The law was designed to ease what was then a growing problem known as "job lock" — the reluctance to move from one company to another for fear of losing health coverage. (Another federal law called COBRA helps you buy benefits when you're between jobs. See Know your COBRA rights.)

You might be surprised, however, to learn that it can also be considered a problem that you were aware of but never sought treatment for.

And worse, under some definitions, says a spokesperson for the Arizona Department of Insurance, a medical problem can be considered pre-existing even if you didn't know you had the problem before you bought your health plan.

HIPAA says that group health plans cannot deny your application for coverage based solely on your health status. It also gives workers who change or lose jobs better access to health insurance; limits exclusions for pre-existing conditions; and guarantees renewability and availability of health coverage to certain employees and individuals.
In addition, HIPAA says you can't be denied coverage because of mental illness, genetic information, disability, or the claims you've filed in the past.

Group health plans also cannot consider pregnancy a pre-existing condition and can't exclude coverage for prenatal care or your baby's delivery. However, there is no federal law that requires health plans to actually provide maternity coverage. Some states, though, do mandate such coverage. Thus, this HIPAA provision only applies to health plans that offer maternity coverage. (You can read more about how Pregnancy complicates health insurance options.)

HIPAA's rules apply to every employer group health plan that has at least two participants who are current employees, including companies that are self-insured. States have the option of applying the group rules to "groups" of one, which some have opted to do — a big bonus for the self-employed. Some states also have enacted their own laws protecting health care consumers, and in many cases they afford more rights than federal law.

Unfortunately, there is one huge exception to HIPAA: It provides no protection if you switch from one individual health plan to another individual plan. That's what makes buying individual plans especially difficult for people who have chronic medical problems — the insurers can simply turn them away time after time.

The ifs, ands, or buts of HIPAA
In an effort to balance the interests of consumers and the interests of insurers, HIPAA also contains plenty of other exceptions, conditions, and loopholes that limit your rights. Thus, it's important to understand them under HIPAA before you change health plans.

HIPAA help online
The federal Health Care Financing Administration (HCFA) has an online interactive tool designed to answer your questions about your health insurance rights under federal law. HIPAA OnLine is found under the "publications" link at HCFA's Web site.

First understand some fundamental tenets of the American health care system. Employers are not required by any state or federal law to offer or pay for health insurance for employees. And unless mandated by state law, employers are not told to offer specific types of benefits, such as mental health or maternity coverage. Further, just because HIPAA grants you insurance "portability" does not mean that you'll have the same benefits, premiums, co-payments, or deductibles when you move from one health plan to another.

Your health coverage can also be canceled if you or your employer fail to pay the premiums, commit fraud, violate health plan rules, or move outside of your insurer's service area. HIPAA also does not eliminate the common practice of requiring a waiting period, generally one to three months, before you become eligible to join a new group health plan when you switch jobs. (Note, however, that waiting periods do not count as a lapse in health coverage, and thus you would not be penalized under HIPAA.)

HIPAA requirements also do not apply to certain types of benefit plans known as "excepted benefits." Those benefits are:

Coverage only for accident (including accidental death or dismemberment) or disability income insurance
Liability insurance
Supplements to liability insurance
Workers compensation or similar insurance
Automobile medical payment insurance (known as "MedPay")
Credit-only insurance (for example, mortgage insurance)
Coverage for on-site medical clinics.

Coverage when you're already sick
The driving force behind HIPAA is that health insurance companies have traditionally tried to hold down their costs by invoking a "pre-existing condition" clause — refusing to cover a condition you had before you bought the health plan.

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When it comes to someone's health, pre-existing condition exclusions might seem downright unfair.

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The concept of pre-existing conditions makes sense when you're talking about auto insurance: For example, if your windshield was cracked before you bought your coverage, you can't expect your new auto insurer to replace it after you buy a policy. That would be like asking your insurer to replace the windshield for free when you haven't paid premiums for that problem.

But when it comes to someone's health, the issue might seem less clear-cut or even downright unfair.

Got diabetes? Your current health plan might pay for insulin and visits to the doctor. But before HIPAA was enacted, if you switched to a new health plan, it would have been allowed to consider your diabetes a pre-existing condition and refuse to cover treatment for it. You'd then be stuck paying for all of your diabetes treatment yourself, on top of the regular out-of-pocket expenses you'd pay for other medical care. The frightening prospect of having to pay hundreds or thousands of dollars for your medical care is what created job lock and helped fuel the push for legislation banning such practices.

HIPAA imposes limits on the extent to which some health plans can exclude coverage for pre-existing conditions. For instance, if you've had "creditable" health insurance for 12 straight months, with no lapse in coverage of 63 days or more, and you switch to a new group health plan, it cannot invoke the pre-existing condition exclusion at all. It must cover your medical problems as soon as you enroll in the plan. (Newborns and adopted children who are covered within 30 days are not subject to the 12-month waiting period.)

Most health coverage is creditable. It includes prior coverage under a group health plan (including a governmental or church plan), health insurance coverage (either group or individual), Medicare, Medicaid, a military-sponsored health care program such as TriCare (formerly 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.

On the other hand, if you don't have that creditable coverage behind you when you enroll in a new group plan, it can refuse to pay for any of your existing medical problems, but only for a maximum of 12 months. Late enrollees in group health plans may have to wait up to 18 months for coverage of pre-existing conditions.

Giving you credit where credit is due
Chances are, if you've already been in a group health plan, you won't have to sit out the full 12-month exclusion period, though. Your new health plan must give you "credit for time served" — the amount of time you were enrolled in your previous plan — and deduct it from the exclusion period. Thus, if you've had 12 or more months of continuous coverage, you'll have no pre-existing condition waiting period. And if you had prior coverage for eight months, you can be subject to only a four-month exclusion period when you switch jobs.

But let's say you're a recent college graduate and you haven't had health insurance for the last six months because you'd rather spend your money elsewhere. (Read Finding affordable health insurance after the apron strings are cut to learn more about affordable insurance when you're on a tight budget.) But then you land a job that offers you group health coverage. Because you've had such a long lapse in coverage, you'll likely face the 12-month exclusion period for any existing medical problems you have. (Keep in mind that insurers are not required to impose these pre-existing exclusions, but it is their standard practice.)

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In order to keep your coverage continuous, you cannot let it lapse for more than 63 days.

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In order to keep your coverage continuous, you cannot let it lapse for more than 63 days. That's where COBRA can help. If you leave one company before starting with another, consider buying COBRA coverage to keep your coverage continuous. Otherwise, you'll be back at square one and faced with another 12-month exclusion period.

Whenever you leave any health plan, either group or individual, make sure that you get a "certificate of creditable coverage" in writing. Among other things, your certificate should say:

Your coverage dates.
Your policy ID number.
The insurer's name and address.
Any family members included under your coverage.
This is the easiest way to ensure your rights under HIPAA. However, you can use other evidence to prove creditable coverage. These include:

Pay stubs that reflect a premium deduction.
Explanation of benefit forms.
A benefit termination notice from Medicare or Medicaid.
Verification letter from your doctor or your former health care benefits provider that you had prior health coverage.
Remember to review the evidence for accuracy. When applying for a new group health plan, you'll give the evidence to the plan administrator at your company. You'll give it directly to the insurer when applying for an individual health plan.

As an alternative method of determining your creditable coverage, insurers can look at your coverage for five specific benefits: prescription medications, vision, dental, mental health, and substance abuse treatment. If you had a group health plan for 12 continuous months but had coverage for, say, dental benefits, for just six of those months, you would only be credited for six months of dental coverage. Thus, your new health plan could impose a pre-existing condition exclusion for dental benefits only — not the entire health plan — for up to six more months.

Page 2: The HIPAA law:
Your rights to health insurance portability
By insure.com

Individual health plans and HIPAA
In some cases, you might not have the option of switching to a new group health plan when you lose coverage under your old group health plan. That could happen, for instance, if you work for a small employer and it decides to discontinue health benefits because of rising costs. If you have medical problems, that's enough to send you into a panic.

But under HIPAA, you might be able to buy an individual health plan without the threat of exclusions for pre-existing conditions. In order to do so, you have to qualify as an "eligible individual" — and the rules are tougher than for group health plans. In 11 states (Arizona, California, Colorado, Delaware, Hawaii, Maryland, Michigan, North Carolina, Rhode Island, Tennessee, and West Virginia), if you qualify as an individual under HIPAA, any insurer that sells individual health plans in your service area must offer you a plan.

To be eligible under HIPAA, you must:

Have at least 18 months of continuous creditable coverage.
Have been covered under a group health plan, a governmental plan, or church plan (or health insurance offered in connection with such plans, such as COBRA) during the most recent period of creditable coverage.
Not be eligible for coverage under a group health plan, Medicare, or Medicaid.
Not have other health insurance coverage.
Have not had your most recent coverage canceled for nonpayment of premiums or fraud (unless it was your employer that failed to pay premiums).
Have elected and exhausted any option for continuation of coverage (under COBRA or a similar state law) that was available under your prior plan.
If you qualify as an eligible individual, any insurer that sells individual health plans in your service area must offer you a plan. But keep in mind that your premiums are not governed by HIPAA; rather, they are determined by state law and can generally be set higher if you have medical problems. Thus, while your application for coverage won't be rejected because of your health problems, the health plan can charge higher rates as long as it has state approval.

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Your premiums are not governed by HIPAA.

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In addition, your benefits could be vastly different under an individual plan. That's why when you're moving from a group plan to an individual plan it's especially important to shop around for the best rates and benefits to suit your needs.

In some cases, you might be offered a conversion plan when you lose your group health plan coverage. That essentially lets you convert your group plan into an individual plan, with certain restrictions. Be careful choosing that option, though. Because conversion plans are individual plans, once you buy it, you'll no longer qualify as an eligible individual for the individual market.

Be sure to check with your state's insurance regulatory agency when you buy any new health plan, though. States can, and often do, enact laws that shorten the exclusion periods insurers can provide. And some have relaxed the rules to qualify as an eligible individual.

If at all possible, you should buy coverage through a group plan, as they generally have broader benefits and wellness care. You don't necessarily have to have an employer to do so: Trade associations and chambers of commerce often offer their members group health insurance. In some states, such as Connecticut, you can get group coverage if you're self-employed — as a "group" of one. Check with your state's department of insurance to find out your rights on buying a group plan.

Last updated Feb. 27, 2001

Life and Health Insurance Services
Steven M Weinstock, Licensed Broker

Office: 702-380-8232
Toll Free: 800-799-4224

info@mynewinsurance.com