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Frequently Asked Questions About Health Insurance Portability Law

Frequently Asked Questions About Health Insurance Portability Law

March 19, 2008

Q. How will the new law help people who currently have health insurance through their employer and who want to change jobs?

A. Currently some plans do not cover pre-existing medical conditions. HIPAA limits this practice so that most plans cover an individual’s pre-existing condition after 12 months. If at the time you change jobs you already have 12 months of continuous group health coverage, you will not have to start over with a new 12-month exclusion for any pre-existing conditions. Under HIPAA, your new employer will be required to give you credit for the length of time that you had continuous group health coverage.

Q. How does “crediting” for pre-existing conditions work under HIPAA?

A. You will receive credit for your previous coverage that occurred without a break in coverage of 63 days or more. However, any coverage occurring prior to a break in coverage of 63 days or more would not be credited against an exclusion period. To illustrate, suppose an individual had coverage for two years followed by a break in coverage for 70 days and then resumed coverage for eight months. That individual would only receive credit against any pre-existing condition exclusions for eight months of coverage; no credit would be given for the two years of coverage prior to the break of 63 days.

It is also important to remember that during any exclusion period you may be entitled to COBRA continuation coverage. “COBRA” is the name for a federal law that provides workers and their families the opportunity to purchase group health coverage through their employer’s health plan for a limited period of time (generally 18, 29 or 36 months) if they lose coverage due to specified events including termination of employment, divorce or death. Workers in companies of 20 or more employees generally qualify for COBRA.

Q. Can I receive credit for previous COBRA coverage?

A. Yes. Under HIPAA any period of time that you are receiving COBRA continuation coverage is counted as previous continuous health coverage as long as the coverage occurred without a break in coverage of 63 days or more. For example, if you were covered for five months by a previous health plan and then received seven months of COBRA continuation coverage, you would be entitled to receive credit for 12 months by your new group health plan.

Q. What is a “pre-existing condition”?

A. Under HIPAA a “pre-existing condition” is a condition for which medical advice, diagnosis, care or treatment was recommended or received within the six-month period ending on the enrollment date in any new health plan. If you had a medical condition in the past, but have not received any medical advice, diagnosis, care or treatment within the six months prior to enrolling in the plan, your old condition is not a pre-existing condition for which exclusion can be applied.

Q. Are there “pre-existing conditions” that cannot be excluded from coverage?

A. Pre-existing condition exclusions cannot be applied to pregnancy, regardless of whether the woman had previous coverage. In addition, a pre-existing condition exclusion cannot be applied to a newborn or adopted child under age 18 as long as the child became covered under the health plan within 30 days of birth or adoption, provided they do not incur a subsequent 63 day or longer break in coverage.

Q. How will newly hired employees prove they had prior health coverage that should be credited?

A. Under HIPAA, providing information about an employee’s prior health coverage is the responsibility of an employee’s former employer, group health plan and/or the insurance company providing such coverage. HIPAA sets specific reporting and certification requirements for group health plans, insurance companies and HMO’s. Certification statements detailing when the employee was covered under the plan must be provided to employees when they are no longer covered by the plan and when the employees’ COBRA coverage ceases.

Q. What if I have trouble getting documentation from a prior employer?

A. Under HIPAA, insurers and group health plans are required to provide documentation to individuals that certifies any credible coverage they have earned. Insurers and group health plans that fail or refuse to provide such certification are subject to monetary penalties under HIPAA. HIPAA also requires that a process be established that will allow individuals to show they are entitled to credible coverage in situations where they cannot obtain a certification from an insurer or group health plan. It is important, therefore, for individuals 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 credible coverage in the event a certification cannot be obtained from an insurer or group health plan.

Q. If I change jobs am I guaranteed the same benefits that I have under my current plan?

A. No. When a person transfers from one plan to another, the benefits the person receives will be those provided under the new plan. Coverage under the new plan could be less or could be greater.

Q. Will I be covered immediately under my new employer’s plan?

A. Not necessarily. Employers and insurance companies may set a waiting period before enrollees become eligible for benefits under the plan. HMO’s may have an “affiliation period” during which an enrollee does not receive benefits and is not charged premiums. Affiliation periods may not last for more than two months and are only allowed for HMO’s that do not use pre-existing condition exclusions.

Q. Can I lose coverage if my health status changes?

A. Group health plans and issuers may not establish eligibility for enrollment based on your health status, medical condition (physical or mental), claims experience, receipt of health care, medical history, genetic information, evidence of insurability or disability. For example, you cannot be excluded or dropped from coverage the health plan offers just because you have a particular illness.

Although employers may establish limits or restrictions on benefits or coverage for similarly situated individuals under a plan, they may not require an individual to pay a premium or contribution which is greater than that for a similarly situated individual based on health status. They may also change plan benefits or covered service if they give participants notice of any “material reductions” within 60 days after the change is adopted.

Q. Does HIPAA require employers to offer health coverage or to provide specific benefits?

A. No. The provision of health coverage by an employer is still voluntary. HIPAA does not require specific benefits nor does it prohibit a plan from restricting the amount or nature of benefits for similarly situated individuals.

Q. What if my new employer does not provide health coverage?

A. There is no requirement for any employer to offer health insurance coverage. If your new employer does not offer health insurance, you may, if qualified, continue coverage under your previous employer’s health plan under COBRA.

Q. What if I am unable to obtain group coverage?

A. You may have the option of obtaining coverage under an individual policy. HIPAA would guarantee access to individual insurance for those who:

● Have not had group coverage for at least 18 months.

● Did not have their group coverage terminated because of fraud or nonpayment of premiums.

● Are ineligible for COBRA or have exhausted their COBRA benefits; and

● Are not eligible for coverage under another group health plan.

The opportunity to buy an individual insurance policy is the same whether the individual is laid off, fired or quits his or her job. For information on individual insurance policies you should contact your State Insurance Commissioner’s office or the Health Care Financing Administration.

Q. What if I cannot afford the premiums for health coverage?

A. HIPAA does not set premium rates but is does prohibit charging an individual more than similarly situated individuals in the same plan because of health status. Employers may offer premium discounts or rebates for participation in wellness or other health care promotions. In addition, many states limit insurance premiums and HIPAA does not pre-empt current or future state laws regulating the cost of insurance.

Q. If coverage under my health plan is provided through an HMO or an insurance policy of an insurance company licensed in my state, are there any state offices that I can contact if I have questions about my plan’s insurance policy?

A. Yes. The State Insurance Commissioner’s office can assist you in matters involving a group or individual health insurance policy offered by an insurance company licensed in your state. This includes managed care coverage offered by HMO’s.

In addition, many states may limit insurance premiums and HIPAA does not pre-empt current or future state laws regulating the cost of insurance.

Information courtesy of What Every Business Manager and HR Professional Should Know About Federal Labor and Employment Laws

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