9.1.2 Health Insurance Portability and Accountability Act (HIPAA)

Louisiana Statewide Transition Project and Louisiana: Healthy and Ready to Work Fact Sheet Series

 

6/25/99

 

I.             WHY IS THIS IMPORTANT?

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 (HR 3103) was signed by President Clinton in 1996. The law is intended to reduce barriers for individuals when obtaining new health insurance coverage, whether through a new group or individual insurance plan. HIPPA was designed to ease "job lock", the reluctance to move from one company to another for fear of losing eligibility for health benefits. While HIPPA offers protection, it also has many of loopholes, conditions, and exceptions. Young adults and their families need to know about HIPPA in order to make informed choices about health care coverage (Pinckard Agency, Inc, 1999).

II.           KEY POINTS

HIPAA clarified and/or refined several provisions of the Employee Retirement Income Security Act (ERISA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA), two pieces of legislation that impact private health insurance in America. Key provisions of HIPAA include:

 

Pre-existing Medical Condition Limitation: This provision limits the period of time that insurers can deny or limit coverage because of pre-existing conditions to 12 months. Moreover, employees cannot be forced to wait through more than one 12-month period during their worklife, provided they do not experience a substantial gap in coverage (63 days) (Winger & Frasca, 1998).

Guaranteed Access: This provision states that individuals leaving a group plan in which they have participated in for 18 months cannot be denied individual coverage. Insurers cannot refuse to sell policies to small companies or individuals who have exhausted their COBRA coverage (for more information on COBRA, see the fact sheet entitled 9.1.1 Consolidated Omnibus Budget Reconciliation Act.)

Portability: This provision allows workers to retain their eligibility for health insurance when they change employers. However, they don't necessarily retain their previous insurer.

Renewability: This provision states that renewal of health care coverage cannot be refused because of health problems. In addition, insurers must offer individual policies to those that have exhausted group health coverage.

It is important to remember that offering insurance to employees is an option, not a requirement, for employers. However, if insurance is offered, it must also be offered to all employees.

III.          ROLES/NEXT STEPS

Students/Young Adults:

Young adults should know what options are available to them regarding continued health insurance coverage. If they are currently covered under a parent's plan, they should find out how long they will be able to remain covered by this plan. These and other health insurance issues should be discussed when planning for the transition to adulthood.

Young adults should be careful about changing policies. A new policy may have waiting periods and pre-existing condition exclusions that could leave them without coverage. If a change in policy is necessary, young adults should know about HIPPA and how it may impact their coverage.

Families:

When helping their son/daughter plan for the transition to adulthood, families should make sure to consider health insurance needs. Families should find out how long their son/daughter may continue to be covered under their insurance policy. They should investigate how laws such as the Health Insurance Portability and Accountability Act (HIPAA) may impact them.

Families should help their son/daughter investigate the options available for health insurance. By discussing the pros and cons of each option, families can help young adults make informed choices.

Agencies:

Local Education Agencies (LEAs) can help young adults learn about various forms of health insurance in general, and HIPAA in particular, by including this topic in courses such as Consumer Science or Consumer Economics (formerly Home Economics).

It may be helpful to invite the family's insurance representative to the Individualized Education Program (IEP) meeting at which the transition to adulthood is discussed. By providing information on what coverage is available to the young adult through the family's existing plan, as well as other available options, the representative can help young adults plan for their insurance needs.

 

IV. RESOURCES/CONTACTS

Pension & Welfare Benefits Administration

U.S. Department of Labor

200 Constitution Avenue N.W.

Room N-5625

Washington, D.C. 02010

Telephone (202) 219-8776

(To order publications) 1-800-998-7542

Customer Service 816-426-5131

Website: http://www.hcfa.gov

 

V. REFERENCES

                              Department of Labor. (1998). H.B. 3103: Health Insurance Portability and Accountability Act- Questions and Answers.

The Pinckard Agency, Inc. (1999). HIPPA (Health Insurance Portability and Accountability Act of 1996). Alabama: The Pinckard Agency, Inc. [available via Internet at http://theshopnet.com/hippa.htm]

                              Winger, B.J. and Frasca, R.R. (1998). Personal finance: An integrated planning approach (4th edition). Upper Saddle Creek, NJ: Prentice-Hall Business Publishing, Inc.