The Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act (HIPAA), signed into law by President Clinton on August 21, 1996, offers new protections for millions of American workers that improves portability and continuity of health insurance coverage.

HIPAA protects workers and their families by:

limiting exclusions for preexisting medical conditions;
provides credit for prior health coverage and a process for providing certificates concerning prior coverage to a new group health plan or issuer;
provides new rights that allow individuals to enroll for health coverage when they lose other health coverage or add a new dependent;
prohibits discrimination in enrollment and in premiums charged to employees and their dependents based on health status-related factors;
guarantees availability of health insurance coverage for small employers and renewability of health insurance coverage in both the small and large group markets;
and preserves the states' role in regulating health insurance, including the states' authority to provide greater protections.

Preexisting Condition Exclusions:

The law defines a preexisting condition as one for which medical advice, diagnosis, care, or treatment was recommended or received during the 6-month period prior to an individual's enrollment date. Most group health plans may not exclude an individual's preexisting medical condition from coverage for more than 12 months (18 months for late enrollees) after an individual's enrollment date. Under HIPAA, a new employer's plan must give individuals credit for the length of time they had continuous health coverage, thereby reducing the 12-month exclusion period. Individuals who have 12 months of continuous health coverage -- without a break in coverage of 63 days or more -- do not have to start over with a new 12-month exclusion for any preexisting conditions.

Creditable Coverage:

included prior coverage under another group health plan, an individual health insurance policy, COBRA, Medicaid, Medicare, or a public health plan.

Certificates of Creditable Coverage:

must be provided automatically by the plan when an individual loses coverage under the plan or exhausts COBRA continuation coverage.
must be provided, if requested, before losing coverage or within 24 months of losing coverage,
may be provided through the use of a model certificate which is contained in the preamble to the regulations.

Special Enrollment Rights:

are provided for individual who lose their coverage in certain situations
are provided for individuals who become a new dependent through marriage, birth, adoption or placement for adoption.

Discrimination Prohibitions:

ensure that individuals are not excluded from coverage, or charged more for benefits offered by a plan or issuer, based on health status-related factors.

The Department of Labor simultaneously issued interim rules regarding new disclosure requirements under ERISA for group health plans. Under those rules, plans are now required to:

furnish a summary of a "material reduction in covered services or benefits" to covered workers within 60 days after the change has been adopted by the plan.
provide information to workers if an insurance company is used by the plan -- including an explanation of whether their benefits are guaranteed under an insurance contract or policy.
list in their plan brochure the office of the Labor Department where individuals can get assistance or information about their rights under federal law in general or HIPAA in particular.

The disclosure rules also provide guidance on the use of electronic media (e.g., E-mail) to furnish covered workers with required group health plan disclosures.

The interim rules are effective for all plans with respect to certification requirements of HIPAA beginning June 1, 1997. However, the other HIPAA provisions are generally effective for plan years beginning after June 30, 1997.