What does 'waiting period' refer to in health insurance policies?

In health insurance policies, the term 'waiting period' specifically refers to the time span before coverage for a particular condition takes effect. During this waiting period, any claims related to the specified condition will not be paid by the insurance provider. This practice is commonly implemented to manage the risk of adverse selection, where individuals might seek coverage primarily for existing health issues that they anticipate requiring immediate medical attention. By establishing a waiting period, insurers can mitigate potential losses associated with these pre-existing conditions.

For instance, if a policy includes a waiting period of six months for coverage of major medical expenses due to a pre-existing condition, insured individuals would not be eligible for coverage or reimbursement for treatments related to that condition until the waiting period concludes. This mechanism ensures that the insurer maintains a balance between covering risks and maintaining the financial viability of the insurance pool.