December 30, 2004
New Final and Proposed HIPAA Portability Regulations Issued
On December 30, the Internal Revenue Service, Department of Labor, and Centers for Medicare and Medicaid Services issued three new sets of Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations: final regulations for health coverage portability and two sets of proposed portability rules affecting tolling of certain time periods and interaction with Families and Medical Leave Act (FMLA) and requests for information on benefit-specific waiting periods under HIPAA.
The final regulations apply for plan years beginning on or after July 1, 2005. These final rules do not significantly modify the framework established in the April 1997 interim rules. Instead, they implement changes to improve the portability of health coverage while seeking to minimize burdens on group health plans and group health insurance issuers.
- add new definitions,
- add clarifications to the HIPAA limitations on a plan's or issuer's ability to impose a preexisting condition exclusion,
- add coverage under S-CHIP as an eleventh category of creditable coverage, modify the definition of public health plan for purposes of creditable coverage,
- set forth guidance regarding the certification requirements and other requirements for disclosure of information relating to prior creditable coverage,
- update the model creditable coverage certificate,
- clarify that procedures to request a certificate need to be in writing,
- reorganize and clarify the special enrollment rules,
- create rules regarding when an HMO affiliation period can be an alternative to a preexisting condition exclusion,
- add new rules defining limited scope dental and vision benefits and for determining the extent to which benefits provided under a health flexible spending arrangement are excepted benefits, and
- clarify special rules for partnerships.
- modify the 63-day break-in-coverage rules,
- modify the required elements for the educational statement in certificates of creditable coverage to require a disclosure about FMLA,
- provide proposed rules for tolling of the special enrollment period similar to those proposed for determining a significant break in coverage,
- address how the HIPAA portability requirements apply in situations where a person is on FMLA leave, and
- clarify the rules regarding issuance of a creditable coverage certificate when an employee switches between an employer's benefit plan options.
The second issuance from the Departments on benefit-specific waiting periods is a request for comments. Several comments they received in response to the April 1997 interim final rules asked the Departments to clarify that a preexisting condition exclusion would also include any benefit-specific waiting period or other temporary exclusion of specific benefits. Essentially, these comments argue that some plans and issuers use benefit-specific waiting periods that are, in effect, preexisting condition exclusions that do not comply with HIPAA's statutory limits. The Departments are asking for comments related to a number of specific concerns on this issue of benefit-specific waiting periods. All comments to either set of proposed guidance are due by March 30, 2005.
The Departments have also issued questions and answers concerning HIPAA. Department of Labor publications concerning changes in health care law are available by calling 1-866-444-EBSA (3272) or online at the EBSA Web site. In addition, CMS's publication entitled "Protecting Your Health Insurance Coverage" is available by calling 1-800-633-4227 or online at CMS's HIPAA page, which includes a link to the interactive HIPAA Online.
For more information, please contact Susan Relland, Council health policy legal counsel, at (202) 289-6700.
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.