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Hip, Hip, HIPAA! Medical plan goes where you go

If you're one of millions who think the medical insurance situation is a mess, consider how bad it would be without HIPAA.

Never heard of it? It should be etched in your brain. It's a godsend for millions of Americans with an ongoing medical condition, most of whom who would be virtually uninsurable if they were ever to be cut adrift from an employer health plan.

And, like it or not, it could happen to you through no fault of your own. You're downsized out of your lifelong job, your company goes belly-up with little warning, or death, divorce or separation cuts you off from a spouse's health benefits. Suddenly you have no health insurance. And when you look for new coverage, you find they won't cover you for any pre-existing conditions. Still others are reluctant to take advantage of an opportunity to switch to a better job because they're afraid pre-existing condition clauses will limit their coverage.

Since 1996, those fears and problems are almost wiped out, thanks to the Health Insurance Portability and Accountability Act. HIPAA guarantees that if you've had continuous group health coverage without an interruption of more than 63 days, you cannot be denied group health insurance, even in the face of a devastating pre-existing condition.

"The good news about HIPAA is that it removes the worry about not getting health insurance because of those dreaded pre-existing conditions," says James Meyer, vice president of the Washington, D.C.-based Economic and Social Research Institute. "The bad news is that taking advantage of it often costs far beyond what low income groups can afford."

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Guarantees accessibility
HIPAA, often mistaken for a form of insurance, gives you guaranteed legal access to insurance you might otherwise be denied. It prevents insurers from limiting or denying coverage -- and even charging higher rates for that coverage -- because of past or present medical conditions. It also limits the time an insurer can refuse to cover a pre-existing condition to 12 months.

For example, let's say an individual has been covered by a group plan for several years and recently has been treated for a heart condition. His company one day up and fires him. His medical coverage is terminated along with the job. Before HIPAA, he would have found it nearly impossible to get new medical insurance. If he did, he likely would face a waiting period of up to 12 months before that plan will cover any cardiac treatment.

At best, it would have cost a small fortune. The worst: no coverage and mountains of medical bills that destroy family finances for years to come.

Teams up with COBRA
HIPAA works hand-in-hand with COBRA (Consolidated Omnibus Budget Reconciliation Act), which lets you continue participation in your company's health plan after you leave the firm. Together, the two laws are critical in keeping your health insurance in place, and that's why it's just as critical to understand exactly how each works. If the man in our example opted out of his employer's COBRA continuation plan and had a 63-day gap in coverage, he would have lost his HIPAA protection.

"HIPAA's provisions help out in a very serious situation, but that's if you can afford what it provides for," says Kathleen Stoll, director of policies for Families USA, a nonprofit organization dedicated to helping all Americans obtain affordable health insurance.

"In many cases, the people who need insurance most -- the poorest among us -- are the ones who suffer most when they get into any kind of health insurance crunch," says Stoll, noting that a staggering 40 million Americans have no health insurance coverage whatsoever.

HIPAA provides that a pre-existing condition is any condition for which medical advice, diagnosis, care or treatment was recommended or was received during the six-month period prior to an individual's enrollment date. The maximum time a plan can delay coverage for the condition is 12 months, even if the insurer has a waiting period before a new employee can join the plan.

If, however, at the time you change jobs, you already have had 12 months of continuous health coverage (without a break in coverage of 63 days or more), you will not have to start over with a new 12-month exclusion for any pre-existing conditions. Anytime you leave a job where you've had continuous coverage, you should be sure to obtain a Certificate of Coverage which provides exact dates you were covered. That time can be applied against any waiting period, so if you had 12 months continuous coverage, the maximum 12-month waiting period would be wiped out by the prior coverage.

Bill Burt is a freelance writer based in Florida.

-- Posted: Sept. 23, 2003

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