HIPAA Portability and Nondiscrimination – A Refresher (Benefit Minute)
The Health Insurance Portability and Accountability Act (HIPAA) was passed into law in 1996. Its purpose is to provide protection for employees and their dependents by affording additional opportunities to enroll in a group health plan if other coverage is lost or certain life events occur. It also prohibits discrimination against employees and their dependents based on any health factor they may have.
Although HIPAA provisions related to limits on preexisting condition exclusions and credit for prior health insurance (creditable coverage) no longer apply because the Affordable Care Act eliminated all preexisting condition limitations in health insurance, other HIPAA portability and nondiscrimination provisions continue to apply. This Benefit Minute provides a refresher on those provisions.
Special Enrollment Rights
HIPAA’s special enrollment rights allow an employee and dependents to enroll in group health plan coverage outside of the initial enrollment period or the annual open enrollment period. Group health plans are required to allow certain individuals to enroll in the following circumstances:
- Loss of eligibility for other group health coverage or health insurance, including loss of eligibility for both group health plan coverage and individual market coverage, complete termination of employer contributions towards coverage even if there is no actual loss of coverage, and expiration of maximum COBRA coverage period
- New dependent as a result of marriage, birth, adoption or placement for adoption
- Loss of eligibility for Medicaid or Children’s Health insurance program (CHIP)
- New eligibility for CHIP state premium assistance
In the case of a HIPAA special enrollment right, the employee must be permitted to select any medical benefit package option available under the plan (the same medical plan options that are available to a similarly situated new hire). This means that a current participant may move to a different plan option in the middle of the plan year. If the group health plan is fully insured, the insurance carrier must honor the special enrollment right. HIPAA special enrollment rights do not apply to standalone dental and vision coverage.
Timeframe for Enrollment
Employees must be given a period of at least 30 days from the date of the event to request enrollment. In the case of loss of Medicaid/CHIP or new eligibility for CHIP premium assistance, the timeframe is 60 days. For birth, adoption or placement for adoption, the effective date of coverage is the date of the birth, adoption or placement for adoption, even if this results in a retroactive effective date (Code section 125 rules allow for retroactive elections in these cases). For all other special enrollments, the election change should not be retroactive and must be effective no later than the first day of the month following the event or the request for the change (whichever is later). If the group health plan generally adds new enrollees on the first day of the month, then there is no requirement to add a special enrollee mid-month (other than in the case of birth, adoption or placement for adoption). For example, if an employee is married on October 20 and the group health plan receives a request on November 3 to add the new spouse, the coverage for the spouse would begin on December 1.
Individuals Eligible for Enrollment
The individuals who are entitled to the special enrollment right depend upon the event triggering the special enrollment as follows:
- Employee’s loss of eligibility for other coverage: employee and eligible spouse/dependents.
- Spouse/dependent loss of eligibility for other coverage: employee (if not currently enrolled) and spouse/dependents who have lost eligibility for other coverage. The plan is not required to enroll any other dependents.
- Marriage: employee (if not currently enrolled), new spouse and any newly acquired dependent children. The plan is not required to enroll any other dependents.
- Birth, adoption, placement for adoption: employee (if not currently enrolled), spouse and newborn or newly adopted child. The plan is not required to enroll any other dependents.
- Medicaid/CHIP: employee (if not currently enrolled) and spouse/dependent who loses Medicaid/CHIP or gains eligibility for state premium assistance.
Under HIPAA’s nondiscrimination provisions, an employee and dependents cannot be denied eligibility or benefits based on certain health factors when enrolling in a group health plan, nor may they be charged a higher premium due to these health factors. The only exception to these prohibitions is premium differentials under a wellness program that complies with specific requirements under HIPAA and the ACA. A discussion of HIPAA and ACA compliant wellness programs is beyond the scope of this Benefit Minute.
The health factors that are protected under HIPAA are:
- Health status
- Medical conditions, including physical and mental illness
- Claims experience
- Receipt of health care
- Medical history
- Genetic information
- Evidence of insurability
In addition, a group health plan cannot deny enrollment or charge a higher premium for conditions arising from acts of domestic violence or for participation in activities such as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding and skiing. However, a group health plan may exclude coverage for a specific disease or limit or exclude benefits for certain treatments as long as the restriction applies uniformly to all similarly situated individuals and is not directed at individual participants who may have a health factor. Plan amendments to reduce or eliminate benefits are not considered to be directed at individual participants as long as they apply to all similarly situated individuals and are effective no earlier than the first day of the plan year following adoption.
HIPAA does not prohibit more favorable treatment of participants with adverse health factors.
Other Nondiscrimination Provisions
A group health plan may not delay an individual’s eligibility, benefits or effective date of coverage nor may the plan increase the premium based on confinement in a hospital or medical facility on the date the individual would otherwise become eligible. Additionally, a group health plan may not delay enrollment in coverage because the individual is not actively at work due to a health factor on the day coverage would otherwise be effective.
The portability and nondiscrimination provisions of HIPAA for group health plans are enforced by the Department of Labor.