You probably know the
Health Insurance Portability and Accountability Act, or HIPAA, from the
privacy-notification forms you have to sign at your doctor's office and
pharmacy. HIPAA, enacted by the United States Congress in 1996, has two
functions.
The first part of the law was designed to ease a
problem known as "job lock" — the reluctance to move from one company
to another for fear of losing health insurance. (Another federal law called COBRA helps you buy health insurance benefits if you lose a job. Know your COBRA rights.)
Health insurance companies have traditionally tried
to control costs by using a "pre-existing condition" clause — refusing
to cover a condition that existed before you purchased a health
insurance plan.
The concept of pre-existing conditions is simple: If you were to purchase car insurance and your windshield was cracked before you bought your coverage, you can't expect your new car insurer to replace it.
Before HIPAA was enacted, if you switched to a new
group health plan, the new insurer could consider your diabetes a
pre-existing condition and refuse to cover treatment. You would then
have to pay for all of your diabetes treatment.
HIPAA imposes limits on the extent to which some
group health plans can exclude health insurance for pre-existing
conditions. For instance, if you've had "creditable" health insurance
for 12 months, with no lapse in coverage of 63 days or more, a new
group health plan cannot invoke a pre-existing condition exclusion. It
must cover your medical problems as soon as you enroll in the plan.
- A group health plan
- Medicare
- Medicaid
- A military-sponsored health care program such as TriCare
- Health plans offered by the Indian Health Service
- A state high-risk health insurance pool
- The federal Employees Health Benefit Program
- A public health plan established or maintained by a state or local government
- A health benefit plan provided for Peace Corps members
On the other hand, if you are not
switching from a “creditable” coverage plan when you enroll in a new
group plan — or had coverage from an overseas health insurer — your new
insurer can refuse to pay for treatment of your pre-existing conditions
for 12 months (except pregnancy, if the plan has maternity coverage). Late enrollees in group health plans might have to wait up to 18 months for coverage of pre-existing conditions.
Pre-existing conditions
A
pre-existing condition is generally considered a physical or mental
ailment for which medical advice, diagnosis, care or treatment was
recommended or received before you enroll in a health insurance plan.
It can also be a problem you were aware of, but for which you never sought treatment.
Under some health insurance policies, a medical problem can be
considered pre-existing even if you didn't know you had the problem
before you bought your health plan.
|
There is no federal law that requires health plans to provide maternity coverage, although some states have such laws.
In
some states, health plans provided by an employer or group typically
include maternity benefits. Health maintenance organizations (HMOs) are
required by state law to have maternity coverage. Preferred provider
organizaions (PPOs) can choose to exclude the benefit. (Read more about
how pregnancy complicates health insurance options.)
HIPAA's
rules apply to every employer group health plan that has at least two
participants who are current employees, including companies that are
self-insured. States have the option of applying the rules to "groups"
of one, which some have opted to do. That helps the
self-employed. Some states also have enacted their own laws protecting
health insurance applicants, and in many cases the states afford more
rights than federal law.
There is one
major exception to HIPAA: It provides no protection if you switch from
one individual health plan to another individual plan.
In
an effort to balance the interests of consumers and insurers, HIPAA
also contains plenty of other exceptions, conditions and loopholes that
limit your rights. It's important to understand HIPAA before you change health plans.
Employers are not required by any law to offer employee health insurance.
Even
if employers do offer health insurance, it's possible they don’t have
to cover such things as mental health or maternity, but this depends on
state mandates. Levels of mandated coverage vary from state to state. The Council for Affordable Health Insurance provides a list of state mandates for group health insurance.
While
HIPAA makes it much easier to get health insurance from your new
employer if you switch jobs, it doesn’t guarantee the same level of
benefits, deductibles or claim limits you might have enjoyed under your
former employer’s health plan. The law is meant to provide valuable
protection against having to start new waiting periods for coverage of
pre-existing conditions when you change jobs.
Your
group health insurance can be canceled if you or your employer fail to
pay the premiums, commit fraud, violate health plan rules or move
outside of your insurer's service area. HIPAA also allows employers to
impose a waiting period, generally one to three months, before you
become eligible to join the group health plan. Such waiting periods do not count as a lapse in health insurance and you would not be penalized under HIPAA's 63-day window.
HIPAA requirements do not apply to "excepted benefits." Those benefits include:
- Coverage only for accidents (such as accidental death and dismemberment) or disability income insurance
- Liability insurance
- Supplements to liability insurance
- Workers compensation or similar insurance
- Automobile medical payment insurance (known as "MedPay")
- Credit-only insurance (for example, mortgage insurance)
- Coverage for on-site medical clinics
Under
HIPAA, if you've already been in a group health plan, chances are you
won't have to sit out the full 12-month exclusion period. Your new
health plan must give you "credit for time served" — the amount of time
you were enrolled in your previous plan — and deduct it from the
exclusion period. Thus, if you've had 12 or more months of continuous
health insurance, you'll have no waiting period for pre-existing
conditions. If you had prior coverage for eight months, you can be
subject to only a four-month exclusion period when you switch jobs.
Let's
say you're a recent college graduate and you haven't had health
insurance for the last six months. Then you land a job that offers you
group health coverage. Because you've had such a long lapse in
coverage, you'll likely face the 12-month exclusion period for any
existing medical problems. (Insurers are not required to impose these
pre-existing exclusions, but it is standard practice.)
| In order to keep your coverage continuous, you cannot have a lapse in coverage for 63 days or more. |
In order to keep your health insurance continuous, you cannot have a lapse or break in coverage for 63 days or more.
The
U.S. Centers for Medicare and Medicaid Services warns it’s crucial to
maintain health insurance when you leave a job if you want to avoid
exclusions for pre-existing conditions in your new employer’s health
plan. A good way to bridge a lapse in insurance is through the
Consolidated Omnibus Budget Reconciliation Act (COBRA). Here are 10 things you should know about COBRA.
Whenever
you leave any health plan, either group or individual, get a
"certificate of creditable coverage" in writing. Your certificate
should list the following:
- Your coverage dates.
- Your policy ID number.
- The insurer's name and address.
- Any family members included under your coverage.
This
is the easiest way to ensure your rights are secured under HIPAA. You
can use other evidence to prove creditable coverage. These include:
- Pay stubs that reflect a health insurance premium deduction
- Explanation-of-benefit forms
- A benefit-termination notice from Medicare or Medicaid
- A verification letter from your doctor or your former health insurance provider that you had prior coverage
If
your employer decides to drop group health insurance, HIPAA might make
it easier to get an individual health insurance policy.
Under
HIPAA, you might be able to buy an individual health plan without the
threat of exclusions for pre-existing conditions. In order to do so,
you have to qualify as an "eligible individual."
In
some states, if you qualify for individual health insurance under
HIPAA, any company offering individual health plans in that state must
sell you coverage. Your state’s insurance department can explain the
rules.
To be eligible as an individual under HIPAA, you must:
- Have at least 18 months of continuous creditable coverage without a gap of more than 63 days.
- Have
been covered under a group health plan, a government health plan or
church plan (or health insurance offered in connection with such plans,
such as COBRA) during the most recent period of creditable coverage. If
you do not have a creditabe coverage certificate, you can talk to the
health plan to find out if there are other ways you can prove you had
18 months of coverage.
- Not be eligible for coverage under a group health plan (including a spouse's plan), Medicare or Medicaid.
- Not have other health insurance.
- Have
not lost your most recent health coverage due to nonpayment of premiums
or fraud (unless it was your employer that failed to pay premiums).
- Have
elected and exhausted any option for continuation of coverage under
COBRA (or a similar state law) that was available under your prior
plan.
HIPAA does not
limit the premiums individual health plans can charge. While your
application for insurance won't be rejected because of health problems,
the premiums for individual coverage can be much higher than for group
plans.
