Health Insurance Portability and Accountability Act

Portability

HIPAA's portability rules are intended to address a situation known as job lock, or individuals' reluctance to change jobs for fear of losing health coverage for preexisting conditions. HIPAA guarantees an individual's right to purchase health insurance, providing the individual (a) has had 18 months of “creditable coverage” through a group health plan, (b) does not have other health insurance and is not eligible for health coverage under another group plan (including Medicare or Medicaid), (c) did not lose health insurance for lack of payment of premiums or fraud, and (d) has exhausted coverage provided under the Consolidated Omnibus Budget Reconciliation Act of 1985. Once individuals are HIPAA-eligible, HIPAA prohibits denying them health insurance or charging them higher rates for health insurance on the basis of their health history or the health history of their dependents. HIPAA also places the following limits on exclusions due to preexisting conditions:

• In certain cases, HIPAA may limit the amount of time to which exclusions for a preexisting medical condition apply so that the diagnosis or treatment of medical conditions before this period may not be used by health plans. This look-back period provision defines a preexisting condition as a medical condition that has been diagnosed or treated within 6 months of the enrollment date. Thus, a medical condition for which treatment was received prior to that period would not qualify as a preexisting condition.
• In cases in which a preexisting condition is determined to exist, HIPAA limits the time during which exclusions can prevent an individual from receiving health care for that condition to 12 months.
• Exclusions for preexisting conditions can be reduced if an individual has had creditable coverage under another health plan or policy prior to enrollment in a new health plan. For example, if an employee had 6 months of creditable coverage under another group health plan, the previous coverage can be applied to the 12-month period. Thus, the new plan cannot exclude coverage for more than 6 months.

Exclusions based on preexisting conditions are not applied to newborns or adopted children who are covered under group health plans within 30 days after their birth.

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