The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which is effective for plan years beginning on or after July 1, 1997, was designed to enhance the portability of health insurance coverage by permitting individuals who lose health coverage to obtain coverage under a new employer’s group health plan or individual group health plan coverage. The HIPAA which applies to group health plans (including group health plans for partners, self-employed individuals, and their dependents) and their insurers:
- imposes a maximum on pre-existing condition limits (six month look-back window for expenses incurred during the first twelve months of coverage [18 months for a late enrollee]) and prohibits them completely for certain classes of individuals (newborns, adoptees and pregnant women) under certain circumstances;
- requires a reduction in the twelve or 18-month limitation period above for pre-existing conditions by the length of prior coverage unless there has been at least a 63-day break in coverage;
- mandates an open enrollment period for employees or dependents who did not elect coverage, who had other coverage which has been exhausted and for new dependents due to marriage, birth or adoption;
- requires that participants be given a summary description within 60 days if benefits under an ERISA group health plan are reduced
- prohibits discrimination in group health plan eligibility and premiums on the basis of health-related status;
- provides that group health plan coverage for multiemployer plans and multiple employer welfare arrangements must be guaranteed renewable;
- requires the provision under certain circumstances of a written certification of a period of coverage under a plan.
HIPAA does not apply to a group health plan if the plan has fewer than two participants who are current employees.
The HIPAA is important legislation which employers and employees should each be familiar with.