70 West Madison St.
Chicago, Illinois 60602
the Health Insurance Portability and Accountability Act of 1996,
extends new rights to millions of employees and their families who
have preexisting medical conditions. The protection takes the form
of limitations on exclusions for preexisting conditions as well as
protection from discrimination in employment on the basis of
individual medical conditions. HIPAA also takes steps to guarantee
the availability of health coverage to certain employees leaving a
group health plan.
you may know, many group health plans limited or denied coverage
as to medical conditions that were present prior to an individual's
enrollment in the plan. Any
symptom that had been treated, diagnosed or discussed with a
doctor prior to enrollment would not be covered under the plan for
a designated period. HIPAA does away with preexisting coverage
limitations for stated conditions and for individuals who qualify
for such protection by having sufficient "continuous
coverage" under a previous group health plan.
The specific rules are as follows:
Preexisting conditions are limited to those for which
medical treatment, advice or diagnosis was sought during the 6
month period ending on an employee's "enrollment
date" in the new plan. "Enrollment date" for this
purpose is the first date of coverage, or if there is a waiting
period, the first day of the waiting period, typically the date of
hire. This means that a condition for which an employee received
no medical advice or treatment during the 6 months prior to his
enrollment date can never under any circumstances be a preexisting
condition. An even shorter "look back" period may apply
under state law. So, the first thing HIPAA does is that it
confines the definition of preexisting condition.
Certain preexisting conditions cannot be excluded from
coverage regardless of when treatment or initial consultation
takes place prior to enrollment.
condition exclusions can never be applied to pregnancy.
Similarly, genetic information that has not required
medical treatment can never be a preexisting condition. There are
also classes of individuals to whom preexisting condition
limitations cannot be applied. These classes include newborn
children, newly adopted children under age 18, children under 18
placed for adoption so long as such children are covered within 30
days of their birth, adoption or placement for adoption.
HIPAA establishes a maximum period of 12 months
during which a coverage exclusion for a preexisting condition can
apply under a group health plan. This period can be extended to 18
months for late enrollees, but otherwise any exclusion of
coverage for preexisting conditions is prohibited after 12 months
from an employee's enrollment date.
A "late enrollee" for this purpose is an
individual who enrolls in the plan after the earliest date on
which coverage is available under the plan.
HIPAA requires that all "creditable coverage"
under a prior group health plan be set off against the 12 month
(or 18 month) maximum exclusion period unless a newly covered
employee has incurred a break in coverage of 63 days or more. So,
if an employee has 18 months of creditable coverage under a prior
health plan following any break in coverage of 63 days or more,
the employee will not be subject to any exclusions for preexisting
conditions even if he is a late enrollee. Similarly, an employee
with at least 12 months of creditable coverage under a prior
health plan who does not incur a 63 day break in coverage will not
be subject to any exclusions for preexisting conditions if he
enrolls in the new plan at his first opportunity to do so.
coverage" for this purpose means prior group health coverage
including COBRA continuation coverage, HMO coverage, coverage
under an individual health insurance policy and Medicaid or
Medicare coverage. Employment
during any waiting period when an employee has no coverage is not
included in creditable coverage.
Creditable coverage does not include coverage consisting of
only "excepted benefits" such as dental or vision
In order to document an individual's creditable coverage,
HIPAA imposes on group health plans and health insurance companies
an obligation to furnish certificates of coverage to document an
individual's prior creditable coverage. A certificate of coverage:
be provided automatically when an individual loses
coverage under the plan or becomes entitled to elect COBRA
continuation coverage and when an individual's COBRA
continuation coverage ends. This means an employee who elects
COBRA coverage must automatically be given two
certificates of coverage, one at the beginning of COBRA
coverage and one at the end of COBRA coverage.
certificate of coverage also must be provided, upon
employee request, before the employee loses coverage or within
24 months of actually losing coverage.
certificate of coverage is a standard form and should be easy
for most plan administrators to complete except for those
employees who have interrupted service. Remember, creditable
service only counts from after a 63 day break in service, so
if you have an employee who works for 2 years and then leaves
for, say, 3 months without electing COBRA coverage, and then
returns for 6 months during which he has group health
coverage, the employee's creditable coverage is 6 months,
the period following his 63 day break in coverage.
certificate of creditable coverage need not reflect more than
18 months of creditable coverage because that's the maximum
period that is relevant for HIPAA purposes.
of creditable coverage are also required for dependents of
covered employees, and if the coverage information is the same
as for the employee, it can be included on a single
certificate with information for both the employee and the
employee's dependent. However,
an automatic certificate is not required until the plan or
insurance company becomes aware through the exercise of
reasonable diligence that a dependent has lost coverage.
This may happen annually in connection with the
collection of information during an open enrollment period.
HIPAA certificate of coverage rules most directly affect
administrators of group health plans.
However, HIPAA also prescribes rules relating to special
enrollment periods that extend health plan coverage to individuals
who otherwise would have their coverage delayed.
Just like the rules relating to preexisting conditions have
expanded health coverage for millions of individuals, the HIPAA
special enrollment rules have accelerated coverage for others.
A special enrollment period under HIPAA is required when an
employee with other health care coverage who has previously
declined coverage loses that other coverage, or if a person
becomes a new dependent of an employee through marriage, birth,
adoption or placement for adoption.
Such employees and their dependents do not have to wait for
the plan's next open enrollment period but can seek immediate
an employee or dependent of an employee loses other health
coverage, a special enrollment opportunity is required but
only if the employee has previously declined coverage under
the group health plan and the "other coverage" was
in effect when
group health coverage was previously declined.
the "other coverage" is COBRA continuation coverage
under a prior plan, special enrollment applies only if the
COBRA coverage is exhausted.
enrollees are not late enrollees for purposes of the 18 month
maximum period for excluding preexisting conditions from
employee or dependent must request special enrollment within
30 days of the loss of coverage.
Resulting coverage must be made effective no later than
the first day of the calendar month beginning after receipt of
an enrollment request.
enrollment also applies to new dependents resulting from
marriage, birth, adoption or placement for adoption.
Again, the individual must request coverage within 30
days of the marriage, birth, adoption or placement for
adoption. In the
case of marriage, coverage must be made available by the first
day of the calendar month following the receipt of an
enrollment request. In
the case of birth, adoption or placement for adoption,
enrollment must be effective as of the date of such birth,
adoption or placement for adoption.
plans are required to provide a description of special enrollment
rights to employees before they are offered a right to enroll in
group health coverage, the ball is in the employee's court when it
comes to requesting special enrollment.
As an administrator, you can take a passive position as to
special enrollment because you don't need to do anything until an
employee comes to you with a special enrollment request.
However, you must make sure that your group health booklet
does contain a proper notice of special enrollment rights.
general nondiscrimination rule under HIPAA is that individuals
cannot be denied eligibility - or continued eligibility - under a
group health plan on the basis of specified health factors.
Further, individuals may not be charged more for coverage
than similarly situated individuals based on these specified
health factors. These
health factors include an employee health status, medical
condition (physical or mental), claims experience, medical
history, genetic makeup, disability or evidence of insurability.
In short, all the factors that a health insurance
underwriter might look at to evaluate a health insurance risk
cannot be taken into account in making group health
coverage available, and no extra premium contributions can be
required of individual employees and covered dependents on the
basis of such factors. An
exception applies to "wellness programs," which can
offer premium discounts or rebates for participating in programs
directed to influencing participant behavior.
also imposes participant notification requirements relating to
reductions in covered services and benefits as well as specific
mandated federal coverage requirements.
pre-HIPAA law, participants would not have to be provided notice of
plan changes until 210 days after the end of the plan year in which
the change was adopted. This
was the due date for a "summary of materials
modifications" or a revised summary plan description explaining
any material plan revisions. Under
HIPAA, participants and beneficiaries must be advised of any
material reduction in benefits or services within 60 days of the
adoption of the change. A
material reduction in covered services or benefits would include any
benefits payable under the plan;
benefits payable under the plan;
deductibles, co-payments or other amounts to be paid by a
participant or beneficiary;
the service area covered by an HMO; or
new conditions or requirements for obtaining benefits such as
preauthorization for in-patient surgery.
participant notification requirements also cover federally
mandated benefits. Accordingly,
participants must be specifically notified that federal law
prohibits a limit of group health benefits for hospital stays to
less than 48 hours for child birth, and 96 hours for cesarean
plan administrators must make sure that any benefit cut backs -
particularly those made during a plan year, are reflected in a
revised summary plan description booklet or a separate summary of
material modifications within 60 days of the adoption of the change.
Golan & Christie LLP
70 West Madison St.
Chicago, Illinois 60602