17. 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?