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HIPAA

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) – also known as the Kassebaum-Kennedy Act – was designed to provide a smooth transition of health insurance coverage for people with a serious illness, disability, or other “preexisting conditions”. Prior to HIPAA, it was very difficult for an ill or disabled employee to obtain coverage when changing employers because the new insurance provider would frequently avoid or deny coverage of their “preexisting conditions”. This dilemma was referred to as “job-lock”. In addition to changing from one employer to another, HIPAA regulations also apply to employees leaving to become self-employed.

In summary, HIPAA guarantees the continuation of health benefits to individuals who have been insured for 12 months immediately prior to a change of employment as long as they choose to participate in the new employer’s group health coverage. HIPAA laws do not force any employer to provide group health coverage, but they do regulate what happens assuming the employers do offer this type of coverage.

Any break in coverage for more than 63 days during this twelve-month period will void eligibility for HIPAA protection and allow any new insurer to delay coverage for preexisting conditions.

Important Tip: If you have a break in coverage for over 63 days, some insurers will allow you to start the new plan retroactively (usually no more than 90 days retroactively). You will have to pay for the current month and all retroactive months at the start of the new policy, but you will not lose your eligibility for HIPAA coverage as long as your effective gap in coverage is less than 63 days. In addition, if you paid for medical care during the retroactive coverage period, you may be able to get reimbursed for part or all of your expenses, depending on your coverage. Consult your insurance broker or new employer for more information on retroactive coverage.

If an employee does not meet these coverage requirements, the new health care provider is allowed to exclude coverage of the preexisting condition for as much as 12 months.

Preexisting conditions are not limited to conditions for which you actually received medical treatment. Essentially, a preexisting condition is anything that you did, should, or were advised to get treatment for during the six months prior to the start of any new coverage.

Under HIPAA, your health status and/or medical condition cannot be used to determine your initial or continued eligibility for health coverage.

Under HIPAA, a “health status-related factor” cannot be used to charge one employee a higher premium rate than any other employee in the same class (meaning someone with the same age, sex, etc.)

Under HIPAA, all employees in the same class must be granted the same coverage and subject to the same limitations. For example, a cap or limit on any type of coverage cannot affect an individual with a covered disability or illness any more than it affects the average employee in the same class. However, caps or limitations to coverage are permissible as long as they do not discriminate.

This is only a partial summary of HIPAA regulations. For more specific information about HIPAA coverage, we recommend contacting you state’s Department of Insurance, a professional insurance advisor, or an attorney.