Federal Law > Managing Employees > Employee Benefit Plans and ERISA > Health Insurance Portability and Accountability Act1

Health Insurance Portability and Accountability Act1

 
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was signed into law on August 21, 1996. This law includes protections for working Americans and their families who have preexisting medical conditions or who might suffer discrimination in health coverage based on a factor that relates to an individual's health. HIPAA's provisions amend Title I of the Employee Retirement Income Security Act of 1974 (ERISA) as well as the Internal Revenue Code and the Public Health Service Act and place requirements on employer-sponsored group health plans, insurance companies and health maintenance organizations (HMOs). HIPAA includes changes that:
  • limit exclusions for preexisting conditions;
  • prohibit discrimination against employees and dependents based on their health status;
  • guarantee renewability and availability of health coverage to certain employers and individuals; and
  • protect many workers who lose health coverage by providing better access to individual health insurance coverage.

The following information provides general guidance on frequently asked questions about HIPAA.

PREEXISTING CONDITION EXCLUSIONS

Under HIPAA, a group health plan or a health insurance issuer offering group health insurance coverage may impose a preexisting condition exclusion with respect to a participant or beneficiary only if the following requirements are satisfied:

  • a preexisting condition exclusion must relate to a condition for which medical advice, diagnosis, care or treatment was recommended or received during the 6-month period prior to an individual's enrollment date;
  • a preexisting condition exclusion may not last for more than 12 months (18 months for late enrollees) after an individual's enrollment date; and
  • this 12- (or 18-) month period must be reduced by the number of days the individual's prior creditable coverage, excluding coverage before any break in coverage of 63 days or more.

How will the new law help people who currently have health coverage and who want to change jobs? Currently some employer health plans do not cover preexisting medical conditions. HIPAA limits the time period of these restrictions so that most plans must cover an individual's preexisting condition after 12 months. Under HIPAA, an employer's plan will be required to give a new employee credit for the length of time the individual had continuous health coverage that will reduce the 12-month exclusion period.

If, at the time an individual changes jobs, she/he already has had 12 months of continuous health coverage (without a break in coverage of 63 days or more), she/he will not have to start over with a new 12-month exclusion for any preexisting conditions.

What is a "preexisting condition"? A "preexisting condition" is a condition present before the enrollment date in any new health plan. 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 the enrollment date.

If an individual had a medical condition in the past, but has not received any medical advise, diagnosis, care or treatment within the 6 months prior to her/his enrollment date in the plan, the old condition is not a "preexisting condition" for which an exclusion can be applied.

Are there "preexisting conditions" that cannot be excluded from coverage? Yes. Preexisting condition exclusions cannot be applied to pregnancy, regardless of whether the woman had previous coverage. In addition, a preexisting condition exclusion cannot be applied to a newborn, adopted child under age 18 or a child under 18 placed for adoption as long as the child became covered under the health plan within 30 days of birth, adoption or placement for adoption, and provided the child does not incur a subsequent 63-day or longer break in coverage.

Can states modify HIPAA's portability requirements? Yes, in certain circumstances. States may impose stricter obligations on health insurance issuers. Therefore, you should check with your State Insurance Commissioner's Office to find out the rules in your state.

How do individuals know if they are subject to any preexisting condition exclusion period? A plan must tell an employee if it has a preexisting condition exclusion period (and can only exclude coverage for a preexisting condition after the employee has been notified). The plan must also notify an individual of her/his right to show 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 an employee's creditable coverage and the length of any preexisting condition exclusion period. An individual must 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.

If an employer has a waiting period for enrollment in a plan, how does this relate to the preexisting condition exclusion period? HIPAA does not prohibit a plan or issuer from establishing a waiting period. 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.

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 a group health plan. However, if the employee or dependent is a late enrollee or a special enrollee, any period before such late or special enrollment is not a waiting period.

If an individual seeks and obtains coverage by purchasing an individual insurance policy, the period between the date the individual files a substantially complete application for coverage and the first day of coverage is a waiting period.

CREDITING PERIOD HEALTH COVERAGE FOR PURPOSES OF REDUCING A PREEXISTING CONDITION EXCLUSION PERIOD

A preexisting condition exclusion period is not permitted to extend for more than 12 months (or 18 months for late enrollees) after an individual's enrollment date in the plan. The period of any preexisting condition exclusion that would apply under a group health plan is generally reduced by the number of days of creditable coverage.

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 dental or vision benefits.

Days in a waiting period during which an individual has no other coverage are not creditable coverage under the plan, nor are these days taken into account when determining a significant break in coverage (a break of 63 days or more).

How does "crediting" for prior coverage work under HIPAA? Most plans will use the "standard method" of crediting coverage. Under the standard method, an individual will receive credit for 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 will not be 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 (described above) 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 of all of these categories.)
When using the alternative method, the plan or issuer looks to see if 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 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 an employer's plan requests information from an individual's plan regarding any of the five categories of benefits under the alternative method, the 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 included at the end of this chapter.

Can an individual receive credit for previous COBRA continuation coverage? Yes. Under HIPAA any period of time that an individual receives 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 an individual was covered continuously for 5 months by a previous health plan and then received 7 months of COBRA continuation coverage, the individual would be entitled to receive credit for 12 months of coverage by the new group health plan.

CERTIFICATION 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; and
  • may be provided through the use of the model certificate included at the end of this chapter.

How will newly hired employees prove that they had prior health coverage that should be credited? Under HIPAA, providing information about an employee's prior health coverage is the responsibility of an employee's former group health plan and/or insurance company providing such coverage. HIPAA sets specific disclosure and certification requirements for group health plans, insurance companies and HMOs.

A certificate stating when an individual was covered under the plan must be provided automatically when an individual loses coverage under the plan or otherwise becomes entitled to elect COBRA continuation coverage as well as when COBRA continuation coverage ceases. An individual may also request a certificate, free of charge, until 24 months after the time coverage ended.

What if an individual has trouble getting a certificate from a former employer's plan? Under HIPAA, group health plans and insurers are required to provide documentation that certifies the creditable coverage earned. Group health plans and insurers that fail or refuse to provide certificates are subject to penalties.

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; and
  • 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 premium ends.

Is there a model certificate that group health plans and issuers can use? Yes. See the attached model certificate at the end of this chapter.

Can an old plan simply call a new plan to relay information about creditable coverage? Yes, if the individual, the new plan and the old plan all agree, the information may be transferred by telephone. An individual may always request a written certificate for her/his records in addition to a telephonic transmission of information between plans.

What if the plan or issuer cannot identify employees' dependents or their coverage information? A plan or issuer must make reasonable efforts to collect the necessary information for dependents and include it on the certificate. 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. Through June 30, 1998, a plan or issuer may satisfy its obligation to provide a written certificate regarding the coverage of a dependent by providing the name of the participant covered by the plan and specifying the type of coverage provided (such as family coverage or employee-plus-spouse coverage). If requested, however, the plan must make reasonable efforts to obtain and provide the name of the dependent.

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 requestÛ

  • 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 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.

When do group health plans and issuers start providing certificates of creditable coverage? Group health plans and issuers are not required to provide certificates before June 1, 1997. Generally, the certification requirements apply to periods of coverage that occur after June 30, 1996, and certificates must be provided when coverage ceases under the plan.

In general, by June 1, 1997, plans or issuers must send certificates (or notices as discussed in the next question) to individuals who lost coverage or became eligible for COBRA between October 1, 1996 and May 31, 1997.

After June 1, 1997, plans or issuers must provide certificates to individuals as they lose coverage or begin COBRA in the manner set forth in the interim regulations.

Are there interim rules to assist in compliance with the certification requirement? Yes. There is a transitional model notice. For certification events occurring on ar after October 1, 1996, but before June 1, 1997, a plan or issuer can satisfy its certification obligation by providing, no later than June 1, 1997, a written notice informing individuals of their rights to certification. The transitional model notice is provided at the end of this chapter.

NONDISCRIMINATION REQUIREMENTS

Individuals may not be excluded from coverage under the terms of the plan, or charged more for benefits offered by a plan or issuer, based on specified factors related to health status.

Group health plans and 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 are health status, medical condition (physical or mental), claims experience, receipt of health care, medical history, genetic information, evidence of insurability or disability. For example, an individual cannot be excluded or dropped from coverage under your health plan just because of a particular illness.

Plans may establish limits or restrictions on benefits or coverage for similarly situated individuals. In addition, plans may change covered services or benefits if they give participants notice of such "material reductions" within 60 days after the change is adopted. Also, plans may not require an individual to pay a premium or contribution greater than that for a similarly situated individual based on a health status-related factor.

Plans or group health insurance issuers may not establish rules for eligibility to enroll under the terms of the plan that discriminate based on one or more "health status-related factors." For example, an employer cannot make a group health plan available only to employees who pass a physical examination.

SPECIAL ENROLLMENT

Group health plans and health insurance issuers are required to permit certain employees and dependents special enrollment rights. These rights are provided both to employees who were eligible but declined enrollment in the plan when first offered because they were covered under another plan and to individuals upon the marriage, birth, adoption or placement for adoption of a new dependent. These special enrollment rights permit these individuals to enroll without having to wait until the plan's next regular enrollment period.

What are a plan's obligations with respect to special enrollment? A group health plan is required to provide for special enrollment periods during which certain individuals are allowed to enroll in the plan (without having to wait until the plan's next regular enrollment season).

A special enrollment occurs if an individual with other health insurance coverage loses that coverage or if a person becomes a dependent through marriage, birth, adoption or placement for adoption. A special enrollee is not treated as a late enrollee. Therefore, the maximum preexisting condition exclusion period that may be applied to a special enrollee is 12 months, and the 12 months are reduced by the special enrollee's creditable coverage. (And, remember, a newborn, adopted child or child placed for adoption cannot be subject to a preexisting condition exclusion period if the child is enrolled within 30 days of birth, adoption or placement for adoption.)
A plan must provide a description of the plan's special enrollment rights under HIPAA to anyone who declines coverage. See the model description at the end of this chapter.

COBRA, TERMINATION OF GROUP PLANS AND EMPLOYERS COVERED

Does HIPAA extend COBRA continuation coverage? Generally no. However, HIPAA makes two changes to the length of the COBRA continuation coverage period.

Effective January 1, 1997, qualified beneficiaries who are determined to be disabled under the Social Security Act within the first 60 days of COBRA continuation coverage will be able to purchase an additional 11 months of coverage beyond the usual 18-month coverage period. This is a change from the old law which required that a qualified beneficiary be determined to be disabled at the time of the qualifying event to receive 29 months of COBRA continuation coverage. This extension of coverage is also available to nondisabled family members who are entitled to COBRA continuation coverage.

COBRA rules are also modified and clarified to ensure that children who are born or adopted during the continuation coverage period are treated as "qualified beneficiaries." A model notice that should have been sent to COBRA beneficiaries by November 1, 1996, discussing these changes appears at the end of this chapter. Note that changes should be made to general notice and election forms to reflect these changes in COBRA. See the sample notice in Chapter 34 on COBRA.

I am an employer who provides group health insurance coverage through an issuer. Is this policy renewable? Can it be terminated? At your option (as the plan sponsor), the issuer offering your group health insurance coverage must renew or continue in force your current coverage.

However, the group health insurance coverage may not be renewed or may be discontinued because of nonpayment of premiums, fraud, violation of participation or contribution rules, the issuer ceasing to offer that particular coverage, or movement outside the service area or association membership cessation.

I have a small business and I sponsor a group health plan. Does HIPAA apply to me? The HIPAA health portability provisions apply to group health plans with two or more participants who are current employees. However, your state may elect to regulate smaller groups.

DISCLOSURE REQUIREMENTS

What new kinds of information do group health plans have to give to participants and beneficiaries? HIPAA and other recent legislation made important changes in ERISA's disclosure requirements for group health plans. The Department of Labor issued interim disclosure rules in April 1997 to implement those changes. Under the new interim disclosure rules, group health plans must improve their summary plan descriptions (SPDs) and summaries of material modifications (SMMs) in four major ways to make sure they:

  • notify participants and beneficiaries of "material reductions in covered services or benefits" (for example, reductions in benefits and increases in deductibles and co-payments) generally within 60 days of adoption of the change. This compares to current requirements under which plan changes can be disclosed as late as 210 days after the end of the plan year in which a change was adopted.
  • disclose to participants and beneficiaries information about the role of issuers (e.g., insurance companies and HMOs) with respect to their group health plan. In particular, the name and address of the issuer, whether and to what extent benefits under the plan are guaranteed under a contract or policy of insurance issued by the issuer and the nature of any administrative services (e.g., payment of claims) provided by the issuer.
  • tell participants and beneficiaries which Department of Labor office they can contact for assistance or information on their rights under ERISA and HIPAA.
  • tell participants and beneficiaries that federal law generally prohibits the plan and health insurance issuers from limiting hospital stays for childbirth to less than 48 hours for normal deliveries and 96 hours for cesarean sections.

What is the definition of a "material reduction in covered services or benefits" that is subject to the new 60-day notice requirement? Under the interim disclosure rules, a "material reduction in covered services or benefits" means any modification to a group health plan or change in the information required to be included in the summary plan description that, independently or in conjunction with other contemporaneous modifications or changes, would be considered by the average plan participant to be an important reduction in covered services or benefits under the group health plan.

The interim rules cite examples of "reductions in covered services or benefits" as generally including any plan modification or change that:

  • eliminates benefits payable under the plan;
  • reduces benefits payable under the plan, including a reduction that occurs as a result of a change in formulas, methodologies or schedules that serve as the basis for making benefit determinations;
  • increases deductibles, co-payments or other amount to be paid by a participant or beneficiary;
  • reduces the service area covered by a health maintenance organization; or
  • establishes new conditions or requirements (e.g., preauthorization requirements) to obtain services or benefits under the plan.

Can employers use e-mail systems to communicate these new disclosures to employees, and if so, do employees have a right to get a paper copy of the information from their plan? Yes. The interim disclosure rules provide a "safe harbor" for using electronic media (e.g., e-mail) to furnish group health plan SPDs, summaries of "material reductions in covered services or benefits" and other SMMs (summaries of plan modifications and SPD changes). To use the "safe harbor," among other requirements, employees must be able to effectively access at their worksite documents furnished in electronic form. Participants also continue to have a right to receive the disclosures in paper form on request and free of charge.

Although the interim rule is not the exclusive means by which electronic media can be used to lawfully communicate plan information, the HIPAA "safe harbor" is limited to group health plans. The Department of Labor is considering extending the rule to other types of plans.

IMPLEMENTATION TIMETABLE

When did the changes in HIPAA begin affecting health plans? Most of HIPAA's requirements did not take effect until after June 30, 1997. Group health plans had to comply with all nondiscrimination, preexisting condition and crediting of prior health coverage requirements at the beginning of the first plan year starting after June 30, 1997. For example, if an employer's plan started a new plan year on January 1, HIPAA's provisions applied beginning on January 1, 1998.

There was a special rule for group health plans maintained pursuant to collective bargaining agreements, ratified before August 21, 1996, that delayed the effective date of HIPAA. HIPAA's provisions applied to these plans of the first day of the plan year beginning on or after either the date on which the last collective bargaining agreement ended or July 1, 1997, whichever came later.

HIPAA Rules Announced on Portability of Health Coverage; Model Notice Issued for Employers

Final rules have been issued under the 1996 law on health insurance portability that gives workers greater access to group health plan coverage. The rules were drafted by the U.S. Departments of Labor, Health and Human Services and Treasury.

What the rules do. The regulations essentially adopt the interim final rules issued by the three agencies in 1997, but include several significant modifications. The rules already contained limits on preexisting exclusions that group health plans and insurance issuers can impose and allowed workers to receive credit for prior health coverage from virtually all sources (group health, individual insurance or public health plans) to reduce a future preexisting condition exclusion. Individuals also automatically receive certificates demonstrating prior health coverage. The final rules require an educational statement to be included in the certificate of coverage, explaining individuals' rights to health coverage portability, and include model language that employers can use.

Model HIPAA Certificate Published Along with Proposed New Rules The IRS and EBSA also released a HIPAA Model Certificate of Group Health Plan Coverage. We have reproduced a copy of this Model Certificate below. You can read about the above and more at: http://www.dol.gov/ebsa/. Who enforces HIPAA? The Secretary of Labor enforces the health care portability requirements on group health plans under ERISA, including self-insured arrangements. In addition, participants and beneficiaries can file suit to enforce their rights under ERISA, as amended by HIPAA. The Secretary of the Treasury enforces the health care portability requirements on group health plans, including self-insured arrangements. A taxpayer that fails to comply may be subject to an excise tax. States also have enforcement responsibility for group and individual requirements imposed on health insurance issuers, including sanctions available under state law.




SOURCES

1 This chapter and the model notices following this chapter are adapted from Questions & Answers: Recent Changes in Health Care Law, U.S. Department of Labor, Pension and Welfare Benefits Administration, April, 1997. For more information on HIPAA you may contact the Pension and Welfare Benefits Administration at 1.800.998.7542.




These sample forms are provided as a general guideline for your review only and with the understanding that neither the publisher nor the writers are providing legal advice or other professional service. The law changes regularly and varies from state to state, and you should not rely on or use these or any form without consultation with a competent attorney in your state.

MODEL FOR CATEGORIES OF BENEFITS (Alternative Method)




Information On Categories of Benefits

1. Date of original certificate:_______________
2. Name of group health plan providing the coverage:_______________
3. Name of participant:_______________
4. Identification number of participant:_______________
5. Name of individual(s) to whom this information applies:_______________
6. The following information applies to the coverage in the certificate that was provided to the individual(s) identified above:
a. MENTAL HEALTH:_______________
b. SUBSTANCE ABUSE TREATMENT:_______________
c. PRESCRIPTION DRUGS:_______________
d. DENTAL CARE:_______________
e. VISION CARE:_______________

For each category above, enter "N/A" if the individual had no coverage within the category or either (i) 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), or (ii) 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.



TRANSITIONAL MODEL NOTICE

Important Notice of Your Right to
Documentation of Health Coverage


Recent changes in Federal law may affect your health coverage if you are enrolled or become eligible to enroll in health coverage that excludes coverage for preexisting medical conditions.

The Heath Insurance Portability and Accountability Act of 1996 (HIPAA) limits the circumstances under which coverage may be excluded for medical conditions present before you enroll. Under the law, a preexisting condition exclusion generally may not be imposed for more than 12 months (18 months for a late enrollee). The 12-month (or 18-month) exclusion period is reduced by your prior health coverage. You are entitled to a certificate that will show evidence of your prior health coverage. If you buy health insurance other than through an employer group health plan, a certificate of prior coverage may help you obtain coverage without a preexisting condition exclusion. Contact your state insurance department for further information.

For employer group health plans, these changes generally take effect at the beginning of the first plan year starting after June 30, 1997. For example, if your employer's plan year begins on January 1, 1998, the plan is not required to give you credit for your prior coverage until January 1, 1998.

You have the right to receive a certificate of prior health coverage since July 1, 1996. You may need to provide other documentation for earlier periods of health care coverage. Check with your new plan administrator to see if your new plan excludes coverage for preexisting conditions and if you need to provide a certificate or other documentation of your previous coverage.

To get a certificate, complete the attached form and return it to:

[Insert Name of Entity]:
[Insert Address]:
For additional information contact: [Insert Telephone Number]

The certificate must be provided to you promptly. Keep a copy of this completed form. You may also request certificates for any of your dependents (including your spouse) who were enrolled under your health coverage.

Request for Certificate of Health Coverage

Name of Participant:

Date:

Address:

Telephone Number:

Name and relationship of any dependents for whom certificates are requested (and their address if different from above):



CERTIFICATE OF GROUP HEALTH PLAN COVERAGE
  1. Date of this certificate: ______________

  2. Name of group health plan: ______________________________

  3. Name of participant: ______________________________

  4. Identification number of participant: ______________

  5. Name of individuals to whom this certificate applies: ______________________________

  6. Name, address, and telephone number of plan administrator or issuer responsible for providing this certificate:
    ____________________________________________
    ____________________________________________
    ____________________________________________

  7. For further information, call: ______________

  8. If the individual(s) identified in line 5 has (have) at least 18 months of creditable coverage (disregarding periods of coverage before a 63-day break), check here and skip lines 9 and 10: ___

  9. Date waiting period or affiliation period (if any) began: ______________

  10. Date coverage began: ______________

  11. Date coverage ended (or if coverage has not ended, enter "continuing"): ______________


[Note: separate certificates will be furnished if information is not identical for the participant and each beneficiary.]


Statement of HIPAA Portability Rights

IMPORTANT - KEEP THIS CERTIFICATE. This certificate is evidence of your coverage under this plan. Under a federal law known as HIPAA, you may need evidence of your coverage to reduce a preexisting condition exclusion period under another plan, to help you get special enrollment in another plan, or to get certain types of individual health coverage even if you have health problems.

Preexisting condition exclusions. Some group health plans restrict coverage for medical conditions present before an individual's enrollment. These restrictions are known as "preexisting condition exclusions." A preexisting condition exclusion can apply only to conditions for which medical advice, diagnosis, care, or treatment was recommended or received within the 6 months before your "enrollment date." Your enrollment date is your first day of coverage under the plan, or, if there is a waiting period, the first day of your waiting period (typically, your first day of work). In addition, a preexisting condition exclusion cannot last for more than 12 months after your enrollment date (18 months if you are a late enrollee). Finally, a preexisting condition exclusion cannot apply to pregnancy and cannot apply to a child who is enrolled in health coverage within 30 days after birth, adoption, or placement for adoption.

If a plan imposes a preexisting condition exclusion, the length of the exclusion must be reduced by the amount of your prior creditable coverage. Most health coverage is creditable coverage, including group health plan coverage, COBRA continuation coverage, coverage under an individual health policy, Medicare, Medicaid, State Children's Health Insurance Program (SCHIP), and coverage through high-risk pools and the Peace Corps. Not all forms of creditable coverage are required to provide certificates like this one. If you do not receive a certificate for past coverage, talk to your new plan administrator.

You can add up any creditable coverage you have, including the coverage shown on this certificate. However, if at any time you went for 63 days or more without any coverage (called a break in coverage) a plan may not have to count the coverage you had before the break.

  • Therefore, once your coverage ends, you should try to obtain alternative coverage as soon as possible to avoid a 63-day break. You may use this certificate as evidence of your creditable coverage to reduce the length of any preexisting condition exclusion if you enroll in another plan.

Right to get special enrollment in another plan. Under HIPAA, if you lose your group health plan coverage, you may be able to get into another group health plan for which you are eligible (such as a spouse's plan), even if the plan generally does not accept late enrollees, if you request enrollment within 30 days. (Additional special enrollment rights are triggered by marriage, birth, adoption, and placement for adoption.)
  • Therefore, once your coverage ends, if you are eligible for coverage in another plan (such as a spouse's plan), you should request special enrollment as soon as possible.

Prohibition against discrimination based on a health factor. Under HIPAA, a group health plan may not keep you (or your dependents) out of the plan based on anything related to your health. Also, a group health plan may not charge you (or your dependents) more for coverage, based on health, than the amount charged a similarly situated individual.

Right to individual health coverage. Under HIPAA, if you are an "eligible individual," you have a right to buy certain individual health policies (or in some states, to buy coverage through a high-risk pool) without a preexisting condition exclusion. To be an eligible individual, you must meet the following requirements:
  • You have had coverage for at least 18 months without a break in coverage of 63 days or more;
  • Your most recent coverage was under a group health plan (which can be shown by this certificate);
  • Your group coverage was not terminated because of fraud or nonpayment of premiums;
  • You are not eligible for COBRA continuation coverage or you have exhausted your COBRA benefits (or continuation coverage under a similar state provision); and
  • You are not eligible for another group health plan, Medicare, or Medicaid, and do not have any other health insurance coverage.

The right to buy individual coverage is the same whether you are laid off, fired, or quit your job.
  • Therefore, if you are interested in obtaining individual coverage and you meet the other criteria to be an eligible individual, you should apply for this coverage as soon as possible to avoid losing your eligible individual status due to a 63-day break.

State flexibility. This certificate describes minimum HIPAA protections under federal law. States may require insurers and HMOs to provide additional protections to individuals in that state. For more information. If you have questions about your HIPAA rights, you may contact your state insurance department or the U.S. Department of Labor, Employee Benefits Security Administration (EBSA) toll-free at 1-866-444-3272 (for free HIPAA publications ask for publications concerning changes in health care laws). You may also contact the CMS publication hotline at 1-800-633-4227 (ask for "Protecting Your Health Insurance Coverage"). These publications and other useful information are also available on the Internet at: http://www.dol.gov/ebsa, the DOL's interactive web pages - Health Elaws, or http://www.cms.hhs.gov/hipaa1.




MODEL DESCRIPTION OF SPECIAL ENROLLMENT RIGHTS

If you are declining enrollment for yourself or your dependents (including your spouse) because of other health insurance coverage, you may in the future be able to enroll yourself or your dependents in this plan, provided that you request enrollment within 30 days after your other coverage ends. In addition, if you have a new dependent as a result of marriage, birth, adoption or placement for adoption, you may be able to enroll yourself and your dependents, provided that you request enrollment within 30 days after the marriage, birth, adoption or placement for adoption.




SAMPLE NOTICE TO COBRA BENEFICIARIES (To be sent by November 1, 1996)

The Health Insurance Portability and Accountability Act of 1996 made important changes in COBRA continuation coverage rules that will take effect on January 1, 1997. A comparison of the current rules and the rules that will become effective on January 1, 1997, is provided below. Please review these changes carefully Û they may have an effect on your continuation coverage.

Extension of Coverage for Disabled Beneficiaries
A qualified beneficiary may be eligible for an extension of up to 11 months of COBRA continuation coverage due to disability, if the Plan Administrator receives notification of the Social Security Administration's determination of disability, in writing, within 60 days of the date the determination is made and within the initial 18 months of COBRA continuation coverage.

Currently, only COBRA beneficiaries determined by the Social Security Administration to have been totally disabled on the date of the qualifying event (i.e., the employee's termination of employment, or reduction in hours) making that individual eligible to elect COBRA coverage were eligible to extend continuation coverage for an additional 11 months, to a maximum of 29 months of COBRA continuation coverage.

Effective on January 1, 1997, an extension of up to 11 months of continuation coverage will be available to a qualified beneficiary who is totally disabled during the first 60 days after COBRA continuation coverage begins. Note: the new rule applies to those whose COBRA coverage began in 1996 who are still covered on January 1, 1997, as well as those who become eligible for COBRA in 1997.

Coverage for Newborns & Children Placed for Adoption
Newborn infants and children placed for adoption can be enrolled for COBRA continuation coverage in accordance with the terms of the [name of plan] group health plan. A child is considered to be placed for adoption when the adoptive parent assumes and retains the legal obligation for the support of the child, in accordance with an order to that effect issued by a proper court or other agency which has the authority to issue such order.

Under the current rules, a newborn infant or a child placed for adoption could be enrolled for COBRA continuation coverage; however, the infant or adopted child would not have independent rights as a COBRA beneficiary.

Effective on January 1, 1997, a newborn infant or child placed for adoption with the covered employee will be entitled to receive COBRA continuation coverage as a qualified beneficiary. To enroll a newborn or a child placed with you for adoption, you must notify the Plan Administrator within (plan's time limit for enrolling newly eligible dependent, e.g. 30 days) of your newborn's date or birth or (repeat the plan's time limit) of the date a child is placed with you for adoption. Note: if you added a dependent child during your first 18 months of COBRA continuation coverage and you are covered under COBRA on January 1, 1997, that child will become a qualified beneficiary on January 1, 1997.
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