Are you hip with HIPAA? The Health Insurance Portability and Accountability Act is in place to benefit employees, but comes with some high costs to employers.

• Author: Myers, Deborah J.
• Position: Health Insurance Portability and Accountability Act of 1996

The Health Insurance Portability and Accountability Act of 1996 (HIPAA), also known as the Kennedy-Kassebaum Act, was signed into law primarily to improve the efficiency and security of the health care system and to help employees and their families keep their medical insurance coverage when employment ends. Although many of HIPAA's regulations primarily concern health care organizations, HIPAA also impacts employers who offer health insurance benefits. Understanding HIPAA is important even for the small employer, because the law applies to employers of two or more.

FAIR HIRING

HIPAA ensures that hiring decisions are made fairly, not based on the health status of employees, said Jeff Davis, vice president and general manager of Premera Blue Cross Blue Shield of Alaska.

For example, an employer could have discriminated against an employee whose poor health and/or health risk factors could raise their group rates.

"If employers currently receive protected health information from their health benefits carriers," Davis said, "this practice may be eliminated.

"If it is not eliminated, employers may have to change the way they use and maintain protected health information."

By keeping health information private, HIPAA protects employees from unfair hiring practices.

FAIR COVERAGE

HIPPA ensures that all employees can get coverage, except in some rare circumstances.

"The most important thing to know about HIPAA is that it's a guaranteed buyer environment," said Katie Campbell, life/health actuary at the Alaska Division of Insurance. "You can't deny because of an employee's condition."

In general, an employer cannot say that an employee with ongoing health problems may not enroll in the health insurance plan.

PORTABILITY

The portability aspect of HIPAA eliminates concern over most pre-existing health conditions that used to disqualify employees from coverage.

"If the employee can show continuous coverage, they are not subject to waiting periods," said Tom Harwick, marketing director for Benefits Inc. in Anchorage.

Prior to HIPAA, employees would have to wait months before enrolling.

"HIPAA gives employees who would otherwise be handcuffed to an employer more freedom to shop the job market," Harwick said.

Employees with certain ongoing health concerns, such as needing maintenance drugs or treating a long-term condition, used to be forced to stay with their employers for fear of losing their insurance benefits. If they allowed their coverage to lapse, they may not have passed medical underwriting because of their health conditions.

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