Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996. Also called the Kennedy-Kassebaum Act, it has spanned a massive, multi-year attempt to standardize processes and reduce the incidence of accidental disclosure and fraud.

HIPPA Benefits

Its primary benefits are two-fold. First, HIPPA allows an employee to move to another group plan or to a new employer without being penalized for pre-existing conditions. A pre-existing condition is typically recognized as one that is diagnosed or treated in a six-month frame prior to application for a new policy. There are specifics for eligibility: namely, you will have had 18 months of previous continuous coverage, and you must have been a member of a group plan that met HIPAA requirements, whether it was yours or that of a spouse.

The second most important aspect of HIPAA is that it guarantees all medical information remains stringently private (called the Privacy Rule). This encompasses electronic, recorded, and written information. Under this privacy mandate, health care providers must agree to protect all written, voice, and electronic information regarding an individual's past, present, or future condition, nature of care, and payment history.

HIPAA does not perform like COBRA to guarantee benefit or costs. Nor does it require a company to provide continuing coverage in the event of termination or resignation.

The Security Rule specifically addresses patient information when it is electronically transmitted or maintained and shared in a database. Security addresses this on several levels: administrative, technical, physical access, organizational structuring, corporate procedures, and policies. The Act does allow a patient to access his or her own records and make amendments or correct erroneous information as needed.

HIPPA Eligibility

To apply for an individual plan, you must meet the above requirements, plus: own no other health policies, have participated in the full 18 months of COBRA or other regulated "bridge" coverage, and not be eligible for Medicare/Medicaid. For both individual and group plans, you cannot wait more than 63 days between loss of existing coverage and application to a new plan.

In general, this means you will not be denied coverage if particular conditions are met. You are guaranteed the right to purchase a new policy regardless of past or recurring health issues. In the case of a pre-existing condition, the waiting time will either be greatly reduced or eliminated based on "credit." That is, if the former policy was in effect longer than the current probationary requirement, the waiting period may be waived.

This is not an exhaustive list of conditions and some states will have varying restrictions. It is always best to ask about benefits and entitlements with regard to specific agencies and health care providers.

HIPPA Compliance

Companies that provide insurance plans to employees are legally responsible for ensuring that the provider is HIPAA-compliant. In particular, employers who receive electronic transmission should be aware of the implications of noncompliance.

Healthcare companies and organizations must have reached full compliancy in 2005. They will have undergone an inspection and upgrade of their transmission systems -- electronic data interchange, or EDI -- and internal networks. Following that, they have also imposed rigid security measures and policies on the equipment. Employees will have undergone training to provide the greatest security for information. In addition, coding of patient information and identification has been standardized to meet health insurance and federal standards. It is believed the end result is more efficient and reduces the percentage of errors.