FACT SHEET ON HEALTH INSURANCE
WHAT IS HIPAA?
The Health Insurance Portability and Accountability Act of 1996 is a federal law designed to protect health insurance coverage for workers and their families when they change or lose their jobs. HIPAA applies to all persons insured under group health insurance plans B such as employer-sponsored plans, military-sponsored plans, a state high-risk pool, the Federal Employees Health Benefit Program, or a public health plan established or maintained by State or local government.
WHAT PROTECTIONS DOES HIPAA OFFER?
HIPAA states that a group health plan cannot apply a pre-existing condition exclusion for more than 12 months. In addition, HIPAA’s "portability provision" means that once an employee has had health coverage B through a group plan, or even through Medicaid or Medicare -- this coverage can be used to reduce or eliminate any pre-existing condition exclusion that may be applied under a future employer group plan.
If a person has at least 12 months of creditable coverage under a prior plan, or Medicaid or Medicare, he or she will not be subject to any pre-existing condition clause under a new plan. This means that if a person has or had a prior diagnosed or treated condition, such as asthma or cancer, the new group health insurance plan cannot state that it will not cover the person for that pre-existing condition.
In addition, if a person has less than 12 months of creditable coverage, the new insurance plan must give the person credit for every month that she or he was covered under the old plan. This means that if a person was only on Medicaid for 7 months prior to getting a new job and had a pre-existing condition, the new insurance plan could still impose an exclusion (not cover the person for the pre-existing condition) but only for 5 months.
In order to receive full protection, a person may not have more than a 63 day break in coverage. This means that they cannot have been uninsured for more than 63 days before applying for the new insurance.
NOTE: The "portability provision" does NOT mean that an employee can automatically take his or her current health benefits to a new job.
HIPAA ALSO APPLIES TO INDIVIDUAL INSURANCE MARKETHIPAA also applies to insurance sold outside the employer group market to certain individuals who were previously covered under a group plan. Individuals who have at least 18 months of creditable coverage under a prior group health plan, a government plan or a church plan must be offered private insurance without a pre-existing condition clause, at a premium rate determined by State law. Of course, the allowable premiums may be very high, making this kind of coverage an unrealistic option for many people.
WHAT IS CREDITABLE COVERAGE?
Most health coverage is creditable coverage for the purposes of HIPAA. Creditable coverage will include: coverage under a group health plan, church plan or governmental plan, Medicaid, Medicare, 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.
Every employer, health insurance company, the Illinois Department of Human Services (for the Medicaid program), and the Social Security Administration (for the Medicare program) must issue certificates of creditable coverage to persons previously insured. This means that a person is entitled to receive a certificate stating exact dates of coverage to prove to their next employer or insurer that they were previously covered.