What is Creditable Coverage?

Creditable coverage is a term that is used to describe prior healthcare coverage that was held before enrolling in the current healthcare plan. In many instances, this prior coverage is only considered creditable if there was not a lapse in coverage between the two plans that exceeds 63 days. There are often some limits on what may be considered creditable coverage, with dental and vision plans sometimes excluded from this consideration. In some cases, health insurance plans associated with specific diseases may also be considered outside the scope of creditable coverage.

The recognition of creditable coverage is often important when changing from one health insurance plan to another. This is particularly true when transitioning to plans offered by a previous employer and a new employer. One of the key points of focus has to do with any pre-existing conditions that the employee or members of the family covered under the plans may possess. In many nations, if there is a gap of at least 63 days between the final coverage date on the old plan and the start date of the new one, the new insurance provider may be able to impose some sort of time limits on those pre-existing conditions.

For example, if an individual’s employment is terminated and he or she does not elect to maintain the insurance coverage, the plan will soon lapse. Should the individual be unable to secure employment that includes health insurance as part of the benefit package within 63 days of that lapse, any pre-existing conditions could either be excluded from the coverage or not be considered covered for a period of time that may range from 90 days to a full calendar year. This means that if the individual is diabetic and must take medication to control the condition, the new insurance plan will not cover the costs of that medication until the time frame connected with the pre-existing condition is fulfilled. In the interim, the individual will have to manage the purchase of the diabetes medication without assistance from the health insurance provider.

The same general principal applies when transitioning from a group health insurance plan to either a government-sponsored healthcare plan or an individual insurance plan. Here, the creditable coverage must be established in order for pre-existing conditions to be covered immediately, with no waiting period. This would mean that if an individual’s employment is terminated for any reason, he or she may choose to migrate to an individual health plan rather than hoping to secure group coverage with a new employer. By moving quickly to secure the new plan, the issuance of a certificate of creditable coverage is highly likely, and benefits to aid in managing pre-existing health conditions are readily available.