Health Insurance Portability Act

Protection

Following a job change, HIPAA provides protection for former employees and their families by guaranteeing that the new employer honor the amount of time they had built up in their previous policy. Before HIPAA, new employees usually had to undergo a period of exclusion, whereby they would not be eligible for insurance coverage. In practice, this prevented people from changing jobs.

If a worker has a preexisting condition for which she was covered by the group plan at her former place of employment, it should have no great effect on the new insurance policy premiums or coverage at the new employer. Previously, workers were subject to a 12-month exclusion period, for which the new insurance company would not cover expenses related to this condition. If certain restrictions are met, the exclusion is not allowed.

For HIPAA to apply, the gap in insurance coverage cannot exceed 63 days. If this restriction is met, then the old employer can provide the worker with a certificate showing the number of months the worker was covered under the previous group plan. For every month of coverage the employee had under the group plan at his old job, the 12 months will be reduced by the same amount of time. For example, if the worker was covered for four months at his old job, then he would only be eligible for exclusion for eight months under the new policy.

HIPAA prohibits an insurance company from discrimination in its group plans. For example, if applicants meet the previous-coverage and 63-day lapse restrictions discussed above, they cannot be denied coverage or charged substantially higher premiums because of health status, age, medical history, or genetic information.