Release Date: 02/ 23/ 2006
The Health Insurance Portability and Accountability Act enhances the portability and continuity of health insurance coverage for groups and individuals and helps small firms purchase insurance polices in the individual market. The Act increases the deduction for health insurance costs of the self-employed. The Act also strengthens health care fraud and abuse controls, authorizes the creation of medical savings accounts, and allows for acceleration of death benefits.
Insurance Portability
Individuals changing jobs or insurers who have been covered for at least 12 months may not be subjected to preexisting condition exclusions when changing health plans. Newborns and adopted children covered within 30 days of birth/adoption are also exempt from any pre-existing condition exclusions.
Coverage for Small Groups
All insurers and Health Maintenance Organizations must guarantee coverage to employees of employers with fewer than 50 employees. Every small employer that applies for coverage must be accepted or the insurer or HMO may not participate in the regional market for a defined period of time.
Guaranteed Renewability
Insurers must guarantee renewal of health insurance policies. Policies may not be refused due to sharp increases in claims experienced by an individual or a group. Exceptions exist for fraud, nonpayment of premiums, or noncompliance with plan guidelines. Plans may terminate coverage for an entire state, but they are then barred from doing business in the state for five years.
Medical Savings Accounts
Individuals covered under a qualified high deductible health plan may set up tax-exempt medical savings accounts. Contributions to the accounts are tax deductible and funds can be withdrawn from the account for day to day medical expenses. A high deductible plan is defined as a health plan with an annual deductible of between $1,500 and $2,250 for an individual and $3,000 to $4,500 for a family. Maximum out-of-pocket expenses (including the deductible) are limited to $3,000 for an individual and $5,500 for a family.
For a complete copy of this law or any other information please visit the Centers for Medicare & Medicaid Services Web site at www.cms.hhs.gov/hhs.
