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Limitations, Exclusions, and Riders

Like any insurance, health insurance can be complicated. Trying to understand the ins and outs of coverage can be like trying to crack an elaborate code. A big piece of the puzzle is getting familiar with policy limitations, exclusions, and riders.

What should you know about limitations and exclusions?

The trend in health insurance has been toward more comprehensive coverage. Each state has its own laws regarding health insurance, including what must be covered and what is allowed to be excluded. In addition, the Patient Protection and Affordable Care Act (PPACA) of 2010 has impacted the healthcare delivery system in the United States, including private health insurance. Still, it would be nearly impossible to find a policy that covers everything. Many policies provide limited coverage for certain types of illnesses, injuries, treatments, and procedures. These are known as the policy's limitations. More importantly, some things may not be covered at all. These are known as the policy's exclusions. Here are some common limitations and exclusions that you might find in a policy:

  • Pre-existing conditions: A pre-existing condition is an illness or injury that began or occurred before you were covered under your policy. These conditions are sometimes excluded from coverage, but are often covered after a specified waiting period (e.g., six months with no treatment or six months on the plan). However, beginning in 2010, PPACA prohibits health plans from denying children coverage based on pre-existing conditions or from including pre-existing condition exclusions for children. And, in 2014, all health insurers must sell coverage to everyone who applies, regardless of their medical history or health status, and plans will not be able to exclude coverage for those medical conditions.
  • Nonduplication of payments/coordination of benefits: To prevent double coverage, many policies specify that benefits will not be paid for expenses that are reimbursed by other insurance companies. This provision limits the total payment of benefits to 100 percent of covered expenses.
  • Care covered by the Department of Veterans Affairs, formerly known as the Veterans Administration, or by workers' compensation: This is to avoid double coverage.
  • Military duty: This provision usually suspends coverage while you're serving in the military.
  • Alcohol and/or drug abuse treatment: It's increasingly common now to find policies that cover this, as many states have mandated coverage.
  • Cosmetic surgery: A common exception to this is cosmetic surgery required as a result of an accidental injury or congenital defect.
  • Dental expenses: You generally need dental insurance, but some health insurance policies cover reconstructive dental treatment resulting from an accidental injury.
  • Alternative treatments: These include chiropractic and acupuncture. This coverage is now becoming more common.
  • Experimental procedures: This may refer to procedures that aren't yet fully endorsed by the medical community.
  • Infertility treatment: Some policies that provide extensive coverage may cover this treatment, but most do not unless mandated by state law.
  • Organ transplants: Some policies don't cover heart, liver, and kidney transplant procedures.
  • Vision correction: Procedures like laser vision correction surgery are usually not covered.
  • Certain air travel: You're generally covered while traveling on commercial aircraft, but you may not be for other types of air travel.
  • War or acts of war that result in injury: This exclusion applies whether you're a soldier or a civilian.
  • Injury incurred while committing a felony: Covering this would be like paying you for your criminal behavior.
  • Injury or illness that occurs while under the influence of intoxicants or narcotics: The rationale is that you shouldn't have been using these substances in the first place.
  • Self-inflicted injuries: The rationale for not covering these injuries is self-evident.

Limitations and exclusions can vary quite a bit among policies. The best way to find out what's covered (and to what extent) and what's not is to read your policy carefully and ask your insurer. The policy should specifically list all of the coverage limitations and exclusions.

What should you know about riders?

You can often customize a health insurance policy to your individual needs through a rider. A rider is a special provision that is printed separately and attached to your original policy. A rider can be used to make specific changes to your standard policy, or it can provide additional coverage over and above your standard coverage. A policy endorsement can accomplish the same goal--the difference is that an endorsement is actually incorporated into the body of your existing policy. Here are some common health insurance riders:

  • Waiver of premium: Some policies may offer an optional rider that allows you to stop paying your premiums during periods of extended hospitalization. You resume making premium payments once you've left the hospital, but you typically don't have to pay back the premiums that you missed.
  • Exclusion/impairment: This rider is used to specify a medical condition that might normally be covered but isn't because it's a pre-existing condition. Though the particular condition isn't covered, the use of this rider allows you to obtain coverage for other health-care needs when the excluded condition might otherwise make you uninsurable. However, beginning in 2014, coverage cannot be denied based on pre-existing conditions.
  • Additional coverage: If your insurer agrees to provide you with extra coverage that's not included in the standard insurance contract, this coverage can be added with an optional rider. The rider spells out the details of the additional coverage.

Be aware that certain types of health insurance plans (e.g., employer-sponsored plans and other group coverage) may not give you the option of adding riders to your coverage. Or, depending on your health and other factors, your insurer may not be able to offer you the riders you're seeking. Finally, keep in mind that adding a rider to your policy for additional coverage generally increases your premium. You should weigh the extra cost against your need for the rider.