HIPAA: What Do All Those Letters Mean?

HIPAA, an acronym for what is also known as the Health Insurance Portability and Accountability Act, is a piece of legislation that was passed under the title "Kennedy-Kassebaum Act"� in 1996. It aims to aid workers who may have lost a job with an employer-funded health insurance program, and who deal with healthcare needs, especially if these needs may identify them as otherwise uninsurable due to pre-existing conditions or serious health problems. While it may appear to be a confusing jumble of letters, HIPAA is an important benefit to workers who need health coverage and just started a new job, workers who have medical needs and fear a loss of existing health coverage, workers who change employers and thus stand to face an interruption in employer funded health insurance plans, and also workers who seek to purchase a health insurance policy independent of an employer.

These benefits are accomplished by HIPAA designed limitations on the designation of pre-existing condition exclusions. In addition to the foregoing, HIPAA forbids insurance carriers to inflate premiums for perceived poor health risks, either the individual seeking insurance, or a dependant of the eligible individual. Subsequently, insurance carriers are no longer able to refuse policy renewals in light of paid or submitted claims for coverage.

While these benefits are of tremendous helps to individuals who have found themselves with medical needs and are simultaneously transitioning in their workplace, HIPAA very specifically does not obligate employers to offer health care coverage for employees, and their families. Additionally, while it improves the ability of an individual to receive insurance coverage, it does not guarantee the coverage, nor does it regulate the exact dollar amounts an insurance company will charge an individual for coverage. While HIPAA does limit the pre-existing condition exclusions, it does not define the specific benefits an insurance company is required to offer. In addition to the foregoing, it is noteworthy that while the list of pre-existing conditions that may be recognized is decreased, it is not eliminated!

For example, if a worker receives employer sponsored preferred provider organization health insurance on January 1st, 2005, and then on January 2nd, 2006 decides to switch to another health plan the employer offers, perhaps a health maintenance organization, no pre-existing condition exclusion may be applied since 12 consecutive months of coverage have been fulfilled. The most noteworthy constant in HIPAA rulings is the fact that pregnancy is never considered a pre-existing condition but must always be covered by an insurance company. Please note that HIPAA is not a panacea for spotty insurance coverage! If a worker's insurance history evidences long breaks in applicable coverage, i.e. at least 63 consecutive days without insurance coverage, HIPAA protection will be lost. Thus, a worker will be wise to accept COBRA coverage when available. If a worker is indeed eligible for COBRA, HIPAA coverage will not be available until COBRA benefits have been exhausted.

Since its passage, HIPAA has been amended with the Mental Health Parity Act of 1996 (MHPA). Very specifically, this piece of legislation precludes group health plans from enacting yearly dollar limits on mental health benefits that are lower than annual dollar limits for covered medical benefits. The MHPA does not order insurance plans to specifically offer mental health benefits, and only regulates those plans that actually offer this coverage. Another amendment to HIPAA is the Newborns' and Mothers' Health Protection Act of 1996 (NMHPA) which regulates the amount of time a new mother and her infant you are covered for a hospital stay following childbirth. The final amendment occurred with the WHCRA (Women's Health and Cancer Rights Act) of 1998. This protection is designed very specifically for cancer patients who elect to undergo breast reconstruction surgery in connection with a mastectomy. It is important to understand that the WHCRA does not order health plans to cover mastectomies, and only applies to insurance plans that already do cover this procedure.

HIPAA legislation has greatly increased the affordability of health care for workers, regardless of their economic backgrounds, health histories, or even the claim histories of their covered dependants. Nonetheless, it is not an unlimited safety net, and individual workers must be cognizant of the limitations HIPAA does have.