HIPAA Health Plan

HIPAA – Leveraging the Rights of the Insured

The health insurance system functions well when the predictable health risk of individuals enrolled in the program is low and unvaried over a period of time. This means that candidates with pre-existing conditions either do not qualify or are exempt from coverage for their pre-existing medical conditions. As one ages, the health costs of being part of a risk pool often doubles, which means a person above the age of 50 pays twice more than a person under 20.

One way in which health insurers mitigate the effects of “adverse selection” or having too many high health-care risk individuals in the plan is by offering coverage benefits to large groups like companies with many employees. HIPAA health plan was enacted over rising concerns of discrimination in providing healthcare coverage.


What is HIPAA?

HIPAA (Health Insurance Portability and Accountability Act) was passed as a mandate in 1996 to provide rights and protection to individuals in a group health plan. HIPAA also benefits those who have lost or changed their jobs.


Advantages of HIPAA

HIPAA health plan limits the time period that a state licensed health insurer or employee welfare benefit plan can specify for the exclusion of benefits for a pre-existing condition. A pre-existing, exclusion condition allows health insurers to protect themselves from liabilities arising from any pre-existing medical conditions that the insured person could be suffering from.

If you have never had lapses in your health insurance for more than 63 days, you cannot be denied a health insurance plan. The Act increases access to health coverage. According to its regulations, even a small company (which in HIPAA’s definition is a 2 – 50 employee company), has the rights to all small-group products of state licensed health insurers regardless of the status of the health or claims status of employees in such a company.

HIPAA makes allowances for certain individuals to join individual plans after having left group plans. Under HIPAA, state licensed insurance organizations serving multiple employers should renew coverage upon end of contract, except when the employer has defaulted or committed fraud. HIPAA does not permit state-licensed insurance organizations or employee welfare benefit plans to discriminate against a person on health grounds when considering his/her eligibility to the plan.

Disadvantages of HIPAA

HIPAA does not regulate the premium charged by state-licensed insurers and employee welfare plans. These rates are regulated at the state-level and are often quite high.