance coverage subject to a
preexisting condition exclusion, must provide a written general notice
of preexisting condition exclusion to participants under the plan and
cannot impose a preexisting condition exclusion with respect to a
participant or a dependent of the participant until such a notice is
provided.
(1) Manner and timing. A plan or issuer must provide the general
notice of preexisting condition exclusion as part of any written
application materials distributed by the plan or issuer for enrollment.
If the plan or issuer does not distribute such materials, the notice
must be provided by the earliest date following a request for enrollment
that the plan or issuer, acting in a reasonable and prompt fashion, can
provide the notice.
(2) Content. The general notice of preexisting condition exclusion
must notify participants of the following:
(i) The existence and terms of any preexisting condition exclusion
under the plan. This description includes the length of the plan's look-
back period (which is not to exceed 6 months under paragraph (a)(2)(i)
of this section); the
[[Page 644]]
maximum preexisting condition exclusion period under the plan (which
cannot exceed 12 months (or 18-months for late enrollees) under
paragraph (a)(2)(ii) of this section); and how the plan will reduce the
maximum preexisting condition exclusion period by creditable coverage
(described in paragraph (a)(2)(iii) of this section).
(ii) A description of the rights of individuals to demonstrate
creditable coverage, and any applicable waiting periods, through a
certificate of creditable coverage (as required by Sec. 2590.701-5(a))
or through other means (as described in Sec. 2590.701-5(c)). This must
include 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.
(iii) A person to contact (including an address or telephone number)
for obtaining additional information or assistance regarding the
preexisting condition exclusion.
(3) Duplicate notices not required. If a notice satisfying the
requirements of this paragraph (c) is provided to an individual, the
obligation to provide a general notice of preexisting condition
exclusion with respect to that individual is satisfied for both the plan
and the issuer.
(4) Example with sample language. The rules of this paragraph (c)
are illustrated by the following example, which includes sample language
that plans and issuers can use as a basis for preparing their own
notices to satisfy the requirements of this paragraph (c):
Example. (i) Facts. A group health plan makes coverage effective on
the first day of the first calendar month after hire and on each January
1 following an open season. The plan imposes a 12-month maximum
preexisting condition exclusion (18 months for late enrollees) and uses
a 6-month look-back period. As part of the enrollment application
materials, the plan provides the following statement:
This plan imposes a preexisting condition exclusion. This means that
if you have a medical condition before coming to our plan, you might
have to wait a certain period of time before the plan will provide
coverage for that condition. This exclusion applies only to conditions
for which medical advice, diagnosis, care, or treatment was recommended
or received within a six-month period. Generally, this six-month period
ends the day before your coverage becomes effective. However, if you
were in a waiting period for coverage, the six-month period ends on the
day before the waiting period begins. The preexisting condition
exclusion does not apply to pregnancy nor to a child who is enrolled in
the plan within 30 days after birth, adoption, or placement for
adoption.
This exclusion may last up to 12 months (18 months if you are a late
enrollee) from your first day of coverage, or, if you were in a waiting
period, from the first day of your waiting period. However, you can
reduce the length of this exclusion period by the number of days of your
prior ``creditable coverage.'' Most prior health coverage is creditable
coverage and can be used to reduce the preexisting condition exclusion
if you have not experienced a break in coverage of at least 63 days. To
reduce the 12-month (or 18-month) exclusion period by your creditable
coverage, you should give us a copy of any certificates of creditable
coverage you have. If you do not have a certificate, but you do have
prior health coverage, we will help you obtain one from your prior plan
or issuer. There are also other ways that you can show you have
creditable coverage. Please contact us if you need help demonstrating
creditable coverage.
All questions about the preexisting condition exclusion and
creditable coverage should be directed to Individual B at Address M or
Telephone Number N.
(ii) Conclusion. In this Example, the plan satisfies the general
notice requirement of this paragraph (c), and thus also satisfies this
requirement for any issuer providing the coverage.
(d) Determination of creditable coverage--(1) Determination within
reasonable time. If a group health plan or health insurance issuer
offering group health insurance coverage receives creditable coverage
information under Sec. 2590.701-5, the plan or issuer is required,
within a reasonable time following receipt of the information, to make a
determination regarding the amount of the individual's creditable
coverage and the length of any exclusion that remains. Whether this
determination is made within a reasonable time depends on the relevant
facts and circumstances. Relevant facts and circumstances include
whether a plan's application of a preexisting condition exclusion would
prevent an individual from having access to urgent medical care.
[[Page 645]]
(2) No time limit on presenting evidence of creditable coverage. A
plan or issuer may not impose any limit on the amount of time that an
individual has to present a certificate or other evidence of creditable
coverage.
(3) Example. The rules of this paragraph (d) are illustrated by the
following example:
Example. (i) Facts. A group health plan imposes a preexisting
condition exclusion period of 12 months. After receiving the general
notice of preexisting condition exclusion, Individual H develops an
urgent health condition before receiving a certificate of creditable
coverage from H's prior group health plan. H attests to the period of
prior coverage, presents corroborating documentation of the coverage
period, and authorizes the plan to request a certificate on H's behalf
in accordance with the rules of Sec. 2590.701-5.
(ii) Conclusion. In this Example, the plan must review the evidence
presented by H and make a determination of creditable coverage within a
reasonable time that is consistent with the urgency of H's health
condition. (This determination may be modified as permitted under
paragraph (f) of this section.)
(e) Individual notice of period of preexisting condition exclusion.
After an individual has presented evidence of creditable coverage and
after the plan or issuer has made a determination of creditable coverage
under paragraph (d) of this section, the plan or issuer must provide the
individual a written notice of the length of preexisting condition
exclusion that remains after offsetting for prior creditable coverage.
This individual notice is not required to identify any medical
conditions specific to the individual that could be subject to the
exclusion. A plan or issuer is not required to provide this notice if
the plan or issuer does not impose any preexisting condition exclusion
on the individual or if the plan's preexisting condition exclusion is
completely offset by the individual's prior creditable coverage.
(1) Manner and timing. The individual notice must be provided by the
earliest date following a determination that the plan or issuer, acting
in a reasonable and prompt fashion, can provide the notice.
(2) Content. A plan or issuer must disclose--
(i) Its determination of any preexisting condition exclusion period
that applies to the individual (including the last day on which the
preexisting condition exclusion applies);
(ii) The basis for such determination, including the source and
substance of any information on which the plan or issuer relied;
(iii) An explanation of the individual's right to submit additional
evidence of creditable coverage; and
(iv) A description of any applicable appeal procedures established
by the plan or issuer.
(3) Duplicate notices not required. If a notice satisfying the
requirements of this paragraph (e) is provided to an individual, the
obligation to provide this individual notice of preexisting condition
exclusion with respect to that individual is satisfied for both the plan
and the issuer.
(4) Examples. The rules of this paragraph (e) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan imposes a preexisting
condition exclusion period of 12 months. After receiving the general
notice of preexisting condition exclusion, Individual G presents a
certificate of creditable coverage indicating 240 days of creditable
coverage. Within seven days of receipt of the certificate, the plan
determines that G is subject to a preexisting condition exclusion of 125
days, the last day of which is March 5. Five days later, the plan
notifies G that, based on the certificate G submitted, G is subject to a
preexisting condition exclusion period of 125 days, ending on March 5.
The notice also explains the opportunity to submit additional evidence
of creditable coverage and the plan's appeal procedures. The notice does
not identify any of G's medical conditions that could be subject to the
exclusion.
(ii) Conclusion. In this Example 1, the plan satisfies the
requirements of this paragraph (e).
Example 2. (i) Facts. Same facts as in Example 1, except that the
plan determines that G has 430 days of creditable coverage based on G's
certificate indicating 430 days of creditable coverage under G's prior
plan.
(ii) Conclusion. In this Example 2, the plan is not required to
notify G that G will not be subject to a preexisting condition
exclusion.
(f) Reconsideration. Nothing in this section prevents a plan or
issuer from modifying an initial determination of creditable coverage if
it determines that the individual did not have the
[[Page 646]]
claimed creditable coverage, provided that--
(1) A notice of the new determination (consistent with the
requirements of paragraph (e) of this section) is provided to the
individual; and
(2) Until the notice of the new determination is provided, the plan
or issuer, for purposes of approving access to medical services (such as
a pre-surgery authorization), acts in a manner consistent with the
initial determination.
[69 FR 78763, Dec. 30, 2004] 
