January 2005

HIPAA rule limits preexisting condition exclusions

JANUARY 10, 2005 — A final regulation under the provisions of the 1996 Health Insurance Portability and Accountability Act (HIPAA) provides greater portability and availability of group health coverage when workers and family members change or lose a job. The regulation went into effect in December. It limits the use and duration of preexisting condition exclusions.

The provisions set limits on preexisting condition exclusions that could be imposed and require group health plans and group health insurance issuers to offer "special enrollment" upon certain life events.

Identical regulations are being issued simultaneously by the Departments of Labor and Treasury with a joint explanatory preamble.

The regulation finalizes portions of an interim final regulation published on April 8, 1997, that limits the use and duration of preexisting condition exclusions imposed by group health plans and group health insurance issuers.

It requires these entities to offer an immediate "special enrollment" opportunity to certain individuals who lose eligibility for other group health coverage or other health insurance, and to otherwise eligible new dependents.

The final regulation, which becomes effective for plan years starting on or after July 1, 2005, does not significantly modify the framework of the 1997 interim final regulation. However, in response to comments received during the public comment period, the final regulation contains features that are intended to bolster HIPAA's consumer protections while minimizing the burdens imposed on group health plans and group health insurance issuers.

Source: U.S. Department of Health and Human Services, http://www.hhs.gov

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