The HIPAA law: Your rights to health insurance portability
Individual health plans and HIPAA
In some cases, you might not have the option of switching to a new group health plan when you lose coverage under your old group health plan. That could happen, for instance, if you work for a small employer and it decides to discontinue health benefits because of rising costs. If you have medical problems, that's enough to send you into a panic.
But under HIPAA, you might be able to buy an individual health plan without the threat of exclusions for pre-existing conditions. In order to do so, you have to qualify as an "eligible individual" and the rules are tougher than for group health plans. In some states, if you qualify as an individual under HIPAA, any insurer that sells individual health plans in your service area must offer you a plan.
To be eligible as an individual under HIPAA, you must:
- Have at least 18 months of continuous creditable coverage.
- Have been covered under a group health plan, a governmental plan, or church plan (or health insurance offered in connection with such plans, such as COBRA during the most recent period of creditable coverage.
- Not be eligible for coverage under a group health plan (including a spouse's plan), Medicare, or Medicaid.
- Not have other health insurance coverage.
- Have not had your most recent coverage canceled for nonpayment of premiums or fraud (unless it was your employer that failed to pay premiums).
- Have elected and exhausted any option for continuation of coverage (under COBRA or a similar state law) that was available under your prior plan.
If you qualify as an eligible individual, any insurer that sells individual health plans in your service area must offer you a plan. But keep in mind that your premiums are not governed by HIPAA.
Thus while your application for insurance won't be rejected because of your health problems, the health plan can charge you higher rates because individual health insurance policies are medically underwritten to reflect the age and health of the policyholder.
Your premiums are not governed by HIPAA.
In addition, your benefits could be vastly different under an individual plan. That's why when you're moving from a group plan to an individual plan it's especially important to shop around for the best rates and benefits to suit your needs.
In some cases, you might be offered a "conversion plan" when you lose your group health plan coverage. That essentially lets you convert your group plan into an individual plan, with certain restrictions.
Be sure to check with your state's insurance department; some have relaxed the rules to qualify as an eligible individual.
If at all possible, you should buy health insurance through a group plan, as they generally have broader benefits and wellness care.
You don't necessarily have to have an employer to do so: Trade associations and chambers of commerce often offer their members group health insurance.
In some states, you can get group coverage if you're self-employed as a "group of one."