HIPAA Plan Portability (Pre-Ex)

Section 1201 of the Affordable Care Act (“ACA”) adds a new section to the Public Health Service Act, Section 2704, which amends the HIPAA portability rules relating to preexisting condition exclusions.  The ACA limits application of preexisting condition exclusions in group health plans and health insurance coverage, effective for plan years beginning on or after September 23, 2010, and eliminates such exclusions in their entirety effective for plan years beginning on or after January 1, 2014.

For Plans That Have Not Yet Renewed On Or After January 1, 2014

The Health Insurance Portability and Accountability Act (HIPAA) provides rights and protections for participants and beneficiaries in group health plans in order to improve portability and continuity of health coverage.  It employs a number of mechanisms to advance this goal, including:

• Restricting a plan’s ability to impose exclusions for preexisting conditions
• Requiring plans to allow employees and dependents to enroll upon the occurrence of specified events (special enrollment).
• Prohibiting plans from discriminating with respect to premiums, eligibility or benefits based on an individual’s health status.
• Imposing guaranteed availability and renewability rules on insurers offering group health insurance.

This section address HIPAA’s requirements regarding preexisting conditions.

Some group health plans restrict coverage for medical conditions that are present before an individual’s enrollment (“preexisting conditions”). Plans should be alert to the presence of “hidden” preexisting condition exclusions. For example, a plan provision that provides coverage for accidental injury only if the injury occurred while covered under the plan is a preexisting condition limitation. So are “non-confinement” clauses that postpone the effective date of coverage for persons who are hospital-confined on the date coverage would otherwise become effective.

HIPAA protections include limiting a plan or insurers ability to impose preexisting condition exclusions on plan participants.

Plans Covered

• Applies to all group health plans that are subject to ERISA, church plans¹ and governmental plans subject to PHSA.

Excepted Benefits

Preexisting Condition Exclusion – Basic Rule

The ability of a plan to impose a preexisting condition limitation is subject to the following rules:

• A plan cannot impose a limitation with respect to a given condition unless it is one for which medical advice, diagnosis, care, or treatment was recommended or received within a period of not more than six months before the individual’s enrollment date.
• The maximum duration of the exclusion cannot exceed 12 months for regular and special enrollees and 18 months for late enrollees.
• The maximum duration of the exclusion must be reduced by the amount of an individual’s prior creditable coverage.
• Pregnancy is never a preexisting condition
• The exclusion cannot be applied to enrollees under the age of 19.

Creditable Coverage

Creditable Coverage Definition:

Prior coverage of an individual under another group health plan, an individual health insurance policy, COBRA, Medicaid, Medicare, CHAMPUS, the Indian Health Service, a state health benefits risk pool, FEHBP, the Peace Corps Act, or a public health plan. Coverage that consists solely of excepted benefits is not creditable coverage.

A pre-existing condition exclusion period is generally reduced by the number of days in which the individual has one or more types of creditable coverage. Coverage that precedes a 63-day break in coverage is not counted as creditable coverage.  However, if a plan imposes a waiting period, that time is not counted as a break in coverage.

HIPAA Certificates

HIPAA Certificate of Creditable Coverage is a written certificate issued by a group health plan or health insurance issuer that shows an individual’s creditable coverage (see Creditable Coverage) under the plan.

• This certificate must be issued automatically and free of charge when an individual loses coverage under a plan (or upon request within 24 months after coverage ends), when an individual is entitled to elect COBRA continuation coverage, when an individual loses COBRA continuation coverage, or upon request while the individual has health coverage.

Distribution: The Plan Administrator distributes this certificate to participants and covered dependents. Note that while the ACA phases out the exclusion for preexisting conditions, it does not eliminate the obligation to provide creditable coverage certificates.

Timeframes: A written Certification of Creditable Coverage must be issued upon loss of plan coverage.

• In the case of an individual who is a qualified beneficiary entitled to elect COBRA, a certificate is required to be provided no later than the applicable deadline for giving a COBRA Election Notice (Qualifying Event Notice).
• In the case of an individual who ceases COBRA, a certificate is required to be provided within a reasonable time after the plan learns that COBRA has ceased.
• The certificate must also be given upon request in a reasonable and prompt fashion while the individual is covered under the plan and up to 24 months after coverage ends.

Written Procedure: The Plan should have a written procedure for individuals to request and receive Certificates of Creditable coverage.

Please note that neither the plan nor the employee is required to send a Certificate of Creditable Coverage to the Centers for Medicare and Medicaid Services (CMS).

Click Here for a model certificate.

General Notice

General Notice of Preexisting Condition Exclusion

A group health plan imposing a preexisting condition exclusion must provide a written general notice of the preexisting condition exclusion before it can impose a preexisting condition exclusion.

Notice: The Plan Administrator must provide written notice to all plan participants of:

1.  The existence and terms of any preexisting condition exclusion under the group health plan, including the length of the plan’s look back period (cannot exceed 6 months), the maximum preexisting condition exclusion period (cannot exceed 12 (or 18) months), and how the plan will reduce the maximum preexisting exclusion period by creditable coverage.

2.  The rights of individuals to demonstrate creditable coverage from a prior health plan or health insurer.

3.  The person to contact (including an address and telephone number) for obtaining additional information or assistance regarding the preexisting condition exclusion.

4.  A statement that the current plan will assist in obtaining a certificate of creditable coverage from any prior plan or insurer, if necessary.

Timeframes: This notice should be provided with enrollment materials, or, if no enrollment materials are distributed, by the earliest date following request for enrollment.

Individual Notice

Individual Notice of Period of Preexisting Conditions

After an individual has presented evidence of creditable coverage and after the plan has made a determination of creditable coverage, the plan must provide the individual notice of the length of the preexisting condition exclusion that remains after offsetting for prior creditable coverage.

In some cases, an individual may claim prior creditable coverage but will not have a certificate of creditable coverage from his or her prior plan.  In other cases, an individual may have a certificate but claim that the information it contains inaccurate.  An individual may present and the plan must consider other evidence of creditable coverage.  Examples of other evidence include explanations of benefits (EOBs) or other correspondence from a plan or issuer indicating coverage, pay stubs showing a payroll deduction for health coverage, a health insurance identification card, a certificate of coverage under a group health policy, records from medical care providers indicating health coverage, third party statements verifying periods of coverage, and any other relevant documents that evidence periods of health coverage.

Notice: A written notice shall include:

• The basis of the determination;
• An explanation of the individual’s right to present additional evidence of creditable coverage;
• The remaining preexisting condition exclusion period that will apply to the individual; and
• A description of any applicable appeals procedures.

Distribution: This notice should be sent by the Plan Administrator or Health Insurer to participants and covered dependents to whom a preexisting condition exclusion is applied.

Timeframes: It should be sent within a reasonable time following a determination by the Plan.

Additional Resources

Click Here for the Department of Labor Web Site.

Click Here for Your Health Plan and HIPAA (for employees).

DOL Self-Compliance Tool

Law References:
HIPAA Certificates of Creditable Coverage
ERISA § 701(e) and 29 CFR 2590.701-5

General Notice of Preexisting Condition Exclusion
ERISA §701, IRC §9801 & 29 CFR 2590.701-3(c)

Individual Notice
ERISA §701 & IRC §9801