HIPAA - Health Insurance Portability and Accountability Act of 1996
This overview briefly summarizes our understanding of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). The laws governing HIPAA are very detailed and complex, so, if you have questions about any of the HIPAA regulations, we recommend you consult with your legal counsel for advice on your specific situation.
HIPAA, in general, is designed to make health coverage more portable for individuals who change jobs or health plans by limiting the coverage exclusions that can be imposed when such a change occurs. HIPAA includes changes that:
- Limit exclusions for pre-existing conditions
- Prohibit discrimination against employees and dependents based on their health status
- Guarantee renewability and availability of health coverage to certain employers and individuals
- Require Certificates of Creditable Coverage ("Certificates")
Generally, both group health plans and health insurance insurers offering group health insurance coverage must comply with HIPAA's portability, special enrollment, and nondiscrimination requirements. A plan (including a self-insured plan) is considered a group health plan under HIPAA if it has at least two employees on the first day of the plan year, if it provides health care, and if it is maintained by an employer. The employer sponsoring the plan is generally held responsible for compliance with HIPAA.
HIPAA is applicable to plans providing medical care, including HMOs, individual medical insurance policies, individual short-term limited duration medical insurance policies, group medical insurance policies, self-insured medical plans, medical plans sponsored by the federal government, and medical plans sponsored by churches.
HIPAA also applies to medical plans sponsored by nonfederal governments (state, county, city, village, town, or school district). However, a self-funded nonfederal government plan may elect to be excluded from the following HIPAA requirements:
- Limitations on pre-existing conditions;
- Special enrollment periods;
- Discrimination against individuals based on health status;
- Standards relating to benefits for mothers and newborns;
- Parity in the application of certain limits to mental health benefits.
HIPAA does not apply to:
- Accident or disability income coverage, liability insurance and liability supplement coverage, automobile coverage, workers' compensation, credit-only insurance, or coverage for on-site medical clinics.
- Benefits offered separately for, dental or vision coverage, long-term care, nursing home care, home health care, or community-based care.
- Benefits offered as independent, noncoordinated benefits for, specific disease or illness, hospital indemnity or other fixed-dollar indemnity insurance coverage (such as insurance that pays $100/day for a hospital stay as its only insurance benefit).
- Supplemental plans such as Medicare supplement policies and TRICARE supplement policies if provided under a separate policy, certificate, or contract of insurance.
HIPAA requires any plan that includes a preexisting condition exclusion (PCE) to comply with the following requirements:
- Must use a uniform definition of preexisting condition; A condition (regardless of the cause of the condition) for which medical advice, diagnosis, care or treatment was recommended or received within the six months prior to the enrollment date)
- Prohibits the application of PCEs against certain individuals, including newborns or adopted children who are enrolled in the plan within 30 days of birth, adoption or placement. Genetic information alone and pregnancy may not be treated as a preexisting condition
- Imposes upon plans a maximum exclusionary period; (12 months, or 18 months if a late enrollee)
- Requires plans to credit participants for periods during which they were covered under another plan; Coverage from the prior plan does not count if the individual had a 63-day break in coverage, and
- Requires that all individuals who lose employer-provided group health coverage be furnished with a Certificate showing the period of their coverage under the plan.
HIPAA provides for special mid-year enrollment opportunities for employees and their eligible dependents in the following circumstances:
- When regular coverage is lost.
- When COBRA coverage is lost.
- When an individual requests a Certificate within 24 months of losing coverage.
Plans must notify eligible individuals of their special enrollment rights at or before the time the individuals are given the opportunity to enroll in the plan.
Certificates of Creditable Coverage
Both group health plans and health insurance carriers are required to provide a Certificate to an individual in the following circumstances:
- Loss of Other Coverage. If the employee and/or eligible dependent(s) initially decline enrollment under the WPS group health plan due to coverage under another health plan, including COBRA coverage, then later the other coverage terminates either voluntarily or involuntarily, or the employer contribution for the coverage ceases, the employee and/or eligible dependent(s) may enroll in the WPS group health plan within 31 days of the end of the other coverage or of losing the employer's contribution.
- Acquisition of New Dependent. If the employee has a new dependent as a result of marriage, birth, adoption, or placement for adoption, the employee and eligible dependents may enroll in the WPS plan within 31 days of the event.
We will also provide a Certificate when an individual's Wisconsin's continuation coverage ceases. A Certificate is not required, however, when an individual changes from one plan option to another.
To avoid duplication, if any entity (employer, carrier, or third-party administrator) provides a Certificate to an individual, HIPAA doesn't require any other party to provide the Certificate. However, all parties are still accountable for incomplete information or failure to provide a Certificate. A plan may contract with a carrier to provide the Certificates for individuals covered under the plan (the contract must be in writing). If so, the plan itself is not required to provide the Certificates and is not liable for missing information or failure to provide a Certificate.
The Certificate must include the date any probationary period began, the date coverage began, and the date coverage ended or indicate if coverage is continuing, including any period of COBRA continuation or Wisconsin continuation coverage. A continuation period doesn't have to be separately identified. A Certificate doesn't need to reflect more than 18 months of creditable coverage provided it's uninterrupted for 63 days or more. A plan may combine information for members of the same family who live together.
HIPAA prohibits group health plans and health insurers from discriminating against individuals with regard to eligibility, premiums or contributions based on any health status-related factor. For example, a plan may not require an individual to pay a premium greater than do similarly-situated individuals enrolled on the basis of any health status-related factor. A health status-related factor includes, health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.
Insurance Market Rules
Group health insurers are subject to HIPAA's group market rules including:
- Guaranteed-Renewability Requirement. All group plans are guaranteed renewable with the following exceptions:
- Nonpayment of premiums
- Employees no longer live, reside, or work in the network service area
- We exit the market
- Fraud; misrepresentation
- Discontinuation of the product or plan by us
- Failure of the employer to meet minimum contribution or participation requirements
Plans may be amended at renewal time.
- Guaranteed-Availability Requirement. All group health insurers marketing to businesses with 2 - 50 employees ("small employer" in Wisconsin) must accept every small employer, offer any small employer all of the insurer's small employer products it actively markets, and accept every eligible individual when first eligible for coverage.