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Page 2: HIPAA: Your rights to health insurance portability

Individual health plans and HIPAA.

If your employer decides to drop group health coverage, HIPAA might make it easier to get an individual health 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 coverage 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.
  • Have been covered under a group health plan, a governmental plan, or church plan (or health insurance offered in connection with such plans, such as COBRA) during the most recent period of creditable coverage.
  • Not be eligible for coverage under a group health plan (including a spouse's plan), Medicare or Medicaid.
  • Not have other health insurance coverage.
  • Have not lost your most recent health coverage due to non-payment 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.

Your premiums are not governed by HIPAA.

Deborah Chollet, a senior fellow at Mathematica Policy Research, says HIPAA has two shortcomings when it comes to premiums for individual policies. “One is it didn't say anything about how that coverage would be priced. Even if I am leaving the group market, I have lost coverage in the group market for reasons I do not control, HIPAA did not constrain insurers in any way for how they price you coming in,” Chollet said.

“The other thing that HIPAA did not do is make the world safe for people who live in the individual market. If I am in the individual market, I can easily get trapped in a policy. I may have gotten into this policy, but I decided the rates have gone up so I want to shop around. I want to look for other coverage. I don't have guaranteed issue. I have no guarantees that I can find another insurer who will accept me. If I have a guarantee, it comes from the state. It doesn't come from any federal guarantees,” Chollet adds.

In addition, your benefits could be vastly different under an individual plan. That's why when you're moving from a group plan to an individual plan, it's important to shop around for the best rates and benefits.

“The policies vary tremendously in their content,” points out Steve Larsen, former Maryland Insurance Commissioner. “Maryland has many what are called ‘mandated benefits,’ which are laws that require certain benefits to be provided. Beyond that core group of benefits there is a lot of variation, particularly in terms of deductibles and cost sharing.”

“If you are lucky enough to qualify, to not be excluded, and you are comparing individual policies from two carriers, it is hard to compare apples to apples. They have different co-pays, different deductibles, different cost sharing. So the products do vary tremendously,” Larsen adds.

In some cases, you might be offered a "conversion plan" when you lose your group health coverage. That essentially lets you convert your group coverage into an individual plan from the same health insurer, with certain restrictions.

If at all possible, you should buy health insurance through a group plan, as they generally have broader benefits and wellness care. You don't necessarily need to buy group plans through an employer. Trade associations and chambers of commerce often offer their members group health insurance. In some states, you can get group coverage if you're self-employed — as a "group of one."

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