The Departments of Labor (29 C.F.R. Part 2590), Treasury (26 C.F.R. Part 54) and Health and Human Services (45 C.F.R. subtitle A, Parts 144 and 146) have issued regulations under HIPAA, which applies to local governments through the Public Health Services Act ("PHSA"). Generally, the new rules apply for health plan years beginning after June 30, 1997. HIPAA applies to insured and self-insured health plans, except to the extent self-funded non-federal plans elect to exempt themselves from certain HIPAA requirements.
Generally, HIPAA 1) limits preexisting condition exclusions, 2) credits prior coverage to reduce preexisting condition periods, 3) beginning June 1, 1997, requires issuance of certificates of coverage, and 4) requires certain changes to SPDs and plan documents.
Application to Local Government Plans
Because government plans are exempt from ERISA, HIPAA applies to city and county plans through the PHSA, much like COBRA. Self-funded non-federal governmental plans may elect annually to be exempt from the following HIPAA rules:
- Limitations on preexisting condition exclusion.
- Special enrollment periods for individuals losing other coverage.
- Prohibitions against discrimination based on health status.
- Standards relating to benefits for mothers and newborns.
- Parity in the application of certain limits to mental health benefits.
Plans that elect to exempt themselves from HIPAA must notify all participants. State and local government may not elect out of certification requirements. Whether or not any election is made, a non-federal governmental plan must provide certification of creditable coverage to participants and their dependents.
In general, HIPAA applies to all group health plans, without respect to the size of the plan or whether or not it is insured or self-insured. HIPAA exempts only plans with fewer than 2 individuals who are active employees.
Limits on Preexisting Condition Exclusions
Preexisting condition exclusions must relate to a condition for which medical advice, diagnosis, care or treatment was recommended or received within the 6-month period ending on the enrollment date. A preexisting condition exclusion may not extend for more than 12 months after the enrollment date, or 18 months for a late enrollee. The period of preexisting condition exclusion is reduced by the number of days of creditable coverage the individual has as of the enrollment date.
HIPAA restricts application of preexisting conditions to newborns, adopted children, and pregnancy.
Enrollment
Enrollment date means the first day of coverage or the first day of any waiting period. Late enrollment in a plan is anything other than enrollment on one of the following:
- the earliest date on which coverage can become effective under the terms of the plan
- a special enrollment date
- only the most recent period of employment is taken into account in determining whether the individual is a late enrollee under the plan.
HIPAA provides for special enrollment periods:
(1) Individual losing other coverage. A group health plan or an issuer offering coverage in connection with a group health plan must allow an employee who is eligible, but not enrolled, to become covered under the plan. Dependents are also allowed to enroll, if family coverage is provided under the terms of the plan.
(2) Dependents. If a person becomes a dependent through marriage, birth, adoption, or placement of adoption, the person may enroll as a beneficiary. If not already enrolled, the employee and spouse may enroll at this time.
Creditable Coverage
The period of a preexisting condition exclusion must be reduced by the days of "creditable coverage", not counting coverage that occurs before a "significant break in coverage" (63 days or more). Creditable coverage certificates must be provided by a plan when an individual ceases to be covered. Regulations provide a model certificate.
Creditable coverage includes coverage of an individual under many types of group health plans, including health insurance from the group or individual market, Medicare, Medicaid, military plans, risk pools, or Federal Employee Health Benefits programs.
Certification of Previous Coverage
Effective June 1, 1997, group health plans (or their carriers) must issue certificates of prior coverage whenever regular coverage (or COBRA coverage) ends. Certification requirements are met if another party provides the certificate.
Individuals for Whom Certificates Must be Provided
Certificates must automatically be provided to the following:
- qualified beneficiaries upon a qualifying event: an individual who is a qualified beneficiary and entitled to elect COBRA coverage is entitled to a certificate at the time the individual would lose coverage under the plan in the absence of COBRA or alternative coverage elected instead of COBRA.
- someone not entitled to COBRA must get a certificate within "a reasonable time period" when the individual ceases to be covered under the plan.
- qualified beneficiaries when COBRA ceases.
Certificates must also be provided in the following circumstances:
- any individual who requests a certificate within 24 months after coverage ceases.
- A certificate must be provided upon request even if the individual has previously received a certificate.
The Regulations permit individuals to establish creditable coverage through means other than certificates. If the accuracy of a certificate is contested or a certificate is unavailable when needed by the individual, the individual has the right to demonstrate creditable coverage (and waiting or affiliation periods) through other means.
Virginia has adopted House Bill 2887 conforming Virginia insurance law to HIPAA, which will apply to insured plans in the Commonwealth.
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