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Frequently Asked Questions about Portability of Health Coverage and HIPAA What is HIPAA (portability of health coverage)? The Health Insurance Portability and Accountability Act of 1996 (HIPAA), amended the Employee Retirement Income Security Act to provide new rights and protections for participants and beneficiaries in group health plans. HIPAA contains protections both for health coverage offered in connection with employment (group health plans) and for individual insurance policies sold by insurance companies (individual policies). HIPAA includes protections for coverage under group health plans that: Limit exclusions for preexisting conditions Prohibit discrimination against employees and dependents based on their health status Allow a special opportunity to enroll in a new plan to individuals in certain circumstances What is creditable coverage? Most health coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), HMO, individual health insurance policy, Medicaid or Medicare. Creditable coverage does not include coverage consisting solely of excepted benefits, such as coverage solely for limited-scope dental or vision benefits. Days in a waiting period during which an individual has no other coverage are not creditable coverage under the plan, nor are these days taken into account when determining a significant break in coverage (generally a break of 63 days or more). This 63-day break period may be extended under state law if the coverage is insured through an insurance company or offered through an HMO. Check with your State Insurance Commissioner's Office to see whether a longer break period applies to you. When must group health plans and issuers provide the certificates of creditable coverage? Plans and issuers must furnish the certificate automatically to: An individual who is entitled to elect COBRA continuation coverage, at a time no later than when a notice is required to be provided for a qualifying event under COBRA An individual who loses coverage under a group health plan and who is not entitled to elect COBRA continuation coverage, within a reasonable time after coverage ceases An individual who has elected COBRA continuation coverage, either within a reasonable time after the plan learns that COBRA continuation coverage ceased or, if applicable, within a reasonable time after the individual's grace period for the payment of COBRA premiums ends Are plans and issuers required to issue certificates of creditable coverage to dependents of covered employees? Yes. A plan or issuer must make reasonable efforts to collect the necessary information for dependents and issue the dependent a certificate of creditable coverage. If the coverage information for a dependent is the same as for the employee, one certificate with both the employee and dependent information can be provided. However, an automatic certificate for a dependent is not required to be issued until the plan or issuer knows (or, making reasonable efforts, should know) of the dependent's loss of coverage. This information can be collected annually, such as during an open enrollment period. How does crediting for prior coverage work under HIPAA? Most plans use the standard method of crediting coverage. Under the standard method, an individual receives credit for previous coverage that occurred without a break in coverage of 63 days or more. Any coverage occurring prior to a break in coverage of 63 days or more is not credited against a preexisting condition exclusion period. To illustrate, suppose an individual had coverage for 2 years followed by a break in coverage of 70 days and then resumed coverage for 8 months. That individual would only receive credit for 8 months of coverage; no credit would be given for the 2 years of coverage prior to the break in coverage of 70 days. Is there another way that a group health plan or issuer can credit coverage under HIPAA? Yes. A plan or issuer may elect the alternative method for crediting coverage for all employees. Under the alternative method of counting creditable coverage, the plan or issuer determines the amount of an individual's creditable coverage for any of the five specified categories of benefits. Those categories are mental health, substance abuse treatment, prescription drugs, dental care and vision care. The standard method is used to determine an individual's creditable coverage for benefits that are not within any of the five categories that a plan or issuer may use. (The plan or issuer may use some or all of these categories.) When using the alternative method, the plan or issuer looks to see is an individual has coverage within a category of benefits (regardless of the specific level of benefits provided within that category). For example, if an individual who is a regular enrollee (not a late enrollee) has 12 months of creditable coverage, but coverage for only 6 of those months provided benefits for dental care, a preexisting condition exclusion period may be imposed with respect to that individual's dental care benefits for up to 6 months (irrespective of the level of dental care benefits). If your employer's plan requests information from your former plan regarding any of the five categories of benefits under the alternative method, your former plan must provide the information regarding coverage under the categories of benefits. One way to provide this information is to use the Model for Categories of Benefits. How does a waiting period for enrollment in the plan relate to the preexisting condition exclusion period? HIPAA does not prohibit a plan or issuer from establishing a waiting period. For group health plans, a waiting period is the period that must pass before an employee or a dependent is eligible to enroll under the terms of the plan. Some plans have waiting periods and preexisting condition exclusion periods. However, if a plan has a waiting period and a preexisting condition exclusion period, the preexisting condition exclusion period begins when the waiting period begins. What are group health plan's obligations with respect to special enrollment opportunities? A group health plan is required to allow special enrollment for certain individuals to enroll in the plan without having to wait until the plan's next regular enrollment season. Group health plans and health insurance issuers are required to provide special enrollment periods during which individuals who previously declined coverage for themselves and their dependents may be allowed to enroll (without having to wait until the plan's next open enrollment period). A special enrollment opportunity occurs if an individual with other health insurance loses that coverage or if a person becomes a new dependent through marriage, birth, adoption or placement for adoption. However, an individual must notify the plan of their request for special enrollment within 30 days after losing their other coverage or within 30 days of having (or becoming) a new dependent. If an individual enrolls as a special enrollee, they may not be treated as a late enrollee for purposes of any preexisting condition exclusion period. Therefore, the maximum preexisting condition exclusion period that may be applied is 12 months, reduced by their creditable coverage (rather than 18 months, reduced by creditable coverage). What events trigger a special enrollment opportunity? When the employee or dependent of an employee loses other health coverage, a special enrollment opportunity in the group health plan may be triggered. To have a special enrollment opportunity in this situation, the employee or dependent must have had other health coverage when coverage under the group health plan was previously declined. If the other coverage was COBRA continuation coverage, special enrollment can be requested only after the COBRA continuation coverage is exhausted. If the other coverage was not COBRA continuation coverage, special enrollment can be requested when the individual loses eligibility for the other coverage. In addition, a special enrollment opportunity may be triggered when a person becomes a new dependent through marriage, birth, adoption or placement for adoption. For each triggering event, a special enrollee may not be treated as a late enrollee.Therefore, the maximum preexisting condition exclusion period may be applied to a special enrollee is 12 months, and the 12 months are reduced by the special enrollee's prior creditable coverage. In addition, a newborn, adopted child or child placed for adoption cannot be subject to a preexisting condition exclusion period if the child is enrolled within 30 days of birth, adoption or placement for adoption and has no subsequent significant break in coverage. What are a plan's obligations with respect to special enrollment when an employee or a dependent of an employee loses other health coverage? When an employee or a dependent of an employee loses other health coverage, a special enrollment opportunity may be triggered (only if the individual had other health insurance coverage when first eligible to enroll). The employee or dependent must request special enrollment within 30 days of the loss of coverage. In addition, the resulting coverage must be effective no later than the first day of the first calendar month beginning after the date the completed request for enrollment is received. What are a plan's obligations with respect to special enrollment when a new dependent through marriage, birth, adoption, or placement for adoption? Employees, as well as their spouses and dependents may have special enrollment rights after a marriage, birth, adoption or placement for adoption. In addition, new spouses and new dependents of retirees in a group health plan may also have special enrollment rights after a marriage, birth, adoption or placement for adoption. If a special enrollment opportunity is available, the individual must request special enrollment within 30 days of the marriage, birth, adoption or placement for adoption that triggered the special enrollment opportunity. In the case of marriage, enrollment is required to be effective not later than the first day of the first calendar month beginning after the date the completed request for enrollment is received by the plan. In the case of birth, adoption or placement for adoption, enrollment is required to be effective not later than the date of such birth, adoption or placement for adoption. Are plans and issuers required to disclose individuals' special enrollment rights? Yes. A description of special enrollment rights must be provided to employees on or before the time they are offered the opportunity to enroll in the group health plan, such as that in the model description.       What new kinds of information do group health plans have to give to participants and beneficiaries? HIPAA and other recent laws made important changes in ERISA's disclosure requirements for group health plans. Under current Department of Labor interim disclosure rules, group health plans must improve their summary plan descriptions (SPDs) and summaries of material modifications (SMMs) (documents employers are required to provide to employees at certain key intervals) in four major ways to make sure they: Notify participants and beneficiaries of material reductions in covered services or benefits (for example, reductions in benefits or increases in deductibles and co-payments) generally within 60 days of adoption of the change. This compares to current requirements under which plan changes can be disclosed as late as 210 days after the end of the plan year in which a change was adopted. Disclose to participants and beneficiaries information about the role of issuers (e.g., insurance companies and HMOs) with respect to their group health plan. In particular, the name and address of the issuer, whether and to what extent benefitsunder the plan are guaranteed under a contract or policy of insurance issued by the issuer and the nature of any administrative services (e.g., payment of claims) provided by the issuer. Tell participants and beneficiaries which Department of Labor office they can contact for assistance or information on their rights under ERISA and HIPAA. Tell participants and beneficiaries that federal law generally prohibits the plan and health insurance issuers form limiting hospital stays for childbirth to less than 48 hours for normal deliveries and 96 hours for cesarean sections. What is the definition of a material reduction in covered services or benefits that is subject to the new 60-day notice requirement? Under the interim disclosure rules, a material reduction in covered services or benefits means any modification to a group health plan or change in the information required to be included in the summary plan description that, independently or in conjunction with other contemporaneous modifications or changes, would be considered by the average plan participant to be an important reduction in covered services or benefits under the group health plan. The interim rules cite examples of reductions in covered services or benefits asgenerally including any plan modification or change that: Eliminates benefits payable under the plan Reduces benefits payable under the plan, including a reduction that occurs as a result of a change in formulas, methodologies or schedules that serve as the basis for making benefit determinations Increases deductibles, co-payments or other amounts to be paid by a participant or beneficiary Reduces the service area covered by a health maintenance organization Establishes new conditions or requirements (e.g., preauthorization requirements) to obtain services or benefits under the plan Can employers use e-mail systems to communicate these new disclosures to employees, and is so, do employees have a right to get a paper copy of the information from their plan? Yes. The interim disclosure rules provide a safe harbor for using electronic media (e.g., e-mail) to furnish group health plan SPDs, summaries of material reductions in covered services or benefits and other SMMs (summaries of plan modifications and SPD changes). To use the safe harbor, among other requirements, employees must be able to effectively access at their worksite documents furnished in electronic form. Participants also continue to have a right to receive the disclosures in paper form on request and free of charge. Although the interim rule is not the exclusive means by which electronic media can be used to lawfully communicate plan information, the HIPAA safe harbor is limited to group health plans. The Department of Labor is considering extending the rule to other plans, including pension plans, and to other plan disclosures, but is exploring whether special precautions are necessary to ensure the confidentiality of electronically transmitted individual account or benefit-related information. Who enforces HIPAA? The Secretary of Labor enforces the health care portability requirements on group health plans under ERISA, including self-insured arrangements. In addition, participants and beneficiaries can file suit to enforce their rights under ERISA, as amended by HIPAA. The Secretary of the Treasury enforces the health care portability requirements on group health plans, including self-insured arrangements. A taxpayer that fails to comply may be subject to an excise tax. States also have enforcement responsibility for group and individual requirements imposed on health insurance issuers, including sanctions available under state law. If a state does not act in the areas of its responsibility, the Secretary of Health and Human Services may make a determination that the state has failed to substantially enforce the law, assert federal authority to enforce, and impose sanctions on insurers as specified in the statute, including civil money penalties. Can states modify HIPAA's portability requirements? Yes, in certain circumstances. States may impose stricter obligations on health insurance issuers in the seven areas listed below. States may: Shorten the 6-month look-back period prior to the enrollment date to determine what is a preexisting condition Shorten the 12-and 18-month maximum preexisting condition exclusion periods Increase the 63-day significant break in coverage period Increase the 30-day period for newborns, adopted children and children placed for adoption to enroll in the plan so that no preexisting condition exclusion period may be applied thereafter Further limit the circumstances in which a preexisting condition exclusion period may be applied beyond the exceptions described in federal law (the exceptions under federal law are for certain newborns, adopted children, children placed for adoption, pregnancy, and genetic information in the absence of a diagnosis) Require additional special enrollment periods Reduce the maximum HMO affiliation period to less than 2 months (3 months for late enrollees) In addition, states may sometimes impose other requirements with respect to insurance companies and HMOs. Therefore, if your health coverage is offered through an HMO or an insurance policy issued by an insurance company, you should check with your State Insurance Commissioner's Office to find out the rules in your state. Model for Categories of Benefits (Alternative Method) Information On Categories Of Benefits Date of original certificate: Name of group health plan providing the coverage: Name of participant: Identification number of participant: Name of individual to whom this information applies: The following information applies to the coverage in the certificate that was provided to the individual identified above: Mental Health: Substance Abuse Treatment: Prescription Drugs Dental Care Vision Care For each category above, enter N/A if the individual had no coverage within the category or either: Enter both the date that the individual's coverage within the category began and the date that the individual's coverage within the category ended (or indicate if continuing) Enter same on the line if the beginning and ending dates for coverage within the category are the same as the beginning and ending dates for the coverage in the certificate. www.dol.gov

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