Citations to the Code of Federal Regulations are in parentheses (for example, 45 CFR § 146.113). The first number (e.g., 45) is the Title of the Code, CFR stands for “Code of Federal Regulations,” and the second number (e.g., 146.113) is the section within that title. You can view the full regulations online at http://www.gpoaccess.gov/cfr/index.html. We have included links to consumer publications from the U.S. Department of Labor and the U.S. Department of Health and Human Services that discuss these terms.
Creditable coverage refers to health coverage you had previously that meets certain conditions. Under HIPAA, whether—and for how long—an employer-sponsored group health plan can refuse to cover an illness you had before you enrolled in it will depend on how much creditable coverage you have.
Generally, for each day you have had creditable coverage, the period of exclusion for a preexisting condition is reduced by a day. For example, if a person joins an employer-sponsored group health plan and has no creditable coverage, that plan can normally refuse to cover that person’s preexisting condition for 12 months. However, if the person had three months of creditable coverage, that plan can exclude coverage only for nine months (12 months-3 months=9 months). (See more information about preexisting conditions in the definition below.).
Generally, when calculating how many days of creditable coverage you have, the new health plan will count the days that you had any health coverage and will not examine that coverage for specific benefits. However, health plans are allowed to separately consider the number of days you had benefits for the following: mental health care, substance abuse treatment, prescription drug coverage, dental care, or vision care (45 CFR § 146.113).
Health coverage is said to be “creditable” if it comes from any of the following sources and has not been interrupted by a break of 63 days or more (that is, if the person did not go without coverage for 63 consecutive days):
• Employer-sponsored group health plans;
• Federal or state employee benefits;
• COBRA continuation coverage;
• HMOs or other state-licensed health insurers;
• Association health plans (AHPs);
• Individual health plans;
• State high-risk pools;
• Public health plans (such as a plan offered by a state or by a foreign country);
• The Indian Health Service;
• Veterans’ benefits or other coverage for the uniformed services;
• Medicaid; and,
NOTE: The following kinds of plans do not count as creditable coverage:
• workers’ compensation,
• automobile medical payment, and
• credit-only plans (such as mortgage insurance).
For more details about what counts as a break in coverage, see “Significant Gap in Coverage,” below.
Source: U.S. Department of Labor, Health Coverage Portability (2004), available online at http://www.dol.gov/ebsa/pdf/consumerhipaa.pdf (see page 8).
Employer-Sponsored Group Health Plan (also called “Group Health Insurance”)
An employer-sponsored group health plan is a plan sponsored by an employer, or by an employer in partnership with a union, that provides medical care to two or more employees. This type of plan may also provide benefits to dependents. The employer may either purchase health insurance through an insurer that pays the claims, or it may “self-fund” the benefits, meaning that the employer pays the claims itself. The following types of plans are not considered group health plans: workers’ compensation plans and plans that provide coverage only for accidents, disability, liability, on-site medical clinics, credit, or automobile medical payments (45 CFR § 146.145).
Under HIPAA, people in employer-sponsored group health plans have certain protections. First, employers may not exclude employees or their dependents from a health plan based on their health status. However, under federal law, employers are not required to offer health insurance to all of their employees. Rather, if an employer chooses to offer health insurance, the insurance must be offered to all employees who have a similar position within the company. For example, a large store may choose to offer health coverage to all of its managers but not its sales associates, or it may choose to offer coverage to all full-time employees but not part-time employees.
Second, there are limits on how long the plan can exclude coverage of a preexisting health condition, discussed under Preexisting Condition Exclusions below.
There are some exceptions to these protections. Separate policies that provide coverage only for limited benefits (such as dental, vision, or long-term care) or for specified diseases (e.g., cancer policies) are not subject to HIPAA protections. Plans that are offered by the federal government are not regulated by HIPAA, but they are subject to similar protections under other laws and regulations. Plans that states or local governments self-fund (that is, the state or local government pays the claims) also may not be regulated by HIPAA (42 CFR § 146.180). Some plans that are offered through a church are exempt from HIPAA regulations and may require people enrolled in the plan to show that they are healthy (26 CFR Part 54). For information about whether your church or government plan is regulated by HIPAA, you should check with your plan’s administrator.
Association health plans (including plans purchased through an organization that has a purpose other than business, such as a university) are not considered group health insurance under HIPAA. Association health plans are required to offer coverage to any member of the organization regardless of health status (45 CFR § 144.103), but there are no restrictions on how long these plans can refuse to cover an illness an individual had before he or she joined the plan. This is because association health plans are technically part of the individual health insurance market (see the preamble in 62 FR 16985, April 8, 1997, subsection J, Associations in the Individual Market).
Source: U.S. Department of Health and Human Services, Protecting Your Health Insurance Coverage, available online at http://www.cms.hhs.gov/HealthInsReformforConsume/Downloads/protect.pdf (see page 4); U.S. Department of Labor, Health Coverage Portability (2004), available online at http://www.dol.gov/ebsa/regs/fedreg/final/2004028112.pdf (see page 64);
December 16, 2006 Federal Register contains the final regulations pertaining to church plans, available online at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-9558.pdf.
People are HIPAA-eligible and are guaranteed the right to purchase some form of individual insurance coverage without preexisting condition exclusions under HIPAA if they meet the following criteria:
1) they have had at least 18 months of previous health insurance coverage without a break in coverage lasting 63 days or more;
2) their most recent period of coverage was under an employer-sponsored group plan, a church plan, or a government plan;
3) they did not lose insurance coverage due to fraud or failure to pay premiums;
4) they are ineligible for or have exhausted their COBRA coverage options or similar state continuation coverage; and
5) they are not eligible for any other employer-sponsored group plan, Medicaid, or Medicare.
Although HIPAA-eligible individuals are guaranteed the right to purchase some form of coverage in the individual market, the kind of insurance you can get depends on where you live. Some states designate particular health plans that must serve HIPAA-eligible individuals, while in other states, HIPAA-eligible individuals are guaranteed the right to enroll in any health plan that sells policies to individuals (45 CFR § 148.103). Contact your state insurance department for more information. You can find contact information at http://www.naic.org/state_web_map.htm.
Sources: U.S. Department of Labor, Health Coverage Portability (2004), available online at http://www.dol.gov/ebsa/pdf/consumerhipaa.pdf (see page 28); U.S. Department of Health and Human Services, Protecting Your Health Insurance Coverage, available online at http://www.cms.hhs.gov/HealthInsReformforConsume/Downloads/protect.pdf (see page 5).
Health coverage that people purchase on their own for themselves or their families is individual insurance. Insurance plans that are not group health plans, including association health plans, are considered to be part of the individual insurance market. Plans that are offered through an employer but that have fewer than two enrollees are also considered to be individual health plans, unless a state chooses to define them differently. Contact your state insurance department for more information about individual health plans in your state. You can find contact information at http://www.naic.org/state_web_map.htm.
Sources: U.S. Department of Labor, Health Coverage Portability (2004), available online at http://www.dol.gov/ebsa/regs/fedreg/final/2004028112.pdf (see page 64); U.S. Department of Health and Human Services, Protecting Your Health Insurance Coverage, available online at http://www.cms.hhs.gov/HealthInsReformforConsume/Downloads/protect.pdf (see page5).
Pre-existing Condition Exclusions
A pre-existing condition is a physical or mental health condition that you had before joining a health plan. Under HIPAA, when deciding whether to exclude coverage for a pre-existing condition, a plan can consider any condition (except pregnancy) for which you received medical advice, diagnosis, or treatment, or for which medical care was recommended, within the six months before you joined the plan. This six-month period is called the “look-back period.” Some states have shortened the allowable look-back period in some health plans. Contact your state insurance department to find out if your state uses a shorter look-back period. You can find contact information at http://www.naic.org/state_web_map.htm.
Under HIPAA, your new plan can exclude coverage of a pre-existing condition (that is, it can refuse to treat that condition) for no longer than 12 months for people who enroll in an employer-sponsored group plan (or 18 months for late enrollees in an employer-sponsored group plan), and for 18 months for people moving from a group plan to individual coverage. These periods are reduced for those who have had creditable coverage.
For example, if a person joins an employer-sponsored group health plan and has no creditable coverage, that plan can normally refuse to cover that person’s pre-existing condition for up to 12 months. However, if the person had three months of creditable coverage, that plan can exclude coverage only for nine months (12 months - 3 months = 9 months).
Under HIPAA, health plans are prohibited from imposing pre-existing condition exclusions on pregnancy.
Sources: Federal Register, “Final Regulations for Health Coverage Portability; Final Rule,” December 30, 2004, pp. 78,720-78,799, available online at http://www.dol.gov/ebsa/regs/fedreg/final/2004028112.pdf.
Significant Gap in Coverage
A break of 63 consecutive days or more during which you have had no health coverage constitutes a significant gap in coverage. An individual with a significant gap in coverage loses certain protections (45 CFR § 146.113 (b) (2) (iii)): The coverage you had before the gap is no longer considered “creditable” and will therefore not reduce the amount of time that your health plan can refuse to cover a preexisting condition.
If you join a plan through a new employer or HMO and have a waiting period before that coverage goes into effect, that waiting period is not counted as a break in coverage. If you are electing COBRA during a second election period, as provided under the Trade Adjustment Assistance Reform Act (TAARA), those days between when you lose health coverage through an employer and when you elect COBRA do not count toward the 63-day limit (This second election period applies to people who lost their jobs due to international trade. For more information on coverage under the Trade Adjustment Assistance Reform Act, contact the Department of Labor Employment and Training Administration at 877–US2–JOBS or at www.doleta.gov/tradeact.)
Sources: U.S. Department of Labor, Health Coverage Portability (2004), available online at http://www.dol.gov/ebsa/pdf/consumerhipaa.pdf (see page 8). Federal Register; “Final Regulations for Health Coverage Portability; Final Rule,” December 30, 2004, pp 78,720-78,799, available online at http://www.dol.gov/ebsa/regs/fedreg/final/2004028112.pdf.
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