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What laws protect employees from discrimination in receiving health insurance coverage?
The Health Insurance Portability Accountability Act of 1996
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a primary law protecting the rights of employees with regard to obtaining and continuing health insurance coverage. Specifically, HIPAA prohibits group health plans and health insurance providers from discriminating against employees based upon certain factors. A common practice when an individual applies for health insurance coverage is to examine the individual’s medical history for prior health conditions. The insurance provider will often limit coverage for pre-existing ailments and injuries. This situation becomes a major issue for someone who loses employer-provided, health insurance coverage when leaving her current employment. HIPAA seeks to remedy this situation by granting an employee who leaves one job the ability to continue her same level of health coverage under a subsequent health plan without being excluded for pre-existing conditions. The key requirement is that an individual must never have a considerable break in insurance coverage between canceling one plan and beginning another. If an individual has a break in coverage, the insurer can exclude pre-existing conditions present during the previous 12 months (18 months if a late enrollee in the new plan). For the above-stated reason, individuals losing their employer-provided health coverage must purchase interim insurance to continue coverage during the interim. Coverage is generally available pursuant to the Consolidated Omnibus Budget Reconciliation Act. If the employee maintains coverage, a subsequent insurer cannot exclude or limit coverage of an individual because of health status, medical condition or history, genetic information, or disability.
• Note: The insurer can, however, charge more for the entire plan – which is paid for by the group of employees. Small businesses may be disadvantaged by insurer practices, as they will charge higher rates for the small group policy due to the increased risk of loss by one group member becoming sick.
• Discussion: How do you feel about Congress’s regulation of insurance companies? Should insurers be required to cover employees with pre-existing conditions if they become a member of a group plan? Why or why not? Do you think these provisions offer sufficient protections to employees or are they too strenuous on insurers? Why?
• Practice Question: Ellen is an employee of ABC Corp. She purchases her health insurance through an employer-sponsored plan. She is considering changing jobs to work for 123 Corp. She previously had a heart attack and is worried about losing health coverage for this condition if she changes employment. Does HIPAA offer any protections for Ellen?
The Affordable Care Act of 2014
• Requirements of Individuals & Government – The Affordable Care Act in 2014 (ACA) changes the insurance landscape considerably. The ACA requires that all US citizens purchase health insurance either privately or through their employers. Individuals who fail to purchase health insurance are fined or incur a tax penalty calculated as a percentage of their annual income. Low-income earners are eligible for federal subsidies to aid in the purchase of health insurance coverage. To make insurance available, the ACA establishes federal exchanges through which individuals may purchase coverage. It also provides subsidies for states to establish their own insurance exchanges through an expansion of the state’s Medicaid program. As part of the mandatory insurance requirements, insurance companies cannot exclude applicants based upon pre-existing conditions. Collectively, these provisions make health insurance available to all US citizens.
• Requirements of Businesses – The ACA also places requirements on businesses to sponsor health insurance plans for employees. A business with 50 or more full-time employees (defined as working 30 hours per week during any week of work) must allow employees to purchase health insurance for themselves and their dependents through the employer-sponsored plan. Covered employers who fail to sponsor insurance plans may be subject to fine or tax penalty. The employer incurs a penalty if any employee who qualifies for a federal subsidy based upon her level of income purchases insurance through a federal or state insurance exchange.
• Discussion: How do you feel about federal requirements for employers to sponsor insurance plans for employees? Why do you think health insurance plans are linked to employment? Can you make an argument for any other methods of providing health insurance access to individuals?
• Practice Question: Mica is an employee of ABC Corp, a large employer in her state. She makes a very low hourly wage and is worried about her responsibility to purchase health insurance or face a tax penalty. What are the requirements on ABC Corp to sponsor an employer healthcare plan that Mica can purchase? If Mica cannot afford the insurance coverage, what other options are available to her?