Health Plan Portability

Group health plans with at least two participants on the first day of the plan year who are current employees are covered by the federal Health Insurance Portability and Accountability Act (HIPAA).

The law sets the maximum number of months that a group health plan may exclude coverage for preexisting conditions at 12 months, or at 18 months for late enrollees. Late enrollees are participants or beneficiaries who enroll in the plan other than the first period when eligible or under a special enrollment period.

A preexisting exclusion is permissible only if it concerns a physical or mental condition for which medical advice, diagnosis, care or treatment was recommended or received within six months of the date of enrollment in the new plan. Conditions that have not been diagnosed or treated within the six-month period are not subject to any coverage exclusion. Genetic status is not an excludable condition, unless diagnosis or treatment was rendered within the six-month period.

Health care reform. The enactment of the Patient Protection and Affordable Care Act and related legislation heavily regulates the insurance industry, instituting benefit and coverage mandates. Except for certain grandfathered plans, it mandates that by 2014, all qualified health benefit plans offer at least an "essential health benefits package" as defined by the Secretary of Health and Human Services. The law prohibits insurance companies from denying coverage or refusing to renew coverage because of certain conditions. The implementation of this particular provision is scheduled to fully take effect in 2014, when discrimination based on pre-existing conditions is prohibited.

For more information on the provisions of the Affordable Care Act and their effective dates, visit the government's health care act website.

Reducing the exclusionary period. The plan's preexisting condition exclusionary period is reduced, month for month, by the length of the employee's prior coverage for medical care under a wide variety of health plans, including group health plans, individual policies, HMOs, Medicare and other governmental medical care programs. Prior coverage reduces the time of the plan's exclusionary period, unless there has been a break in the coverage of more than 63 days.

For example, it is possible for employees and their dependents with 12 months of coverage with one employer to move to a new employer with new coverage without being subject to the new employer's preexisting condition exclusion. Pregnancy may not be excluded, however, regardless of a break in coverage.

Waiting periods and affiliation periods are not counted as breaks in coverage. When such a break has occurred, only the coverage after the break may be credited.

Certification of coverage. Employers must provide employees with a written certification of coverage showing the employee's creditable coverage when any of the following occur:

• an individual ceases to be covered under the plan or otherwise becomes covered under a COBRA coverage provision
• COBRA continuation coverage is exhausted
• upon request by the individual within 24 months of leaving the plan or at the end of COBRA coverage, whichever is later

To the extent that medical care under a group health plan consists of health insurance coverage offered in connection with the plan, the plan will satisfy the certification requirement if the issuer provides the certification.

Enrollment periods. Employees must enroll in an employer's group health plan at the first opportunity to take advantage of the 12-month preexisting condition exclusion period. Otherwise, the 18-month period for late enrollees may apply.

When an otherwise eligible employee declines coverage because he or she has other coverage available, perhaps as a dependent on a spouse's plan, and that coverage was lost, the employee must be given 30 days after the loss of coverage to enroll, upon request.

In order for this special enrollment period to apply:

• the prior coverage must have been under another health plan and then COBRA and the COBRA coverage was exhausted;
• the other coverage was terminated upon loss of eligibility (due to separation, divorce, death, termination of employment or reduction in number of hours worked); or
• employer contributions were terminated.

For dependent beneficiaries. When the group health plan covers dependents, and an eligible employee acquires a dependent through marriage, birth, adoption or placement for adoption, enrollment must be provided, measured 30 days from the date dependent coverage is made available or the date of marriage, birth, adoption or placement for adoption. Coverage will be effective, without waiting periods, on the date of birth, adoption or placement for adoption. In the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is received.