What is the Health Insurance Portability and Accountability Act of 1996 (HIPAA)?

HIPAA amended the Employee Retirement Income Security Act (ERISA), to provide new rights and protections for participants and beneficiaries in group health plans.  Understanding this amendment is important to your decisions about future health coverage.  HIPAA contains protections both for health coverage offered in connection with employment (group health plans) and for individual insurance policies sold by insurance companies (individual policies).

If you find a new job that offers health coverage, or if you are eligible for coverage under a family member's employment-based plan, HIPAA includes protections for coverage under group health plans that:

• Limit exclusions for preexisting conditions

• Prohibit discrimination against employees and dependents based on their health status

• Allow a special opportunity to enroll in a new plan to individuals in certain circumstances

If you choose to apply for an individual policy for yourself or your family, HIPAA includes protections for individual policies that:

• Guarantee access to individual policies for people who qualify

• Guarantee renewability of individual policies

What is creditable coverage?

Most health coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), HMO, individual health insurance policy, Medicaid or Medicare.

Creditable coverage does not include coverage consisting solely of excepted benefits, such as coverage solely for limited-scope dental or vision benefits.

Days in a waiting period during which you have no other coverage are not creditable coverage under the plan, nor are these days taken into account when determining a significant break in coverage (generally a break of 63 days or more).  This 63-day break period may be extended under state law if your coverage is insured through an insurance company or offered through an HMO.  Check with your State Insurance Commissioner's Office to see whether a longer break period applies to you.

How does crediting for prior coverage work under HIPAA?

Most plans use the standard method of crediting coverage.

Under the standard method, you receive credit for your previous coverage that occurred without a break in coverage of 63 days or more.  Any coverage occurring prior to a break in coverage of 63 days or more is not credited against a preexisting condition exclusion period.

To illustrate, suppose an individual had coverage for 2 years followed by a break in coverage of 70 days and then resumed coverage for 8 months.  That individual would only receive credit for 8 months of coverage; no credit would be given for the 2 years of coverage prior to the break in coverage of 70 days.

Is there another way that a group health plan or issuer can credit coverage under HIPAA?

Yes.  A plan or issuer may elect the alternative method for crediting coverage for all employees.

Under the alternative method of counting creditable coverage, the plan or issuer determines the amount of an individual's creditable coverage for any of the five specified categories of benefits.  Those categories are mental health, substance abuse treatment, prescription drugs, dental care and vision care.  The standard method is used to determine an individual's creditable coverage for benefits that are not within any of the five categories that a plan or issuer may use.  (The plan or issuer may use some or all of these categories.)

When using the alternative method, the plan or issuer looks to see is an individual has coverage within a category of benefits (regardless of the specific level of benefits provided within that category).

For example, if an individual who is a regular enrollee (not a late enrollee) has 12 months of creditable coverage, but coverage for only 6 of those months provided benefits for dental care, a preexisting condition exclusion period may be imposed with respect to that individual's dental care benefits for up to 6 months (irrespective of the level of dental care benefits).

If your employer's plan requests information from your former plan regarding any of the five categories of benefits under the alternative method, your former plan must provide the information regarding coverage under the categories of benefits.  One way to provide this information is to use the Model for Categories of Benefits.

Can I receive credit for previous COBRA continuation coverage?

Yes.  Under HIPAA any period of time that you are receiving COBRA continuation coverage is counted as previous health coverage as long as the coverage occurred without a break in coverage of 63 days or more.

For example, if you were covered continuously for 5 months by a previous health plan and then received 7 months of COBRA continuation coverage, you would be entitled to receive credit for 12 months of coverage by your new group health plan.

I began employment with my current employer 45 days after my previous group health plan coverage terminated.  I had coverage under my previous employer's plan for 24 continuous months prior to the termination.  I had no other coverage before my enrollment date in my new plan,  Will I be subject to the 12-month preexisting condition exclusion period imposed by my new employer?

Not if you enroll when you are first eligible.  The 45-day break in coverage does not count as a significant break in coverage under HIPAA.  Under federal law, a significant break in coverage is a break in coverage of at least 63 consecutive days.  Since you had over 12 months of creditable coverage from your previous group plan without a significant break, you would not be subject to the preexisting condition exclusion period imposed by your new employer's plan if you enroll when you are first eligible.

I began employment with my current employer 100 days after my previous group health plan coverage terminated.  I had been covered by my previous employer's plan for 36 continuous months prior to termination.  I had no other coverage before my enrollment date in my current employer's plan.  Will I be subject to the 12-month preexisting condition exclusion period imposed by my current employer's plan?

It depends.  Your break in coverage of 100 days is a significant break in coverage under federal law, so under federal law you will not be able to count the 36 months of previous coverage as creditable coverage.

However, the length of time that passes before a significant break in coverage is reached may be longer under state law that applies to HMO's and health insurance.  If your current plan provides health insurance coverage through an insurance policy or an HMO (an insured plan), check with your State Insurance Commissioner's Office to find out if you are entitled to a longer break in coverage.  If your current plan is an insured plan and State law requires that a break in coverage be 100 days (or longer), you would be able to count the 36 months as creditable coverage.

How can I avoid a 63-day break in coverage?

There are several things you can do.  If your last coverage was under a group health plan, you may be able to elect 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 with 20 or more employees generally qualify for COBRA.  Some states have laws similar to COBRA that apply to smaller companies.  You may also try to purchase an individual health insurance policy.

What can I do if I don't have enough creditable coverage to offset a preexisting condition exclusion period?

During any preexisting condition exclusion period under a new plan you may be entitled to COBRA continuation coverage under your former plan.  You may also try to purchase an individual health insurance policy.

What are the requirements regarding certificates of creditable coverage?

Group health plans and health insurance issuers are required to furnish a certificate of coverage to an individual to provide documentation of the individual's prior creditable coverage.  A certificate of creditable coverage:

• Must be provided automatically by the plan or issuer when an individual either loses coverage under the plan or becomes entitled to elect COBRA continuation coverage and when an individual's COBRA continuation coverage ceases

• Must also be provided, if requested, before the individual loses coverage or within 24 months of losing coverage

• May be provided through the use of the model certificate

How do newly hired employees prove that they had prior health coverage that should be credited?

Under HIPAA, an employee's former group health plan and any insurance company or HMO providing such coverage is required to provide the employee with a statement of prior health coverage, commonly referred to as a certificate of creditable coverage.

This certificate must be provided automatically to you when you lose coverage under the plan or otherwise become entitled to elect COBRA continuation coverage as well as when COBRA continuation coverage ceases.

You may also request a certificate, free of charge, until 24 months after the time your coverage ended.  For example, you may request a certificate even before your coverage ends.

What steps should I take if I am not provided a certificate by my plan or issuer?

If you do not receive a certificate by the time you should have received it or by the time you need it, your first step should be to contact the plan administrator of the plan responsible for providing the certificate and request one.  If any part of your creditable coverage was through an insurance company, you can also contact the insurance company for a certificate that reflects that part of your creditable coverage as long as you make the request within 24 months of your coverage ceasing under the insurance policy.  Group health plans and insurers that fail or refuse to provide such certificates are subject to penalties under HIPAA.

In any event, if you do not receive a certificate, you may demonstrate to your new plan that you have creditable coverage (as well as the time you were in any waiting periods) by producing documentation or other evidence of creditable coverage (such as pay stubs that reflect a deduction for health insurance, explanation of benefits forms (EOBs) or verification by a doctor or your former health care benefits provider that you had prior health insurance coverage).  Accordingly, you should keep these records and documentation in case you need them.

Do plans that do not impose a preexisting condition exclusion period (and the issuers that provide coverage under these plans) have to provide certificates?

Yes.

Can plans contract with an issuer to provide the certificates for their employees?

Yes.  To avoid duplication of certificates, a plan may contract with the issuer to provide the certificate.  Furthermore, if any entity (including a third-party administrator) provides a certificate to an individual, no other party is required to provide the certificate.

When must group health plans and issuers provide the certificates?

Plans and issuers must furnish the certificate automatically to:

• An individual who is entitled to elect COBRA continuation coverage, at a time no later than when a notice is required to be provided for a qualifying event under COBRA.

• An individual who loses coverage under a group health plan and who is not entitled to elect COBRA continuation coverage, within a reasonable time after coverage ceases.

• An individual who has elected COBRA continuation coverage, either within a reasonable time after the plan learns that COBRA continuation coverage ceased or, if applicable, within a reasonable time after the individual's grace period for the payment of COBRA premiums ends.

Plans and issuers must also generally provide a certificate to you if you request one, or someone requests one on your behalf (with your permission), at the earliest time that a plan or issuer, acting in a reasonable and prompt fashion, can provide the certificate.

Can my old plan simply call my new plan to relay information about my creditable coverage?

Yes.  If you, your new plan, and your old plan all agree, the information may be transferred by telephone.  You are also entitled to request a written certificate for your records when your coverage information is provided by telephone.

Are plans and issuers required to issue certificates of creditable coverage to dependents of covered employees?

Yes.  A plan or issuer must make reasonable efforts to collect the necessary information for dependents and issue the dependent a certificate of creditable coverage.  If the coverage information for a dependent is the same for the employee, one certificate with both the employee and dependent information can be provided.

However, an automatic certificate for a dependent is not required to be issued until the plan or issuer knows (or, making reasonable efforts, should know) of the dependent's loss of coverage.  This information can be collected annually, such as during an open enrollment period.

What is the minimum period of time that should be covered by the certificate?

It depends on whether the certificate is issued automatically or upon request:

• For a certificate that is issued automatically, the certificate should reflect the most recent period of continuous coverage.

• For a certificate that is issued upon request, the certificate should reflect each period of continuous coverage ending within 24 months prior to the date of the request.

At no time must the certificate reflect more than 18 months of creditable coverage that is not interrupted by a break in coverage of 63 days or more.

What is a preexisting condition?

A preexisting condition is a medical condition present before your enrollment date in any new group health plan.

Under HIPAA, the only preexisting conditions that may be excluded under a preexisting condition exclusion are those for which medical advise, diagnosis, care or treatment was recommended or received within the 6-month period before your enrollment date.  (Your enrollment date is your first day of coverage, or if there is a waiting period to get into the plan, the first day of the waiting period.)

If you had a medical condition in the past, but have not received any medical advise, diagnosis, care or treatment within the 6 months prior to your enrollment date in the plan, your old condition is not a preexisting condition to which an exclusion can be applied.  Moreover, under HIPAA, preexisting condition exclusions cannot be applied to pregnancy, regardless of whether the woman had previous health coverage.

In addition, a preexisting condition exclusion cannot be applied to a newborn, adopted child under age 18, or a child under age 18 placed for adoption as long as the child became covered under health coverage within 30 days of the birth, adoption or placement for adoption and provided that the child does not incur a subsequent 63-day break in coverage.

Finally, genetic information may not be treated as a preexisting condition in the absence of a diagnosis.  If your coverage is through an insurance company or offered through an HMO, state law may provide additional protections.

I changed employment and my new group health plan imposes a preexisting condition exclusion period.  How does my new plan determine the length of my preexisting condition exclusion period?

The maximum length of a preexisting condition exclusion period is 12 months after your enrollment date (18 months in the case of a late enrollee).  A late enrollee is an individual who enrolls in a plan other than on the earliest date on which coverage can become effective under the terms of the plan and other than on a special enrollment date.

A plan must reduce an individual's preexisting condition exclusion period by the number of days of an individual's creditable coverage.  However, a plan is not required to take into account any days of creditable coverage that precede a break in coverage of 63 days or more (significant break in coverage).

A plan generally receives information about an individual's creditable coverage from a certificate furnished by a prior plan or health insurance issuer (e.g., an insurance company or HMO).  A certificate of creditable coverage must be provided automatically to you by the plan or issuer when you lose coverage under the plan or become entitled to elect COBRA continuation coverage and when your COBRA continuation coverage ceases.  You also have a right to receive a certificate when you request one from your previous plan or issuer within 24 months of when your coverage ceases.

How does HIPAA limit the preexisting conditions that can be excluded from coverage under a preexisting condition exclusion?

Under HIPAA, the only preexisting conditions that may be excluded under a preexisting condition exclusion are those for which medical advice, diagnosis, care or treatment was recommended or received within the 6-month period ending on your enrollment date.  Your enrollment date is your first day of coverage, or if there is a waiting period, the first day of your waiting period (typically, your date of hire).

If you had a medical condition in the past, but have not received any medical advice, diagnosis, care or treatment for it within the 6 months prior to your enrollment date in the plan, your old condition is not a preexisting condition to which an exclusion can be applied.

This 6-month look-back period may be shortened under state law if your coverage is insured through an insurance company or offered through an HMO.  Check with your State Insurance Commissioner's Office to see whether a shorter look-back period applies to you.

I changed employment recently.  How do I know if I am subject to any preexisting condition exclusion period?

Many plans do not exclude coverage for preexisting conditions.  A plan must tell you if it has a preexisting condition exclusion period (and can only exclude coverage for a preexisting condition after you have been notified).  The plan must also notify you of your right to show that you have prior creditable coverage to reduce the preexisting condition exclusion period.

If the plan does apply a preexisting condition exclusion period, the plan must make a determination regarding your creditable coverage and the length of any preexisting condition exclusion period that applies to you.  Generally, within a reasonable time after you provide a certificate or other information relating to creditable coverage, a plan is required to make this determination.

You are required to be notified of this determination if, after considering all evidence of creditable coverage, the plan will still impose a preexisting condition exclusion period with respect to any preexisting condition you may have.  The notice must also tell you the  basis of the determination, including the source and substance of any information on which the plan relied and any appeal procedure that is available to you.

The plan may modify its initial determination if it later determines that you do not have the creditable coverage you claimed.  In this circumstance, the plan must notify you of its reconsideration and, until a final determination is made, the plan must act in accordance with its initial determination for purposes of covering medical services.

I am not changing jobs.  How does the HIPAA preexisting condition exclusion provisions apply to me?

On the date your plan  becomes subject to the HIPAA provisions, the plan may not exclude coverage for any preexisting condition for more than 12 months after your enrollment date (18 months for a late enrollee).  This period may have already passed.  If this period has not passed, your plan is required to use any creditable coverage without a significant break in coverage that you had accumulated prior to your enrollment date to reduce your remaining preexisting condition exclusion period.

My employer has a waiting period for enrollment in the plan.  How does this relate to the preexisting condition exclusion period?

HIPAA does not prohibit a plan or issuer from establishing a waiting period.  For group health plans, a waiting period is the period that must pass before an employee or a dependent is eligible to enroll under the terms of the plan.  Some plans have waiting periods and preexisting condition exclusion periods.  However, if a plan has a waiting period and a preexisting condition exclusion period, the preexisting condition exclusion period begins when the waiting period begins.

What are my new group health plan's obligations with respect to special enrollment opportunities?

A group health plan is required to allow special enrollment for certain individuals to enroll in the plan without having to wait until the plan's next regular enrollment season.

Group health plans and health insurance issuers are required to provide special enrollment periods during which individuals who previously declined coverage for themselves and their dependents may be allowed to enroll (without having to wait until the plan's next open enrollment period).

A special enrollment opportunity occurs if an individual with other health insurance loses that coverage or if a person becomes a new dependent through marriage, birth, adoption or placement for adoption.  However, you must notify the plan of your request for special enrollment within 30 days after losing your other coverage or within 30 days of having (or becoming) a new dependent.

If you enroll as a special enrollee, you may not be treated as a late enrollee for purposes of any preexisting condition exclusion period.  Therefore, the maximum preexisting condition exclusion period that may be applied is 12 months, reduced by your creditable coverage (rather than 18 months, reduced by creditable coverage).

I received my certificate from my former plan.  What do I do now?

You should:

• Ensure that the information is accurate; (contact the plan administrator of your former plan if any information is wrong).

• Keep the certificate in case you need it; (you will need the certificate if you enroll in a new group health plan that applies a preexisting condition exclusion period or if you purchase an individual policy from an insurance company).

Can I lose coverage or be charged more for coverage if my health status changes?

Group health plans and health insurance issuers may not establish rules for eligibility (including continued eligibility) of any individual to enroll under the terms of the plan based on health status related factors.  These factors include:

• Health status

• Medical condition (physical or mental)

• Claims experience

• Receipt of health care

• Medical history

• Genetic information

• Evidence of insurability

• Disability

Plans generally may not require an individual to pay a premium or contribution that is greater than that for a similarly situated individual based on a health status related factor.

What if I am unable to obtain new group health plan coverage?

You may be able to purchase an individual insurance policy.  HIPAA guarantees access to individual policies to eligible individuals.  Eligible individuals:

• Have had coverage for a least 18 months without a significant break in coverage where the most recent period of coverage was under a group health plan

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

• Are ineligible for COBRA continuation coverage or if offered COBRA continuation coverage (or continuation coverage under a similar state program), have both elected and exhausted their continuation coverage

Information On Categories Of Benefits

Date of original certificate:

Name of group health plan providing the coverage:

Name of participant:

Identification number of participant:

Name of individual to whom this information applies:

The following information applies to the coverage in the certificate that was provided to the individual identified above:

Mental Health:

Substance Abuse Treatment:

Prescription Drugs

Dental Care

Vision Care

For each category above, enter N/A if the individual had no coverage within the category or either:

Enter both the date that the individual's coverage within the category began and the date that the individual's coverage within the category ended (or indicate if continuing)

Enter same on the line if the beginning and ending dates for coverage within the category are the same as the beginning and ending dates for the coverage in the certificate.