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What is a health insurance moratorium?

“In plain English, a moratorium (pronounced “more-uh-taw-ree-um”) is a suspension of activity. As a legal term, it means a postponement of something or other until a given obligation has been undertaken. The second definition is the one we need when explaining what a health insurance moratorium is.

 

In health insurance, the “something” being postponed is cover for a given pre-existing condition.

The “obligation” is for you to stay free from that condition for a set period of time.

If you meet the obligation, the postponement will stop, and cover will start – and your insurance company will pay for treatment of the condition if it ever happens again.

You’ll also see this described as “moratorium underwriting”.

So, if your new health insurance policy has moratorium underwriting, this means that cover for a pre-existing condition will be withheld (postponed) until you’ve been free of that condition for a given period of time (usually between 1-2 years).

You will be covered for new medical conditions – just not for any conditions for which you had treatment, medicine, or advice from a medical professional, during a set period before you took out the policy (usually five years).

In most moratorium policies, the moratorium period rolls over – so, let’s say you have a two year moratorium on sciatica, and the sciatica flares up inside those two years, the two year period starts again.

More rarely, the moratorium is fixed – in this case, cover resumes after your moratorium even if you do have a flare-up.

A moratorium policy will usually cost the same as a fully medically underwritten policy, but involves less paperwork than full medical underwriting, which will also often exclude pre-existing conditions permanently. It may or may not be right for you, so make sure you talk through the pros & cons with an unbiased health insurance adviser before you commit to anything.

 

 

Aaron Valente is a director of Key Health Partnership, and specialises in health insurance and other health finance products. He’s been working in the insurance industry since 2002, and started out as a healthcare advisor for Aviva.

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