Developed by the U.S. Department of Labor Pension and Welfare Benefits Administration Revised September 1998
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) recently amended the Employee Retirement Income Security Act to provide new rights and protections for participants and beneficiaries in group health plans. Understanding this amendment is important to your decisions about future health coverage. HIPAA contains protections both for health coverage offered in connection with employment (“group health plans”) and for individual insurance policies sold by insurance companies (“individual policies”).
If you find a new job that offers health coverage, or if you are eligible for coverage under a family member’s employment-based plan, HIPAA includes protections for coverage under group health plans that:
- limit exclusions for preexisting conditions.
- prohibit discrimination against employees and dependents based on their health status.
- allow a special opportunity to enroll in a new plan to individuals in certain circumstances.
If you choose to apply for an individual policy for yourself or your family HIPAA includes protections for individual policies that:
- guarantee access to individual policies for people who qualify.
- guarantee renewability of individual policies.
What is a “preexisting” condition?
A “preexisting condition” is a condition present before your enrollment date in any new group health plan.
Under HIPAA, the only preexisting conditions that may be excluded under a preexisting condition exclusion are those for which medical advise, diagnosis, care or treatment was recommended or received within the 6-month period before your enrollment date. (Your enrollment date is your first day of coverage, or if there is a waiting period to get into the plan, the first day of the waiting period.)
If you had a medical condition in the past, but have not received any medical advise, diagnosis, care or treatment within the 6 months prior to your enrollment date in the plan, your old condition is not a “preexisting condition” to which an exclusion can be applied. Moreover, under HIPAA, preexisting condition exclusions cannot be applied to pregnancy; regardless of whether the woman had previous health coverage.
Finally, a preexisting condition exclusion cannot be applied to a newborn, adopted child or child placed for adoption as long as the child enrolls for health coverage within 30 days of the birth, adoption or placement for adoption and provided that the child does not incur a subsequent 63-day break in coverage.
I have a preexisting condition that may be excluded under HIPAA. How does my new plan determine the length of my preexisting condition exclusion period?
The maximum length of a preexisting condition exclusion period is 12 months after your enrollment date (18 months in the case of a “late enrollee”). A late enrollee is an individual who enrolls in a plan other than on the earliest date on which coverage can become effective under the terms of the plan and other than on a “special enrollment date” (see below).
A plan must reduce an individual’s preexisting condition exclusion period by the number of days of an individual’s “creditable coverage.” Most health coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), HMO, individual insurance policy, Medicaid or Medicare. However, a plan is not required to take into account any days of creditable coverage that precede a significant break in coverage (generally, a break in coverage of 63 days or more).
A plan generally receives information about an individual’s creditable coverage from a certificate furnished by a prior plan or health insurance issuer (e.g., an insurance company or HMO). You should receive a certificate of creditable coverage automatically when you lose coverage under your old plan or when you become entitled to COBRA continuation coverage and when your COBRA continuation coverage ceases. You also have a right to receive a certificate when you request one from your previous plan or issuer within 24 months of when your coverage ceases (including before your coverage ceases).
I received my certificate from my former plan. what do I do now?
- ensure that the information is accurate. (Contact the plan administrator of your former plan if any information is wrong.)
- keep the certificate in case you need it. (You will need the certificate if you enroll in a new group health plan that applies a preexisting condition exclusion period or if you purchase an individual policy from an insurance company.)
What if I have trouble getting a certificate from my former employer’s group health plan?
Under HIPAA, group health plans and health insurance issuers are required to provide documentation that certifies the creditable coverage you have earned. Plans and issuers that fail or refuse to provide such certificates are subject to penalties under HIPAA.
However, if you have trouble obtaining a certificate, your new group health plan is required to accept other evidence of creditable coverage, if you have it. It is important, therefore, to keep accurate records (e.g., pay stubs, copies of premium payments or other evidence of health care coverage) that can be used to establish periods of creditable coverage in the event a certification cannot be obtained.
When I enroll in a new group health plan that contains a preexisting condition exclusion period) how does “crediting” for prior coverage work under HIPAA?
Most plans will use what is known as the “standard method” of crediting coverage. Under this method, you will receive credit for your previous coverage that occurred without a break in coverage of 63 days or more. Any coverage you had prior to a break in coverage of 63 days or more may not be credited against a preexisting condition period. However, if your health coverage is offered through an HMO or an insurance policy issued by an insurance company, you should check with your State Insurance Commissioner’s office to find out if this break in coverage period is longer in your state.
To illustrate: Suppose an individual had health insurance coverage for 2 years followed by a break in coverage of 70 days and then resumed coverage for 8 months. That individual would only receive credit for 8 months of coverage. No credit would be given for the 2 years of coverage prior to the break in coverage of 70 days.
HIPAA also permits an “alternative method” for crediting coverage for all employees. Under the alternative method of calculating creditable coverage, the plan or issuer separately determines the amount of an individual’s creditable coverage for any of the five following categories of benefits: mental health, substance abuse treatment, prescrip- tion drugs, dental care and vision care. Your new plan must notify you if it is using the alternative method for any of these benefits.
What are my new group health plan’s obligations with respect to “special enrollment opportunities”?
A group health plan is required to allow special enrollment for certain individuals to enroll in the plan without having to wait until the plan’s next regular enrollment season.
A special enrollment opportunity occurs if an individual with other health insurance loses that coverage. A special enrollment opportunity also occurs if a person has (or becomes) a new dependent through marriage, birth, adoption or placement for adoption. However, you must notify the plan of your request for special enrollment within 30 days after closing your other coverage or within 30 days of having (or becoming) a new dependent.
If you enroll as a special enrollee, you may not be treated as a late enrollee for purposes of any pre- existing condition exclusion period. Therefore, the maximum preexisting condition exclusion period that may be applied is 12 months, reduced by your creditable coverage (rather than 18 months, reduced by creditable coverage)
Can I be denied coverage or charged more for coverage by my new group health plan based on my health status?
No. First, group health plans and health insurance issuers may not establish rules for eligibility (including continued eligibility) of any individual to enroll under the terms of the plan based on “health status related factors.” These factors include: health status, medical condition (physical or mental), claims experience, receipt of health care, medical history; genetic information, evidence of insurability and disability However, plans may establish limits or restrictions on benefits or coverage for all similarly situated individuals.
Second, plans generally may not require an individual to pay a premium or contribution that is greater than that for a similarly situated individual based on a health status related factor.
What if l am unable to obtain new group health plan coverage?
You may be able to purchase an individual insurance policy HIPAA guarantees access to individual policies to “eligible individuals.” Eligible individuals are those who:
- have had coverage for at least 18 months where the most recent period of coverage was under a group health plan.
- did not have their group coverage terminated because of fraud or nonpayment of premiums.
- are ineligible for COBRA continuation coverage or have exhausted their COBRA benefits (or continuation coverage under a similar state provision).
- are not eligible for coverage under another group health plan, Medicare or Medicaid or have any other health insurance coverage.
The chance to buy an individual policy is the same, whether you are laid off, fired or quit your job. However, the type of coverage you are guaranteed may differ across states. Therefore, it is important to check with your State Insurance Commissioner’s Office if you are interested in obtaining individual insurance coverage. The Utah number would be 801-538-3826 or 1-800-439-3805.
In addition, children in families who do not have health coverage due to a temporary reduction in income (for instance, due to job loss) may be eligible for the Children’s Health Insurance Program (CHIP). CHIP is a federal/state partnership that is helping to provide children with health coverage.
States have flexibility in administering programs under CHIP State agencies may choose to expand their Medicaid programs, design new child health insurance programs or create a combination of both. To find out more about this program in Utah go to http://www.health.state.ut.us/chip.