Health Insurance Portability and Accountability Act

What is HIPAA?

On July 1, 1997, the Health Insurance Portability and Accountability Act (HIPAA) became law, enacting the most sweeping changes in federal health benefits legislation in over a decade. It established minimum standards for individual and group health plans. This law allows Americans greater access to health coverage, including the ability to move from job to job without losing coverage, commonly referred to as "portability".

HIPAA Defined

Briefly the provisions of HIPAA are:

1. Groups with 2-50 employees have guaranteed access to all small group medical products offered in their state, regardless of their employee's health conditions.
2. All group health plans are renewable at the employer's option, except in cases such as fraud, nonpayment of premium and failure to meet participation requirements.
3. All group health plans must accept any employee applying timely for coverage.
4. All group health plans must limit pre-existing condition exclusions to 12 months. This is explained in more detail below.
5. Pre-existing condition exclusions may not be applied at all to newborns, adopted children or pregnancy.
6. All group health plans must credit certain prior coverage when applying pre-existing condition exclusions, including short-term, limited coverage, provided the individual's coverage did not lapse for more than 63 days.

Pre-existing Condition Limitation

What is Pre-existing?
A condition present before the first day of coverage, whether or not any medical advice, diagnosis, care or treatment was recommended. or received before that day.
HIPAA's limitations on this definition
First is the "6 month look-back rule". The pre-existing condition must relate to a condition for which medical advice, diagnosis, care or treatment was recommended or received within the 6-month period ending on the enrollment date.

Second, the "prudent person" standard whereby a prudent person would have sought care can no longer be used to determine a pre-existing condition.

Finally, the 6-month look back period is based on the enrollment date. The enrollment date is the first day of coverage or, if there is a "waiting period", the first day of the waiting period. A "waiting period" refers to a delay between the first day of employment and the first day of coverage under the plan.

What is the limitation?
The pre-existing condition exclusion period may not exceed 12 months. Note: the law and regulations are clear that a pre-existing condition limitation cannot apply to pregnancy. Also, it cannot apply to newborns or adopted children under age 18 as long as the child becomes covered 30 days of such an event.

Portability

HIPAA makes it easier to move to a new job without a pre-existing exclusion on your new coverage. Pre-existing condition exclusions are waived for any period of time an insured has maintained other creditable health coverage without substantial interruption. Creditable coverage includes coverage under a self-funded employer group health plan; individual or group health insurance, COBRA or state continuation, Medicare Part A or Part B; most state, federal, and public health plans; or a state high risk pool. A substantial interruption of coverage means a gap of 63 or more days, not including waiting periods. If coverage has been substantially interrupted, no "credit" will be received for coverage before the interruption.

Certificates of Prior Coverage

HIPAA requires health plans to give individuals leaving the plan written certification of prior coverage to ensure these individuals can receive credit for prior coverage under a new group health plan. This certification must be provided at the time of an individual's termination, as well as upon request by the individual within 24 months following the end of coverage.

Health plans receiving this certification from an individual enrolling in the plan must notify the individual of any pre-existing condition period applying under the new plan. The rules require employers and insurers to issue these certificates; however, a party is deemed to have satisfied its certification requirements if the other agrees to provide them. Thus, your employer may not need to provide you with this certification if the insurance carrier has agreed to take over this responsibility.

Guarenteed Individual Coverage

Federally eligible individuals may purchase individual coverage without pre-existing condition exclusions. A federally eligible individual is someone who has maintained prior creditable coverage without substantial interruption for at least 18 months. The last portion of this prior coverage must have been under an employer group health plan with two or more employees.

The State of Illinois became the administrator for those individuals who could not obtain individual medical coverage (after being on a group plan) due to their health. The name of this is the HIPAA-Comprehensive Health Insurance Plan (CHIP) or HIPAA-CHIP.

If you would like additional information regarding HIPAA, you can log onto the Department of Health and Human Services website.