5.9 The Health Insurance Portability and Accountability act of 1996 (hipaa)

• Library: Virginia Employment Practices and Forms (Virginia CLE) (2015 Ed.)

5.9 THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA)

5.901 Overview. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) ²⁰⁰ regulates additional aspects of health care continuation coverage not addressed by COBRA, as well as the privacy and security of health data. In particular, HIPAA:

• Limits the use of pre-existing condition exclusions in health insurance plans, although this rule effectively has been superseded by the enactment of the Patient Protection and Affordable Care Act (ACA), which prohibits these exclusions in all employer-sponsored group health plans;

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• Regulates the sharing of employee health care information that is held or used by an employer-sponsored group health plan; ²⁰¹

• Prohibits discrimination in the provision of group health care coverage on the basis of the past or present poor health of an employee or family member of an employee, unless the group health care policy is considered "grandfathered" under the ACA;

• Requires that certain small employers and individuals who have lost their employer-provided health care insurance coverage be given the right to purchase health insurance, although this requirement too has largely been superseded by the ACA; and

• Permits individuals to renew health benefit coverage regardless of the individual's health conditions.

5.902 Common Employer Misunderstandings About HIPAA. HIPAA's obligations are primarily addressed to health care providers, health plans, and health care billing clearinghouses. Therefore, for most employers, HIPAA will apply only to the extent that the employer provides certain types of on-site health clinic operations available to employees or sponsors a group health plan—particularly a self-insured group health plan—for its employees. Accordingly, employers should be aware that HIPAA does not do any of the following:

• Set premium amounts that group health insurance providers may charge for group coverage;

• Address benefits and exclusions of services from group health plans;

• Require that employers pay for employee group health coverage;

• Permit employees to transfer their health coverage when they move to a new job;

• Require that employers offer group health coverage benefits;

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• Require that employers share health care information; or

• Replace the state as the primary regulator of health insurance.

5.903 Eligibility for Coverage. HIPAA applies to group health plans and issuers. With the ACA's prohibition on exclusions because of pre-existing conditions, an employee's coverage under his or her employer's group health plan can no longer be denied because of a pre-existing condition. However, eligibility for participation in the employer's group health plan will still be determined according to the terms of the health plan and the rules of the health plan issuer. Because of "employer shared responsibility" penalties under the ACA (sometimes referred to as "pay or play" penalties) for employers whose workforces meet certain full-time employee levels, many group health plans will provide that qualifying employees are eligible for coverage as full-time employees if they regularly work at least 30 hours per week. ²⁰²

5.904 Portability and Special Enrollment Requirements. Although HIPAA limited the use of pre-existing condition exclusions, this rule effectively has been superseded by the ACA, which prohibits group health plans, and non-grandfathered individual health policies, from imposing any coverage limitation or exclusion on an individual because of health status. Consequently, after December 31, 2014, group health plans are no longer required to issue "Certificates of Creditable Coverage." ²⁰³ Despite the enactment of the ACA, however, HIPAA's special enrollment rules remain intact. These rules apply to most group health plans sponsored by employers, except for limited plans such as flexible spending accounts, dental or vision plans, or retiree-only plans. The rules permit employees to add, drop, or change their coverage under their employer's group health plan during the middle of the year if the employee or dependent experiences certain qualifying changes in status or coverage, such as the loss of other coverage, the birth or adoption of a child, or circumstances such as marriage, death, or divorce.

5.905 HIPAA and New...