Creditable Coverage Under HIPAA

The 1996 Federal law attempted to limit the ability of a new employer plan to exclude for pre-existing conditions, provide additional opportunities to enroll in a group health plan if you lose other coverage and prohibits discrimination against employees and family members based upon any health factors.

While HIPAA has been in existence for 15 years, confusion abounds as it relates to the new Affordable Care Act.  HIPAA limits the pre-existing condition look back period to only six months and limits a pre-existing condition to a 12- month period.  The 12 –month pre-existing condition period can be reduced by the number of months of “creditable coverage” an employee had before the new group health plan coverage begins.  Remember, the group imposed waiting period has no impact on creditable coverage meaning the employee could still receive credit even if he/she didn’t have coverage during the group imposed waiting period.  For example, employee has been covered under a former employer plan, Medicare, Medicaid, SCHIP, or Tricare plan for at least 12 months.  Employee comes to work and has to satisfy his/her waiting period (let’s assume a 90-day waiting period). Because the employee had prior coverage and no more than a 63 day break in coverage before insurance coverage ended and the group imposed waiting period began, the employee has no pre-existing conditions.

Insurance carriers only use full-time status for eligibility purposes for HIPAA credit.  For example, employee loses coverage with former employer and had been covered for 12 months, comes to work for new employer part-time and then moves to full-time.  If the time between part-time and full-time was greater than 63 days and the employee did not continue former plan through COBRA, then the employee could be subject to new pre-existing conditions.  Sounds confusing?  It is.
The Affordable Care Act excludes any pre-existing conditions for any child less than age 19 and HIPAA excludes pregnancy as a pre-existing condition.  The Affordable Care Act will exclude pre-existing conditions for everyone in 2014.  While HIPAA passed to make it easier for folks to switch jobs without fear of losing heath coverage for pre-existing conditions, the law does have limitations. Until then, understanding the HIPAA rules and how it applies to the new Affordable Care Act can be a daunting task.  For more information, please do not hesitate to give Muneris Benefits a call.

Burman S. Clark

Burman S. Clark, RHU, CSA is the President of Muneris Benefits and a licensed insurance broker and consultant. His independent practice and focuses on employee benefits, individual life, disability, medical, and senior products. Burman has traveled extensively and provided guidance to large employer associations with regards to the Affordable Care Act.