HIPAA: 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 Kassebaum-Kennedy
Act, also known as the Health Insurance Portability and
Accountability Act of 1996.
The law was designed to
ease a problem known as "job lock" — the reluctance to move
from one company to another for fear of losing health
coverage. (Another federal law called COBRA helps you buy
benefits when you're between jobs.
Pre-existing conditions
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 a 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 it comes to health
insurance, there has long been a debate about pre-existing
conditions.
Got diabetes? Your current
group health plan might pay for insulin and visits to the
doctor. Before HIPAA was enacted, if you switched to a new
group health plan, the new insurer could consider your
diabetes a pre-existing condition and refuse to cover
treatment. You would then have to pay for all of your diabetes
treatment, 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 medical care
created "job lock" and helped fuel the push for legislation
banning such practices.
HIPAA imposes limits on the
extent to which some group 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, a new group health plan
cannot invoke the pre-existing condition exclusion. It must
cover your medical problems as soon as you enroll in the plan.
What is “creditable”
coverage? It includes prior coverage you had under any of the
following health plans:
·
A group health plan
·
Medicare
·
Medicaid
·
A military-sponsored
health care program such as TriCare
·
Health plans offered by
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
·
A health benefit plan
provided for Peace Corps members
On the other hand, if you
are not switching from a “creditable” health policy when you
enroll in a new group plan — or had coverage from a foreign
health insurer — your new insurer can refuse to pay for any of
your existing medical problems (except pregnancy, if the
plan has maternity coverage). Maternity restrictions are
only legal for a maximum of 12 months. Late enrollees in group
health plans might have to wait up to 18 months for coverage
of pre-existing conditions.
Your rights under HIPAA
Under
HIPAA, group health plans cannot deny your application
for coverage based solely on your health status. It also
limits exclusions for pre-existing conditions.
In addition, HIPAA
prohibits group health plans from denying coverage because of
mental illness, genetic information, disability, or the claims
you've filed in the past.
Group health plans that
offer maternity coverage cannot consider pregnancy a
pre-existing condition and cannot exclude coverage for
prenatal care or your baby's delivery, regardless of your
employment or health insurance history. This holds true
whether you are the primary insured or listed as a dependent.
There is no federal
law that requires health plans to provide maternity coverage,
although some states have such laws.
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
rules to "groups" of one, which some have opted to do. That
helps the self-employed. Some states also have enacted their
own laws protecting health insurance applicants, and in many
cases the states afford more rights than federal law.
There is one major
exception to HIPAA: It provides no protection if you switch
from one individual health plan to another individual plan.
The ifs, ands, or buts of
HIPAA
In an effort to balance the
interests of consumers and insurers, HIPAA also contains
plenty of other exceptions, conditions, and loopholes that
limit your rights. It's important to understand HIPAA
before you change health plans.
Employers are not required
by federal law to offer or pay for employee health insurance,
and most states also give employers that option.
Even if employers do offer
health coverage, its possible they don’t have to cover such
things as mental health or maternity. Levels of mandated
coverage vary from state to state.
While HIPAA makes it much
easier to get health insurance from your new employer if you
switch jobs, it doesn’t guarantee the same level of benefits,
deductibles and claim limits you might have enjoyed under your
former employer’s health plan.
“It's important to note
that HIPAA and the companion state laws do not entitle a
person to keep the same health care plan when he or she
changes employers,” says Jose Montemayor, the insurance
commissioner of Texas. “These laws do; however, provide
valuable protection against having to start new waiting
periods for coverage of pre-existing conditions when you
change jobs.”
Your group health coverage
can 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 allows
employers or health plans to impose a waiting period,
generally one to three months, before you become eligible to
join the group health plan of a new employer. Such waiting
periods do not count as a lapse in health coverage, and
you would not be penalized under HIPAA.
HIPAA requirements do not
apply to a list of "excepted benefits." Those benefits
include:
-
Coverage only for accident (such as 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
Creditable coverage
Under HIPAA, if you've
already been in a group health plan, chances are you won't
have to sit out the full 12-month exclusion period. 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 coverage, you'll have no
waiting period for pre-existing conditions. If you had prior
coverage for eight months, you can be subject to only a
four-month exclusion period when you switch jobs.
Let's say you're a recent
college graduate and you haven't had health insurance for the
last six months. 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. (Insurers are not required to
impose these pre-existing exclusions, but it is standard
practice.)
In order to keep your
coverage continuous, you cannot have a lapse or break in
coverage for 63 days or more. That's where COBRA can help. If
you leave one company before starting with another, consider
maintaining your health plan from your previous employer
through COBRA. COBRA coverage tends to be very expensive,
because you are picking up the total cost of your coverage.
Even so, COBRA allows you to maintain continuous coverage and
might allow you to avoid an exclusion period for pre-existing
conditions.
The Insurance Information
Institute points out while COBRA coverage might seem
expensive, it’s a relative bargain compared to other health
insurance options facing people between jobs. “You
must pay the full premium, but at group rates that are far
cheaper than the individual rates you would pay for similar
coverage.”
The U.S. Centers for
Medicare and Medicaid Services warns it’s crucial to maintain
health coverage when you leave a job, if you want to avoid
exclusions for pre-existing conditions in your new employer’s
health plan: “If you
had group health plan coverage at your last job, you probably
will be offered COBRA continuation coverage. If you are
eligible for such continuation coverage, it counts as
creditable coverage. In addition, you must accept and exhaust
COBRA benefits before you can obtain coverage in the
individual market as a HIPAA eligible individual.”
Whenever you leave any
health plan, either group or individual, get a "certificate of
creditable coverage" in writing. Your certificate should list
the following:
-
Your coverage dates.
-
Your policy ID number.
-
The insurer's name and address.
-
Any family members included under your coverage.
This is the easiest way to
ensure your rights under HIPAA. You can use other evidence to
prove creditable coverage. These include:
-
Pay stubs that reflect a health insurance premium deduction
-
Explanation-of-benefit forms
-
A benefit-termination notice from Medicare or Medicaid
-
Verification letter from your doctor or your former health insurance
provider that you had prior coverage
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 only had dental benefits
for six months, you would only be credited for six months of
dental coverage. Your new group health plan could impose a
six-month waiting period for dental coverage.
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.
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 says.
“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,
Maryland’s 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, 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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