The HIPAA Law: Your Rights to Health Insurance Portability

If you're worried about keeping your health benefits when you change jobs, you should know about a federal law called HIPAA. It's the Kennedy-Kassebaum Act, also known as the Health Insurance Portability and Accountability Act of 1996, or HIPAA for short. While HIPAA offers only little protection if you're switching from a group health plan to an individual health plan, and even less if you don't have insurance at all, it can help you from losing benefits you already have when you move from one group plan to another.
The law was designed to ease what was then a growing problem known as "job lock" — the reluctance to move from one company to another for fear of losing health benefits.

Your Rights Under HIPAA
Pre-Existing Conditions

A pre-existing condition is generally considered a physical or mental condition for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period prior to your enrollment date.
You might be surprised, however, to learn that it can also be considered a problem that you were aware of but never sought treatment for.

And worse, under some definitions, notes the Arizona Department of Insurance, a medical problem can be considered pre-existing even if you didn't know you had the problem before you bought your health plan.

HIPAA says that group health plans cannot deny your application for coverage based solely on your health status. It also gives workers who change or lose jobs better access to health insurance; limits exclusions for pre-existing conditions; and guarantees renewability and availability of health coverage to certain employees and individuals.

In addition, HIPAA says you can't be denied coverage because of mental illness, genetic information, disability, or the claims you've filed in the past.

Group health plans also cannot consider pregnancy a pre-existing condition and can't exclude coverage for prenatal care or your baby's delivery. However, there is no federal law that requires health plans to actually provide maternity coverage. Some states, though, do mandate such coverage. Thus, this HIPAA provision only applies to health plans that offer maternity coverage.

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 group rules to "groups" of one, which some have opted to do — a big bonus for the self-employed. Some states also have enacted their own laws protecting health care consumers, and in many cases they afford more rights than federal law.

Unfortunately, there is one huge exception to HIPAA: It provides no protection if you switch from one individual health plan to another individual plan. That's what makes buying individual plans especially difficult for people who have chronic medical problems — the insurers can simply turn them away time after time.

The Ifs, Ands, or Buts of HIPAA
In an effort to balance the interests of consumers and the interests of insurers, HIPAA also contains plenty of other exceptions, conditions, and loopholes that limit your rights. Thus, it's important to understand them under HIPAA before you change health plans.

The first thing to understand are some fundamental tenets of the American health care system. Employers are not required by any state or federal law to offer or pay for health insurance for employees. And unless mandated by state law, employers are not told to offer specific types of benefits, such as mental health or maternity coverage. Further, just because HIPAA grants you insurance "portability" does not mean that you'll have the same benefits, premiums, co-payments, or deductibles when you move from one health plan to another.

Your health coverage can also 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 does not eliminate the common practice of requiring a waiting period, generally one to three months, before you become eligible to join a new group health plan when you switch jobs. (Note, however, that waiting periods do not count as a lapse in health coverage, and thus would not penalize you under HIPAA.)

HIPAA requirements also do not apply to certain types of benefit plans known as "excepted benefits." Those benefits are:

Coverage only for accident (including accidental death or 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.
Coverage When You're Already Sick
The driving force behind HIPAA is that health insurance companies have traditionally tried to hold down their costs by invoking a "pre-existing condition" clause — refusing to cover a condition you had before you bought the health plan.

The concept of pre-existing conditions makes sense when you're talking about auto insurance: For example, if your windshield was cracked before you bought your coverage, you can't expect your new auto insurer to replace it after you buy a policy. That would be like asking your insurer to replace the windshield for free when you haven't paid premiums for that problem.

But when it comes to someone's health, the issue might seem less clear-cut or even downright unfair.

Got diabetes? Your current health plan might pay for insulin and visits to the doctor. But before HIPAA was enacted, if you switched to a new health plan, it would have been allowed to consider your diabetes a pre-existing condition and refuse to cover treatment for it. You'd then be stuck paying for all of your diabetes treatment yourself, on top of the regular out-of-pocket expenses you'd pay for other medical care. The frightening prospect of having to pay hundreds or thousands of dollars for your medical care is what created job lock and helped fuel the push for legislation banning such practices.

HIPAA imposes limits on the extent to which some health plans can exclude coverage for pre-existing conditions. For instance, if you've had "creditable" health insurance for 12 straight months, with no lapse in coverage of 63 days or more, and you switch to a new group health plan, it cannot invoke the pre-existing condition exclusion at all. It must cover your medical problems as soon as you enroll in the plan. (Newborns and adopted children who are covered within 30 days are not subject to the 12-month waiting period.)

Most health coverage is creditable. It includes prior coverage under a group health plan (including a governmental or church plan), health insurance coverage (either group or individual), Medicare, Medicaid, a military-sponsored health care program such as CHAMPUS, a program of the Indian Health Service, a state high-risk pool, the federal Employees Health Benefit Program, a public health plan established or maintained by a state or local government, and a health benefit plan provided for Peace Corps members.

On the other hand, if you don't have that creditable coverage behind you when you enroll in a new group plan, it can refuse to pay for any of your existing medical problems, but only for a maximum of 12 months. Late enrollees in group health plans may have to wait up to 18 months for coverage of pre-existing conditions.

Giving You Credit Where Credit is Due
Chances are, if you've already been in a group health plan, you won't have to sit out the full 12-month exclusion period, though. 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 group coverage, you'll have no pre-existing condition waiting period. And if you had prior coverage for eight months, you can be subject to only a four-month exclusion period when you switch jobs.

But let's say you're a recent college graduate and you haven't had health insurance for the last six months because you'd rather spend your money elsewhere. But 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 you have. (Keep in mind that insurers are not required to impose these pre-existing exclusions, but it is their standard practice.)

In order to keep your coverage continuous, you cannot let it lapse for more than 62 days. That's where COBRA can help. If you leave one company before starting with another, consider buying COBRA coverage to keep your coverage continuous. Otherwise, you'll be back at square one and faced with another 12-month exclusion period.

Whenever you leave any health plan, either group or individual, make sure that you get a "certificate of creditable coverage" in writing. This is the only way to ensure your rights under HIPAA. Among other things, your certificate should say:

Your coverage dates
Your policy ID number
The insurer's name and address
Any family members included under your coverage.
Remember to review the certificate for accuracy. When applying for a new group health plan, you'll give the certificate to the plan administrator at your company. You'll give it directly to the insurer when applying for an individual health plan.

As an alternative method of determining your creditable coverage, insurers can look at your coverage for five specific benefits: prescription medications, vision, dental, mental health, and substance abuse treatment. If you had a group health plan for 12 continuous months but had coverage for, say, dental benefits, for just six of those months, you would only be credited for six months of dental coverage. Thus, your new health plan could impose a pre-existing condition exclusion for dental benefits only — not the entire health plan — for up to six more months.

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