HIPAA: Your rights to health insurance portability

If you're worried about keeping your health benefits when you change jobs, you should know about a federal law called HIPAA. It's the Kassebaum-Kennedy Act, also known as the Health Insurance Portability and Accountability Act of 1996.

The law was designed to ease a 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.)

Pre-existing conditions

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 a health plan.

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 it comes to health insurance, there has long been a debate about pre-existing conditions.

Got diabetes? Your current group health plan might pay for insulin and visits to the doctor. Before HIPAA was enacted, if you switched to a new group health plan, the new insurer could consider your diabetes a pre-existing condition and refuse to cover treatment. You would then have to pay for all of your diabetes treatment, 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 medical care created "job lock" and helped fuel the push for legislation banning such practices.

HIPAA imposes limits on the extent to which some group 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, a new group health plan cannot invoke the pre-existing condition exclusion. It must cover your medical problems as soon as you enroll in the plan.

What is “creditable” coverage? It includes prior coverage you had under any of the following health plans:

• A group health plan
• Medicare
• Medicaid
• A military-sponsored health care program such as TriCare
• Health plans offered by 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
• A health benefit plan provided for Peace Corps members

On the other hand, if you are not switching from a “creditable” health policy when you enroll in a new group plan — or had coverage from a foreign health insurer — your new insurer can refuse to pay for any of your existing medical problems (except pregnancy, if the plan has maternity coverage). Maternity restrictions are only legal for a maximum of 12 months. Late enrollees in group health plans might have to wait up to 18 months for coverage of pre-existing conditions.

To find out more about HIPAA, please visit: Insure.com - HIPAA