This publication has been developed by the U.S.

Department of Labor, Pension and Welfare Benefits

Administration. It is available on the Internet at:

http://www.dol.gov/dol/pwba

For a complete list of PWBA publications, call the

toll-free Publication Hotline at:

1-800-998-7542

This material is also available to sensory impaired

individuals upon request.

Voice phone: 1-202-219-8921

TDD* phone: 1-800-326-2577

This booklet constitutes a small entity compliance

guide for purposes of the Small Business

Regulatory Enforcement Fairness Act of 1996.
Questions & Answers: Questions & Answers: Questions & Answers:

Recent Changes in ecent Changes in

Health Care Law Health Care Law

U.S. Department of Labor

Pension and Welfare Benefits Administration

June 1999

Health Insurance Portability and

Accountability Act of 1996

(HIPAA)

Mental Health Parity Act of 1996

(MHPA)

Newborns and Mothers Health

Protection Act of 1996

(Newborns Act) (Newborns Act)

Womens Health and Cancer s Health and Cancer

Rights Act of 1998

(WHCRA) (WHCRA)

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Introduction

The Health Insurance Portability and Accountability Act of 1996 (HIPAA)

Preexisting Conditions To Which Exclusion Periods May Be Applied

Maximum Preexisting Condition Exclusion Period

Crediting Prior Health Coverage to Reduce a Preexisting Condition

Exclusion Period

Certificates of Creditable Coverage

Special Enrollment

Nondiscrimination Requirements

Disclosure Requirements

Enforcement and State Flexibility

Implementation Timetable

Switching from Group Coverage to an Individual Insurance Policy

Additional Frequently Asked Questions on HIPAA

The Newborns’ and Mothers’ Health Protection Act of 1996 (The Newborns’ Act)

The Mental Health Parity Act of 1996 (MHPA)

The Women’s Health and Cancer Rights Act of 1998 (WHCRA)

Special Notice Requirements under WHCRA

Appendices

Appendix A: Technical Bulletin: Notice of Changes under HIPAA to

COBRA Continuation Coverage under Group Health Plans

Appendix B: IRS Notice 98-12: Deciding whether to Elect COBRA

Health Continuation Coverage after Enactment of HIPAA

Appendix C: HIPAA Model Certificate

Appendix D: HIPAA Model Description of Special Enrollment Rights

Appendix E: HIPAA Model for Categories of Benefits (Alternative Method)

Contents Contents

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Appendix F: Sample Language for the Newborns’ Act Disclosure

Requirement

Appendix G: Effective Dates for HIPAA’s Certification

Provisions

Appendix H: State Insurance Commissioners’ Offices

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Introduction Introduction

1

This booklet provides an overview of recent changes in federal law that can affect the

health benefits of millions of working Americans and their families. The questions and

answers in this publication address the benefits and requirements of the following four

pieces of legislation and the regulations that interpret them:

The Health Insurance Portability and Accountability Act of 1996

(HIPAA)

The Newborns’ and Mothers’ Health Protection Act of 1996 (the

Newborns’ Act)

The Mental Health Parity Act of 1996 (MHPA)

The Women’s Health and Cancer Rights Act of 1998 (WHCRA)

While this information does not cover all the specifics of these laws, it does offer

employers who sponsor group health plans an understanding of their obligations. It also

provides employees and their families with information about their rights and protections

under these laws.

If your questions are not addressed, please contact the Pension and Welfare Benefits

Administration Regional Office nearest you or the PWBA Division of Technical

Assistance and Inquiries in the Washington, D.C., office (these offices are listed on the

insert card). If you are an employee covered by an HMO or if the benefits under your

health plan are provided through an insurance policy issued by an insurance company,

you may also contact your State Insurance Commissioner’s Office (listed in Appendix

H). As discussed in this publication, some of the new federal rules under HIPAA, the

Newborns’ Act, MHPA, and WHCRA can be changed by state law for insurance

companies and HMOs if the state law is more protective of individuals.

The information presented in this publication covers legislation and interpretations

based on the most recent regulations. However, it does not represent the official position

of the Department of Labor.

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The Health Insurance P The Health Insurance Portability and ortability and

Accountability Act of 1996 Accountability Act of 1996

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was

signed into law on August 21, 1996. This law includes important new protections for

millions of working Americans and their families who have preexisting medical

conditions or who might suffer discrimination in health coverage based on a factor that

relates to the individual’s health. HIPAA’s provisions amend Title I of the Employee

Retirement Income Security Act of 1974 (ERISA), as well as the Internal Revenue Code

and the Public Health Service Act, and place requirements on employer-sponsored

group health plans, insurance companies and health maintenance organizations

(HMOs). HIPAA includes provisions that:

limit exclusions for preexisting conditions;

prohibit discrimination against employees and dependents based on

their health status; and

guarantee renewability and availability of health coverage to certain

employees and individuals.

The following information provides general guidance on frequently asked questions

about HIPAA.

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Traditionally, many employer-sponsored group health plans limited or denied

coverage of conditions that were present prior to an individual’s enrollment in that

health plan. These types of exclusions are known as “preexisting condition exclusions”

and HIPAA places strict limitations on such exclusions. For example, a preexisting

condition exclusion must relate to a condition for which medical advice, diagnosis, care

or treatment was recommended or received during the 6-month period prior to an

individual’s enrollment date in the plan. In addition, under HIPAA, certain people and

conditions can never be subject to a preexisting condition exclusion.

How does HIPAA limit the preexisting conditions that can be excluded from

coverage under a preexisting condition exclusion?

Under HIPAA, the only preexisting conditions that may be excluded under a

preexisting condition exclusion are those for which medical advice, diagnosis,

care or treatment was recommended or received within the 6-month period ending

on your enrollment date. Your “enrollment date” is your first day of coverage, or

if there is a waiting period, the first day of your waiting period (typically, your

date of hire).

If you had a medical condition in the past, but have not received any medical advice,

diagnosis, care or treatment for it within the 6 months prior to your enrollment

date in the plan, your old condition is not a “preexisting condition” to which an

exclusion can be applied.

This six-month “look-back” period may be shortened under state law if your

coverage is insured through an insurance company or offered through an HMO.

Check with your State Insurance Commissioner’s Office to see whether a shorter

look-back period applies to you. (See Appendix H for a list of these offices.)

I recently changed jobs. Seven months ago I received my last treatment I recently changed jobs. Seven months ago I received my last treatment

for carpal tunnel syndrome. I have not received any medical advice, for carpal tunnel syndrome. I have not received any medical advice,

diagnosis, care or treatment for this condition since that time. Can my employer

impose a preexisting condition exclusion period for this illness?

No. Your employer may only impose a preexisting condition exclusion period with

respect to any condition for which no medical advice, diagnosis, care or treatment was

recommended or received within the 6 months prior to your enrollment date.

Preexisting Conditions to Which

Exclusion Periods May Be Applied

4
Are there other preexisting conditions that cannot be excluded from coverage?

Yes. Preexisting condition exclusions cannot be applied to pregnancy, regardless

of whether the woman had previous coverage. In addition, a preexisting

condition exclusion cannot be applied to a newborn, adopted child under age 18,

or a child under 18 placed for adoption as long as the child became covered under

the health plan within 30 days of birth, adoption or placement for adoption, and

provided the child does not incur a subsequent 63-day or longer break in

coverage. Finally, genetic information may not be treated as a preexisting

condition in the absence of a diagnosis.

Again, if your coverage is insured through an insurance company or offered through an

HMO, state law may provide additional protections. Check with your State

Insurance Commissioner’s Office to see whether additional State law protections

regarding preexisting conditions apply to you. (See Appendix H.)

I changed employment recently. How do I know if I am subject to any

preexisting condition exclusion period?

Many plans do not exclude coverage for preexisting conditions. A plan must tell you if

it has a preexisting condition exclusion period (and can only exclude coverage for a

preexisting condition after you have been notified). The plan must also notify you of your

right to show that you have prior creditable coverage to reduce the preexisting condition

exclusion period.

If the plan does apply a preexisting condition exclusion period, the plan must make a

determination regarding your creditable coverage and the length of any preexisting

condition exclusion period that applies to you. Generally, within a reasonable

time after you provide a certificate or other information relating to creditable

coverage, a plan is required to make this determination.

You are required to be notified of this determination if, after considering all evidence of

creditable coverage, the plan will still impose a preexisting condition exclusion period

with respect to any preexisting condition you may have. The notice must also tell you the

basis of the determination, including the source and substance of any information on

which the plan relied and any appeal procedure that is available to you.

The plan may modify its initial determination if it later determines that you do not have

the creditable coverage you claimed. In this circumstance, the plan must notify you of its

reconsideration and, until a final determination is made, the plan must act in

5
accordance with its initial determination for purposes of covering medical

services.

My employer has a waiting period for enrollment in the plan. How does

this relate to the preexisting condition exclusion period?

HIPAA does not prohibit a plan or issuer from establishing a waiting period. For group

health plans, a waiting period is the period that must pass before an employee or a

dependent is eligible to enroll under the terms of the plan. Some plans have waiting

periods and preexisting condition exclusion periods. However, if a plan has a waiting

period and a preexisting condition exclusion period, the preexisting condition exclusion

period begins when the waiting period begins.

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Under HIPAA, the maximum preexisting condition exclusion period that can be

applied to an individual is 12 months (18 months for late enrollees), beginning on the

individual’s enrollment date in the plan.

I changed employment and my new group health plan imposes a

preexisting condition exclusion period. How does my new plan determine

the length of my preexisting condition exclusion period?

The maximum length of a preexisting condition exclusion period is 12 months after the

enrollment date (18 months in the case of a “late enrollee”). A late enrollee is an

individual who enrolls in a plan other than on either the earliest date on which coverage

can become effective under the terms of the plan or on a special enrollment date. This

12-month (or 18-month) period may be shortened under state law if your

coverage is insured through an insurance company or offered through an HMO.

Check with your State Insurance Commissioner’s Office to see whether a shorter

maximum exclusion period applies to you. (See Appendix H.)

A plan must reduce an individual’s preexisting condition exclusion period by the number

of days of an individual’s creditable coverage. However, a plan is not required to take

into account any days of creditable coverage that precede a break in coverage of 63

days or more (“significant break in coverage”). This 63-day break period may be

extended under state law if your coverage is insured through an insurance

company or offered through an HMO. Check with your State Insurance

Commissioner’s Office to see whether a longer break period applies to you.

(See Appendix H.)

A plan generally receives information about an individual’s creditable coverage from a

certificate furnished by a prior plan or issuer (e.g., an insurance company or HMO).

A certificate of creditable coverage must be provided automatically to you by the plan

or issuer when you lose coverage under the plan or become entitled to elect COBRA

continuation coverage and when your COBRA continuation coverage ceases. You also

have a right to receive a certificate when you request one from your previous plan or

insurance company within 24 months of when your coverage ceases. If you do not

have a certificate, you may present other evidence of creditable coverage. (For

more information on the Consolidated Omnibus Budget Reconciliation Act

(COBRA) as it relates to HIPAA, see Apendix B.)

Maximum Preexisting Condition

Exclusion Period

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I am not changing jobs. How do the HIPAA preexisting condition exclusion

provisions apply to me?

On the date your plan becomes subject to the HIPAA provisions, the plan may not

exclude coverage for any preexisting condition for more than 12 months after

your enrollment date (18 months for a late enrollee). This period may have

already passed. If this period has not passed, your plan is required to use any

creditable coverage without a significant break in coverage that you had

accumulated prior to your enrollment date to reduce your remaining preexisting

condition exclusion period.

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Crediting Prior Health Coverage rior Health Coverage To Reduce

A Preexisting Condition reexisting Condition Exclusion Period

A preexisting condition exclusion period is not permitted to extend for more than 12

months (or 18 months for late enrollees) after an individual’s enrollment date in the plan.

The period of any preexisting condition exclusion that would apply under a group health

plan generally is reduced by the number of days of creditable coverage.

What is creditable coverage?

Most health coverage is creditable coverage, such as coverage under a group health

plan (including COBRA continuation coverage), HMO, individual health insurance

policy, Medicaid or Medicare.

Creditable coverage does not include coverage consisting solely of “excepted benefits,”

such as coverage solely for limited-scope dental or vision benefits.

Days in a waiting period during which you have no other coverage are not creditable

coverage under the plan, nor are these days taken into account when determining a

significant break in coverage (generally a break of 63 days or more). As mentioned

earlier, this 63-day break period may be extended under state law if your coverage

is insured through an insurance company or offered through an HMO. Check

with your State Insurance Commissioner’s Office to see whether a longer break

period applies to you. (See Appendix H.)

How does crediting for prior coverage work under HIPAA?

Most plans use the “standard method” of crediting coverage.

Under the standard method, you receive credit for your previous coverage that

occurred without a break in coverage of 63 days or more. Any coverage occurring

prior to a break in coverage of 63 days or more is not credited against a preexisting

condition exclusion period.

To illustrate, suppose an individual had coverage for 2 years followed by a break in

coverage of 70 days and then resumed coverage for 8 months. That individual would

only receive credit for 8 months of coverage; no credit would be given for the 2 years of

coverage prior to the break in coverage of 70 days.

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Is there another way that a group health plan or issuer can credit

coverage under HIPAA?

Yes. A plan or issuer may elect the “alternative method” for crediting coverage for all

employees.

Under the alternative method of counting creditable coverage, the plan or issuer

determines the amount of an individual’s creditable coverage for any of the five specified

categories of benefits. Those categories are mental health, substance abuse treatment,

prescription drugs, dental care and vision care. The standard method (described above)

is used to determine an individual’s creditable coverage for benefits that are not within

any of the five categories that a plan or issuer may use. (The plan or issuer may use

some or all of these categories.)

When using the alternative method, the plan or issuer looks to see if an individual has

coverage within a category of benefits (regardless of the specific level of benefits

provided within that category).

For example, if an individual who is a regular enrollee (not a late enrollee) has 12

months of creditable coverage, but coverage for only 6 of those months provided

benefits for dental care, a preexisting condition exclusion period may be imposed with

respect to that individual’s dental care benefits for up to 6 months (irrespective of the

level of dental care benefits).

If your new employer’s plan requests information from your former plan regarding any

of the five categories of benefits under the alternative method, your former plan must

provide the information regarding coverage under the categories of benefits. One way to

provide this information is to use the Model for Categories of Benefits included in

Appendix E of this pamphlet.

Can I receive credit for previous COBRA continuation coverage?

Yes. Under HIPAA any period of time that you are receiving COBRA continuation

coverage is counted as previous health coverage as long as the coverage occurred

without a break in coverage of 63 days or more.

For example, if you were covered continuously for 5 months by a previous health plan

and then received 7 months of COBRA continuation coverage, you would be entitled to

receive credit for 12 months of coverage by your new group health plan.

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I began employment with my current employer 45 days after my previous group

health plan coverage terminated. I had coverage under my previous employers

plan for 24 continuous months prior to the termination. I had no other coverage

before my enrollment date in my new plan. Will I be subject to the 12-month

preexisting condition exclusion period imposed by my new employer?

Not if you enroll when you are first eligible. The 45-day break in coverage does

not count as a significant break in coverage under HIPAA. Under federal law, a

significant break in coverage is a break in coverage of at least 63 consecutive

days. Since you had over 12 months of creditable coverage from your previous

group plan without a significant break, you would not be subject to the

preexisting condition exclusion period imposed by your new employer’s plan if

you enroll when you are first eligible.

I began employment with my current employer 100 days after my previous group

health plan coverage terminated. I had been covered by my previous employers

plan for 36 continuous months prior to termination. I had no other coverage

before my enrollment date in my current employers plan. Will I be subject to the

12-month preexisting condition exclusion period imposed by my current 12-month preexisting condition exclusion period imposed by my current

employers plan?

It depends. Your break in coverage of 100 days is a significant break in coverage

under federal law, so under federal law you will not be able to count the 36

months of previous coverage as “creditable coverage.”

As mentioned earlier, however, the length of time that passes before a significant

break in coverage is reached may be longer under state law that applies to HMOs

and health insurance. If your current plan provides health insurance coverage

through an insurance policy or an HMO (an “insured” plan), check with your

State Insurance Commissioner’s Office (listed in Appendix H ) to find out if you

are entitled to a longer break in coverage. If your current plan is an insured plan

and State law requires that a break in coverage be 100 days (or longer), you

would be able to count the 36 months as “creditable” coverage.”

How can I avoid a 63-day break in coverage?

There are several things you can do. If your last coverage was under a group health

plan, you may be able to elect COBRA continuation coverage. “COBRA” is the name

for a federal law that provides workers and their families the opportunity to purchase

group health coverage through their employer’s health plan for a limited period of time

(generally 18, 29 or 36 months) if they lose coverage due to specified events, including

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termination of employment, divorce or death. Workers in companies with 20 or

more employees generally qualify for COBRA. Some states have laws similar to

COBRA that apply to smaller companies. (For more information on COBRA as

it relates to HIPAA, see Appendix B)

You also may try to purchase an individual health insurance policy. (See page 26

under the heading Switching from Group Coverage to an Individual Insurance

Policy for more information on individual health insurance policies.)

What can I do if I dont have enough creditable coverage to offset a preexisting

condition exclusion period?

During any preexisting condition exclusion period under a new plan you may be entitled

to COBRA continuation coverage under your former plan. You also may try to

purchase an individual health insurance policy. (See page 26 under the heading

Switching from Group Coverage to an Individual Insurance Policy for more

information on individual health insurance policies.)

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Certificates of Creditable Coverage

Group health plans and health insurance issuers are required to furnish a certificate

of coverage to an individual to provide documentation of the individual’s prior

creditable coverage. A certificate of creditable coverage:

must be provided automatically by the plan or issuer when an

individual either loses coverage under the plan or becomes entitled to

elect COBRA continuation coverage and when an individual’s COBRA

continuation coverage ceases;

must also be provided, if requested, before the individual loses

coverage or within 24 months of losing coverage; and

may be provided through the use of the model certificate included in

Appendix C of this pamphlet.

How do newly hired employees prove that they had prior health coverage that How do newly hired employees prove that they had prior health coverage that

should be credited?

Under HIPAA, an employee’s former group health plan and any insurance

company or HMO providing such coverage is required to provide the employee

with a statement of prior health coverage, commonly referred to as a “certificate

of creditable coverage.”

This certificate must be provided automatically to you when you lose coverage under

the plan or otherwise become entitled to elect COBRA continuation coverage as well as

when COBRA continuation coverage ceases.

You may also request a certificate, free of charge, until 24 months after the time your

coverage ended. For example, you may request a certificate even before your coverage

ends.

I received a certificate from my former plan. What do I do now?

You should:

ensure that the information is accurate. Contact the plan administrator of

your former plan if any information is wrong.

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keep the certificate in case you need it. You will need the certificate if

you leave your health plan and enroll in a subsequent plan that applies

a preexisting condition exclusion period or if you purchase an

individual insurance policy from an insurance company. But, if you

lose your certificate and cannot obtain another, you can still show

prior coverage using other evidence of prior health coverage (e.g. pay

stubs, copies of premium payments or other evidence of health care

coverage).

What steps should I take if I am not provided a certificate by my plan or

issuer?

If you do not receive a certificate by the time you should have received it or by the time

you need it, your first step should be to contact the plan administrator of the plan

responsible for providing the certificate and request one. If any part of your creditable

coverage was through an insurance company, you can also contact the insurance

company for a certificate that reflects that part of your creditable coverage as long

as you make the request within 24 months of your coverage ceasing under the

insurance policy. Group health plans and insurers that fail or refuse to provide

such certificates are subject to penalties under HIPAA.

In any event, if you do not receive a certificate, you may demonstrate to your new plan

that you have creditable coverage (as well as the time you were in any waiting periods)

by producing documentation or other evidence of creditable coverage (such as pay

stubs that reflect a deduction for health insurance, explanation of benefits forms (EOBs)

or verification by a doctor or your former health care benefits provider that you had

prior health insurance coverage). Accordingly, you should keep these records and

documentation in case you need them.

Do plans that do not impose a preexisting condition exclusion period (and the

issuers that provide coverage under these plans) have to provide certificates?

Yes.

Can plans contract with an issuer to provide the certificates for their

employees?

Yes. To avoid duplication of certificates, a plan may contract with the issuer to provide

the certificate. Furthermore, if any entity (including a third-party administrator) provides

a certificate to an individual, no other party is required to provide the certificate.

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When must group health plans and issuers provide the certificates?

Plans and issuers must furnish the certificate automatically to:

an individual who is entitled to elect COBRA continuation coverage,

at a time no later than when a notice is required to be provided for a

qualifying event under COBRA;

an individual who loses coverage under a group health plan and who is

not entitled to elect COBRA continuation coverage, within a

reasonable time after coverage ceases; and

an individual who has elected COBRA continuation coverage, either

within a reasonable time after the plan learns that COBRA

continuation coverage ceased or, if applicable, within a reasonable

time after the individual’s grace period for the payment of COBRA

premiums ends.

Plans and issuers must also generally provide a certificate to you if you request one, or

someone requests one on your behalf (with your permission), at the earliest time that a

plan or issuer, acting in a reasonable and prompt fashion, can provide the certificate.

Is there a model certificate that group health plans and issuers can use?

Yes. See the Model Certificate in Appendix C of this pamphlet.

Can my old plan simply call my new plan to relay information about my

creditable coverage?

Yes. If you, your new plan, and your old plan all agree, the information may be

transferred by telephone. You are also entitled to request a written certificate for your

records when your coverage information is provided by telephone.

Are plans and issuers required to issue certificates of creditable coverage

to dependents of covered employees?

Yes. A plan or issuer must make reasonable efforts to collect the necessary information

for dependents and issue the dependent a certificate of creditable coverage. If the

coverage information for a dependent is the same as for the employee, one

certificate with both the employee and dependent information can be provided.

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However, an automatic certificate for a dependent is not required to be issued

until the plan or issuer knows (or, making reasonable efforts, should know) of the

dependent’s loss of coverage. This information can be collected annually, such as

during an open enrollment period.

What is the minimum period of time that should be covered by the

certificate?

It depends on whether the certificate is issued automatically or upon request:

For a certificate that is issued automatically, the certificate should

reflect the most recent period of continuous coverage.

For a certificate that is issued upon request, the certificate should

reflect each period of continuous coverage ending within 24 months

prior to the date of the request.

At no time must the certificate reflect more than 18 months of creditable coverage that is

not interrupted by a break in coverage of 63 days or more.

For additional information regarding certificates see the Timeline Relating to

Effective Dates for Certifications in Appendix G of this publication.

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Special Enrollment Special Enrollment

Group health plans and health insurance issuers are required to provide special

enrollment periods during which individuals who previously declined coverage for

themselves and their dependents may be allowed to enroll (without having to wait until

the plan’s next open enrollment period). A special enrollment period can occur if a person

with other health coverage loses that coverage or if a person becomes a new dependent

through marriage, birth, adoption or placement for adoption.

What events trigger a special enrollment opportunity?

When the employee or dependent of an employee loses other health coverage, a

special enrollment opportunity in the group health plan may be triggered. To

have a special enrollment opportunity in this situation, the employee or dependent

must have had other health coverage when coverage under the group health plan

was previously declined. If the other coverage was COBRA continuation

coverage, special enrollment can be requested only after the COBRA continuation

coverage is exhausted. If the other coverage was not COBRA continuation

coverage, special enrollment can be requested when the individual loses eligibility

for the other coverage.

In addition, a special enrollment opportunity may be triggered when a person

becomes a new dependent through marriage, birth, adoption or placement for

adoption.

For each triggering event, a special enrollee may not be treated as a late enrollee.

Therefore, the maximum preexisting condition exclusion period that may be

applied to a special enrollee is 12 months, and the 12 months are reduced by the

special enrollee’s prior creditable coverage. In addition, a newborn, adopted child

or child placed for adoption cannot be subject to a preexisting condition

exclusion period if the child is enrolled within 30 days of birth, adoption or

placement for adoption and has no subsequent significant break in coverage.

 What are a plans obligations with respect to special enrollment when an

employee or a dependent of an employee loses other health coverage?

When an employee or a dependent of an employee loses other health coverage, a

special enrollment opportunity may be triggered (only if the individual had other

health insurance coverage when first eligible to enroll). The employee or

dependent must request special enrollment within 30 days of the loss of coverage.

17
In addition, the resulting coverage must be effective no later than the first day of

the first calendar month beginning after the date the completed request for

enrollment is received.

What are a plans obligations with respect to special enrollment when an

individual becomes a new dependent through marriage, birth, adoption, individual becomes a new dependent through marriage, birth, adoption,

or placement for adoption?

Employees, as well as their spouses and dependents may have special enrollment

rights after a marriage, birth, adoption or placement for adoption. In addition,

new spouses and new dependents of retirees in a group health plan may also have

special enrollment rights after a marriage, birth, adoption or placement for

adoption.

If a special enrollment opportunity is available, the individual must request

special enrollment within 30 days of the marriage, birth, adoption or placement

for adoption that triggered the special enrollment opportunity. In the case of

marriage, enrollment is required to be effective not later than the first day of the

first calendar month beginning after the date the completed request for enrollment

is received by the plan. In the case of birth, adoption or placement for adoption,

enrollment is required to be effective not later than the date of such birth,

adoption or placement for adoption.

Are plans and issuers required to disclose individuals special enrollment Are plans and issuers required to disclose individuals special enrollment

rights?

Yes. A description of special enrollment rights must be provided to employees on

or before the time they are offered the opportunity to enroll in the group health

plan. See Appendix D for a model description.

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Nondiscrimination Requirements Nondiscrimination Requirements

Individuals may not be denied eligibility or continued eligibility to enroll for benefits

under the terms of the plan based on specified health factors. In addition, an individual

may not be charged more for coverage than similarly situated individuals based on these

specified health factors.

Can I lose, or be charged more for, coverage if my health status changes?

Group health plans and issuers may not establish rules for eligibility (including continued

eligibility) of any individual to enroll under the terms of the plan based on “health statusrelated factors.” These factors are your health status, medical condition (physical or

mental), claims experience, receipt of health care, medical history, genetic information,

evidence of insurability or disability. For example, you cannot be excluded or dropped

from coverage under your health plan just because you have a particular illness.

Also, plans and issuers may not require an individual to pay a premium or contribution

that is greater than that for a similarly situated individual based on a health status-related

factor.

My employer sponsors a group health plan that is available only to

employees who pass a physical examination. Is this requirement that I employees who pass a physical examination. Is this requirement that I

pass a physical examination permissible?

No. This is a rule for eligibility to enroll in a plan that discriminates based on one or

more “health-status related factors,” and plans or group health insurance issuers

may not establish rules for eligibility to enroll under the terms of the plan that

discriminate based on one or more “health status-related factors.”

I was denied initial eligibility in my employers plan, prior to the effective

date of HIPAA, because I could not pass a physical examination. What are

my rights after HIPAA becomes effective for my plan?

Individuals who, until the effective date of the HIPAA nondiscrimination provisions,

were denied coverage under a group health plan because of a health status-related

factor (or who failed to apply for coverage before the effective date of HIPAA because

it was reasonable to believe that the application would have been futile due to a

discriminatory plan provision) cannot be prevented from enrolling in the plan after

HIPAA becomes effective.

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Accordingly, if you were kept out of a health plan prior to HIPAA’s effective date

because of discrimination based on a “health status-related factor,” you must be

given an opportunity to enroll under the terms of the plan (even if the plan does

not otherwise offer open enrollment seasons).

If you were kept out of a health plan due to a discriminatory plan provision and

choose to enroll when first eligible after HIPAA’s effective date, you cannot be

treated as a late enrollee for purposes of applying a preexisting condition

exclusion period. Therefore, the longest preexisting condition exclusion period

that you may be subject to is 12 months from your enrollment date. Your

enrollment date is the first day of the waiting period (i.e., generally your first day

of work, irrespective of whether it was before the effective date of HIPAA).

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Disclosure Requirements Disclosure Requirements

What new kinds of information do group health plans have to give to

participants and beneficiaries?

HIPAA and other recent laws made important changes in ERISA’s disclosure

requirements for group health plans. Under current Department of Labor interim

disclosure rules, group health plans must improve their summary plan

descriptions (SPDs) and summaries of material modifications (SMMs)

(documents employers are required to provide to employees at certain key

intervals) in four major ways to make sure they:

notify participants and beneficiaries of “material reductions in covered

services or benefits” (for example, reductions in benefits or increases

in deductibles and co-payments) generally within 60 days of adoption

of the change. This compares to current requirements under which

plan changes can be disclosed as late as 210 days after the end of the

plan year in which a change was adopted.

disclose to participants and beneficiaries information about the role of

issuers (e.g., insurance companies and HMOs) with respect to their group

health plan. In particular, the name and address of the issuer, whether and

to what extent benefits under the plan are guaranteed under a contract or

policy of insurance issued by the issuer and the nature of any administrative

services (e.g., payment of claims) provided by the issuer.

tell participants and beneficiaries which Department of Labor office they can

contact for assistance or information on their rights under ERISA and

HIPAA.

tell participants and beneficiaries that federal law generally prohibits the plan

and health insurance issuers from limiting hospital stays for childbirth to less

than 48 hours for normal deliveries and 96 hours for cesarean sections.

Sample language is provided in Appendix F.

What is the definition of a material reduction in covered services or

benefits that is subject to the new 60-day notice requirement?

Under the interim disclosure rules, a “material reduction in covered services or benefits”

means any modification to a group health plan or change in the information

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required to be included in the summary plan description that, independently or in

conjunction with other contemporaneous modifications or changes, would be

considered by the average plan participant to be an important reduction in

covered services or benefits under the group health plan.

The interim rules cite examples of “reductions in covered services or benefits” as

generally including any plan modification or change that:

eliminates benefits payable under the plan;

reduces benefits payable under the plan, including a reduction that occurs as

a result of a change in formulas, methodologies or schedules that serve as

the basis for making benefit determinations;

increases deductibles, co-payments or other amounts to be paid by a

participant or beneficiary;

reduces the service area covered by a health maintenance organization; or

establishes new conditions or requirements (e.g., preauthorization

requirements) to obtain services or benefits under the plan.

Can employers use e-mail systems to communicate these new disclosures

to employees, and if so, do employees have a right to get a paper copy of to employees, and if so, do employees have a right to get a paper copy of

the information from their plan?

Yes. The interim disclosure rules provide a “safe harbor” for using electronic media

(e.g., e-mail) to furnish group health plan SPDs, summaries of “material reductions in

covered services or benefits” and other SMMs (summaries of plan modifications and

SPD changes). To use the “safe harbor,” among other requirements, employees must

be able to effectively access at their worksite documents furnished in electronic form.

Participants also continue to have a right to receive the disclosures in paper form on

request and free of charge.

Although the interim rule is not the exclusive means by which electronic media can be

used to lawfully communicate plan information, the HIPAA “safe harbor” is limited to

group health plans. The Department of Labor is considering extending the rule to other

plans, including pension plans, and to other plan disclosures, but is exploring whether

special precautions are necessary to ensure the confidentiality of electronically

transmitted individual account or benefit-related information.

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Enforcement and State Flexibility Enforcement and State Flexibility

Who enforces HIPAA?

The Secretary of Labor enforces the health care portability requirements on group

health plans under ERISA, including self-insured arrangements. In addition, participants

and beneficiaries can file suit to enforce their rights under ERISA, as amended by

HIPAA.

The Secretary of the Treasury enforces the health care portability requirements on group

health plans, including self-insured arrangements. A taxpayer that fails to comply may be

subject to an excise tax.

States also have enforcement responsibility for group and individual requirements

imposed on health insurance issuers, including sanctions available under state law. If a

state does not act in the areas of its responsibility, the Secretary of Health and Human

Services may make a determination that the state has failed “to substantially enforce” the

law, assert federal authority to enforce, and impose sanctions on insurers as specified in

the statute, including civil money penalties.

Can states modify HIPAAs portability requirements?

Yes, in certain circumstances. States may impose stricter obligations on health insurance

issuers in the seven areas listed below. States may:

shorten the 6-month “look-back” period prior to the enrollment date to

determine what is a preexisting condition;

shorten the 12- and 18-month maximum preexisting condition exclusion

periods;

increase the 63-day significant break in coverage period;

increase the 30-day period for newborns, adopted children and children

placed for adoption to enroll in the plan so that no preexisting condition

exclusion period may be applied thereafter;

further limit the circumstances in which a preexisting condition

exclusion period may be applied beyond the “exceptions”

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described in federal law (the “exceptions” under federal law are for

certain newborns, adopted children, children placed for adoption,

pregnancy, and genetic information in the absence of a diagnosis);

require additional special enrollment periods; and

reduce the maximum HMO affiliation period to less than 2 months (3

months for late enrollees).

In addition, states may sometimes impose other requirements with respect to

insurance companies and HMOs. Therefore, if your health coverage is offered

through an HMO or an insurance policy issued by an insurance company, you

should check with your State Insurance Commissioner’s Office to find out the

rules in your state. (See Appendix H).

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Implementation Timetable

When will the changes in HIPAA affect my health plan?

Group health plans must comply with all nondiscrimination, preexisting condition and

crediting of prior health coverage requirements at the beginning of the first plan year

starting after June 30, 1997. For example, if your employer’s plan starts a new plan

year on January 1, HIPAA’s provisions generally apply beginning on January 1,

1998.

There is a special rule for group health plans maintained pursuant to collective bargaining

agreements, ratified before August 21, 1996, that delays the effective date of HIPAA.

HIPAA’s provisions apply to these plans on the first day of the plan year beginning on or

after either the date on which the last collective bargaining agreement ends or July 1,

1997, whichever comes later.

See table of Effective Dates for HIPAA’s Certification Provisions in Appendix G.

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Switching From Group Coverage to

an Individual Insurance Policy

What if I am unable to obtain group coverage?

You may be able to obtain coverage under an individual insurance policy issued by an

insurance company or, in some states through a high-risk pool. HIPAA guarantees

access to individual insurance to “eligible individuals.” Eligible individuals:

have had coverage for at least 18 months without a “significant break in

coverage” (see section on crediting prior health coverage for the definition

of a significant break in coverage) where the most recent period of

coverage was under a group health plan;

did not have their group coverage terminated because of fraud or

nonpayment of premiums; and

are ineligible for COBRA continuation coverage or if offered COBRA

continuation coverage (or continuation coverage under a similar state

program) have both elected and exhausted their continuation coverage.

The opportunity to buy an individual insurance policy is the same whether the individual

is laid off, is fired or quits his or her job. For information on individual insurance

policies or on state high-risk pools you should contact your State Insurance

Commissioner’s Office. (See Appendix H).

What if I cannot afford the premiums for an individual insurance policy?

HIPAA does not limit premium rates. However, many states limit insurance premiums

and HIPAA does not preempt state laws regulating the cost of insurance. For

information on how your state law may limit premium rates for individual

insurance policies or for information on state high-risk pools you should contact

your State Insurance Commissioner’s Office.

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Is my individual insurance policy renewable? Can it be terminated?

At your option, individual health coverage must be renewed or continued in force.

However, your individual health coverage may not be renewed or may be

discontinued because you failed to pay premiums, committed fraud, terminated

the policy, moved outside the service area, or ended membership in a bona fide

association (if you terminated your membership in an association that is not a

bona fide, your health insurance coverage cannot be terminated because your

membership terminated). For information on whether an association is bona fide

you should contact your State Insurance Commissioner’s Office. (See

Appendix H.)

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Additional Frequently Asked Questions Additional Frequently Asked Questions

on HIPAA

If I change jobs am I guaranteed the same benefits that I have under my

current plan?

No. When a person transfers from one plan to another, the benefits the person receives

will be those provided under the new plan. Coverage under the new plan can be

different than the coverage under the former plan.

Will I be covered immediately under my new employers plan?

Not necessarily. Plans may set a waiting period before individuals become eligible for

benefits. HMOs may have an “affiliation period” during which an individual does not

receive benefits and is not charged premiums. Affiliation periods run concurrently with

any waiting period under a plan and may not last for more than 2 months (3

months for late enrollees) and are only allowed for HMOs that do not impose

preexisting condition exclusion periods.

Does HIPAA require employers to offer health coverage or require plans to

provide specific benefits?

No. The provision of health coverage by an employer is voluntary. HIPAA does not

require specific benefits nor does it prohibit a plan from restricting the amount or nature

of benefits for similarly situated individuals.

What if my new employer does not provide health coverage?

There is no requirement for any employer to offer health insurance coverage. If your

new employer does not offer health insurance, you may be able to continue coverage

under your previous employer’s plan under COBRA continuation coverage.

What if I cannot afford the premiums for group health coverage?

HIPAA does not limit premium rates, but it does prohibit plans and issuers from

charging an individual more than similarly situated individuals in the same plan

because of health status. Plans may offer premium discounts or rebates for

participation in wellness programs. In addition, many states limit insurance

premiums and HIPAA does not preempt state laws regulating the cost of

insurance. For special rules concerning the cost of COBRA coverage, see IRS

Notice 98-12: Deciding Whether to Elect COBRA Health Continuation

Coverage After Enactment of HIPAA in Appendix B.

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Does HIPAA extend COBRA continuation coverage?

Generally no. However, HIPAA makes two changes to the length of the COBRA

continuation coverage period.

Effective January 1, 1997, qualified beneficiaries who are determined to be disabled

under the Social Security Act within the first 60 days of COBRA continuation coverage

will be able to purchase an additional 11 months of coverage beyond the usual 18-

month coverage period. This is a change from the previous law which required

that a qualified beneficiary be determined to be disabled at the time of the

qualifying event to receive 29 months of COBRA continuation coverage. This

extension of coverage is also available to nondisabled family members who are

entitled to COBRA continuation coverage.

COBRA rules are also modified and clarified to ensure that children who are born or

adopted during the continuation coverage period are treated as “qualified beneficiaries.”

Further information discussing these changes appears at the end of this publication. (See

Appendices A and B).

I am an employer who provides group health insurance coverage through

an issuer. Is this policy renewable? Can it be terminated?

At your option (as the plan sponsor), the issuer offering your group health insurance

coverage must renew or continue in force your current coverage. However, the group

health insurance coverage may not be renewed or may be discontinued because of

nonpayment of premiums (including payments that are not timely), fraud, violation of

participation or contribution rules, the issuer ceasing to offer that particular coverage or

all health insurance coverage, or individuals moving outside the service area, or if

membership in a bona fide association ceases.

I have a small business and I sponsor a group health plan. Does HIPAA

apply to me?

The HIPAA health portability provisions apply to group health plans with two or more

participants who are current employees. However, your state may elect to regulate

smaller groups.

Does HIPAA apply to self-insured group health plans?

Yes.

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Are health flexible spending arrangements (FSAs) required to issue

certificates?

If a health FSA is offered in conjunction with another group health plan and if the

maximum benefit payable does not exceed a specified amount (two times the

employee’s salary reduction election under the health FSA for the year, or if greater, the

amount of the employee’s salary reduction election under the health FSA for the year,

plus $500), in most cases the benefits under the health FSA will be excepted benefits

and therefore not covered under HIPAA. Accordingly, the coverage under the FSA

will not be creditable coverage, and the FSA is not required to issue certificates

for the coverage.

If you have a question concerning whether coverage under your health FSA is

creditable coverage and if you are entitled to a certificate of creditable coverage,

contact your plan administrator or the Department of Labor office nearest you.

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The Newborns and Mothers Health The Newborns and Mothers Health

Protection Act of 1996 Protection Act of 1996

The Newborns’ and Mothers’ Health Protection Act of 1996 (the Newborns’ Act) was

signed into law on September 26, 1996. The law includes important new protections for

mothers and their newborn children with regard to the length of the hospital stay

following childbirth. The Newborns’ Act is subject to concurrent jurisdiction by the

Departments of Labor, the Treasury, and Health and Human Services.

Interim regulations issued by the Departments of Labor, the Treasury and Health

and Human Services clarify the statutory requirements and provide information

valuable to employers and employees in understanding their rights and obligations

under the law.

The following information is intended to provide general guidance on frequently

asked questions about the Newborns’ Act.

I am a pregnant woman. How does the Newborns Act affect my health

care benefits?

The Newborns’ Act affects the amount of time you and your newborn child are

covered for a hospital stay following childbirth. Group health plans, insurance

companies and health maintenance organizations (HMOs) that are subject to the

Newborns’ Act may not restrict benefits for a hospital stay in connection with

childbirth to less than 48 hours following a vaginal delivery or 96 hours following

a delivery by cesarean section. However, the attending provider may decide, after

consulting with you, to discharge you or your newborn child earlier. In any case,

the attending provider cannot receive incentives or disincentives to discharge you

or your child earlier than 48 hours (or 96 hours).

 Who is the attending provider?

An attending provider is an individual licensed under state law who is directly

responsible for providing maternity or pediatric care to a mother or newborn child.

Therefore, a plan, hospital, insurance company or HMO would not be an attending

provider. However, a nurse midwife or a physician assistant may be an attending

provider if licensed in the state to provide maternity or pediatric care in

connection with childbirth.

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Under the Newborns Act, when does the 48-hour (or 96-hour) period start?

If you deliver in the hospital, the 48-hour period (or 96-hour period) starts at the

time of delivery. So, for example, if a woman goes into labor and is admitted to

the hospital at 10 p.m. on June 11, but gives birth by vaginal delivery at 6 a.m. on

June 12, the 48-hour period begins at 6 a.m. on June 12.

However, if you deliver outside the hospital and you are later admitted to the hospital in

connection with childbirth (as determined by the attending provider), the period begins

at the time of the admission. So, for example, if a woman gives birth at home by vaginal

delivery, but begins bleeding excessively in connection with childbirth and is admitted to

the hospital, the 48-hour period starts at the time of admission.

Under the Newborns Act, may a group health plan, insurance company or

HMO require me to get permission (sometimes called prior authorization or

precertification based upon medical necessity) for a 48-hour or 96-hour

hospital stay?

A plan, insurance company or HMO cannot deny you or your newborn child coverage

for a 48-hour stay (or 96-hour stay) because the plan claims that you, or your attending

provider, have failed to show that the 48-hour stay (or 96-hour stay) is medically

necessary.

However, plans, insurance companies and HMOs generally can require you to notify the

plan of the pregnancy in advance of an admission if you wish to use certain providers or

facilities, or to reduce your out-of-pocket costs.

Under the Newborns Act, may group health plans, insurance companies

or HMOs impose deductibles or other cost-sharing provisions for hospital or HMOs impose deductibles or other cost-sharing provisions for hospital

stays in connection with childbirth?

Yes. But only if the deductible, coinsurance, or other cost-sharing for the later part of a

48-hour (or 96-hour) stay is not greater than that imposed for the earlier part of the

stay. For example, with respect to a 48-hour stay, a group health plan is permitted to

cover only 80 percent of the cost of the hospital stay. However, a plan covering

80 percent of the cost of the first 24 hours could not reduce coverage to 50

percent for the second 24 hours.

Does the Newborns Act require my plan to offer maternity benefits?

No. The Newborns’ Act does not require plans, insurance companies or HMOs to

provide coverage for hospital stays in connection with childbirth. However, other legal

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requirements may require this type of coverage, including Title VII of the Civil

Rights Act of 1964. Questions regarding Title VII should be directed to the Equal

Employment Opportunity Commission.

Does the Newborns Act apply to my coverage?

It depends. If your plan offers benefits for hospital stays in connection with childbirth,

the Newborns’ Act only applies to certain coverage. Specifically, it depends on

whether your coverage is “insured” by an insurance company or HMO or “self-insured”

by the employment-based plan. (You should check your Summary Plan Description

(SPD) or contact your plan administrator to find out if your coverage in connection with

childbirth is “insured” or “self-insured.”)

“Self-insured” coverage is subject to the Newborns’ Act. However, if your coverage is

“insured” by an insurance company or HMO and your state has a law regulating

coverage for newborns and mothers that meets specific criteria, then your rights depend

on state law, rather than the Newborns’ Act. If this is the case, the state law may

differ slightly from the Newborns’ Act requirements, so it is important for you to

know which law applies to your coverage in order to know what your rights are.

Based on a preliminary review of state laws as of July 1, 1998, the following

states and other jurisdictions have a law regulating coverage for newborns and

mothers that would apply to coverage insured by an insurance company or HMO:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut,

the District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas,

Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota,

Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico,

New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania,

Rhode Island, South Carolina, South Dakota, Tennessee, Texas,

Virginia, Washington and West Virginia.

Moreover, the following states appear to have a state law applicable to health

insurance companies and HMOs that references the federal Newborns’ Act provisions:

Delaware, Idaho and Oregon.

Finally, the following states and other jurisdictions do not appear to have a law

regulating coverage for newborns and mothers that would apply to health coverage

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insured by an insurance company or HMO. Therefore, the federal Newborns’ Act

provisions appear to apply to health insurance coverage in the following states.

Hawaii, Michigan, Mississippi, Nebraska, Utah, Vermont, Wisconsin,

Wyoming, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake

Island, the Northern Mariana Islands, and the pertinent areas and

installations of the Canal Zone.

If your coverage is insured by an insurance company or HMO, you should always

contact your State Insurance Commissioner’s Office for the most current information on

State laws. (See Appendix H.)

If the Newborns Act applies to my coverage, when do its requirements go

into effect?

The Newborns’ Act’s requirements apply to group health plans for plan years beginning

on or after January 1, 1998. To find out when your plan year begins, check your

Summary Plan Description (SPD) or contact your plan administrator.

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The Mental Health P The Mental Health Parity Act of 1996 arity Act of 1996

The Mental Health Parity Act (MHPA) was signed into law on September 26, 1996.

MHPA provides for parity in the application of aggregate lifetime and annual dollar limits

on mental health benefits with dollar limits on medical/surgical benefits. MHPA’s

provisions are subject to concurrent jurisdiction by the Departments of Labor, the

Treasury, and Health and Human Services.

On December 22, 1997, the Departments of Labor, the Treasury, and Health and

Human Service issued interim regulations that interpret MHPA. The regulations clarify

the statutory requirements and provide information valuable to employers and employees

in understanding their obligations and rights under the law.

The following information is intended to provide general guidance on frequently

asked questions about MHPA.

How does MHPA affect my benefits?

Under MHPA, group health plans, insurance companies and HMOs offering mental

health benefits are no longer allowed to set annual or lifetime dollar limits on mental

health benefits that are lower than any such dollar limits for medical and surgical

benefits. A plan that does not impose an annual or lifetime dollar limit on medical and

surgical benefits may not impose such a dollar limit on mental health benefits offered

under the plan. MHPA’s provisions, however, do not apply to benefits for substance

abuse or chemical dependency.

Does MHPA require all health plans to provide mental health benefits?

No. Health plans are not required to include mental health in their benefits package.

The requirements under MHPA apply only to plans offering mental health benefits.

May a plan impose other restrictions on mental health benefits?

Yes. Plans are still able to set the terms and conditions (such as cost-sharing and limits

on the number of visits or days of coverage) for the amount, duration and scope of

mental health benefits.

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Do all plans offering mental health benefits have to meet the parity

requirements?

No. There are two exceptions to these new rules. First, the mental health parity

requirements do not apply to small employers who have fewer than 51 employees.

Second, any group health plan whose costs increase 1 percent or more due to the

application of MHPA’s requirements may claim an exemption from MHPA’s

requirements.

How does a plan claim the 1 percent increased cost exemption under MHPA?

The increased cost exemption must be taken based on actual claims data, not on an

increase in insurance premiums. The provisions of MHPA must be implemented for at

least 6 months and the calculation of the 1 percent cost exemption must be based

on at least 6 months of actual claims data with parity in place. In addition:

Plans claiming the increased cost exemption must notify the appropriate

government agency and plan participants and beneficiaries 30 days before

the exemption becomes effective.

A formula is provided for plans to calculate the increased cost of

complying with parity.

A summary of the aggregate data and the computation supporting the

increased cost exemption must be made available to plan participants and

beneficiaries free of charge upon written request.

Once a plan qualifies for the 1 percent increased cost exemption, it

does not have to comply with the parity requirements for the life of the

MHPA provisions, which sunset on September 30, 2001.

When do the MHPA requirements take effect? Are these changes

permanent?

The MHPA requirements generally apply to group health plans for plan years beginning

on or after January 1, 1998. Under MHPA, there is also a “sunset” provision providing

that the law will cease to apply to benefits for services furnished on or after September

30, 2001.

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The Womens Health and Cancer s Health and Cancer

Rights Act of 1998 Rights Act of 1998

The Women’s Health and Cancer Rights Act (WHCRA) was signed into law on

October 21, 1998. The law includes important new protections for individuals who elect

breast reconstruction in connection with a mastectomy. WHCRA amended the Employee

Retirement Income Security Act of 1974 (ERISA) and the Public Health Service Act (PHS

Act) and is administered by the Departments of Labor and Health and Human Services.

The following information is intended to provide general guidance on frequently

asked questions about WHCRA provisions that amend ERISA .

Ive been diagnosed with breast cancer and plan to have a mastectomy.

How will WHCRA affect my benefits?

Under WHCRA, group health plans, insurance companies and health maintenance

organizations (HMOs) offering mastectomy coverage must also provide coverage for

reconstructive surgery in a manner determined in consultation with the attending

physician and the patient. Coverage includes reconstruction of the breast on which the

mastectomy was performed, surgery and reconstruction of the other breast to produce

a symmetrical appearance, and prostheses and treatment of physical complications at all

stages of the mastectomy, including lymphedemas.

Will WHCRA require all group health plans, insurance companies and HMOs to

provide reconstructive surgery benefits?

All group health plans, and their insurance companies or HMOs, that provide coverage

for medical and surgical benefits with respect to a mastectomy are subject to the

requirements of WHCRA.

Under WHCRA, may group health plans, insurance companies or HMOs

impose deductibles or coinsurance requirements for reconstructive

surgery in connection with a mastectomy?

Yes, but only if the deductibles and coinsurance are consistent with those established for

other benefits under the plan or coverage.

When do these requirements take effect?

The reconstructive surgery requirements apply to group health plans for plan

years beginning on or after October 21, 1998. To find out when your plan year

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begins, check your Summary Plan Description (SPD) or contact your plan

administrator. These requirements also apply to individual health insurance

policies offered, sold, issued, renewed, in effect, or operated on or after October

21, 1998. These requirements were placed in the PHS Act within the jurisdiction

of the Department of Health and Human Services.

My state requires the coverage for breast reconstruction that is required by

WHCRA and also requires minimum hospital stays in connection with a

mastectomy that are not required by WHCRA. If I have a mastectomy and breast . If I have a mastectomy and breast

reconstruction, am I also entitled to the minimum hospital stay?

It depends. The federal WHCRA permits state law protections to apply to certain

health coverage. State law protections apply if the state law is in effect on

October 21, 1998 (date of enactment of WHCRA) and the state law requires at

least the coverage for reconstructive breast surgery that is required by the federal

WHCRA.

If state law meets these requirements, then it applies to coverage provided by an

insurance company or HMO (“insured” coverage). If you obtained your coverage

through your employer and your coverage is “insured,” you would be entitled to the

minimum hospital stay required by state law. If you obtained your coverage

through your employer but your coverage is not provided by an insurance

company or HMO (that is, your employer “self-insures” your coverage), then state

law does not apply. In that case, only the federal WHCRA applies and it does not

require minimum hospital stays. To find out if your group health coverage is

“insured” or “self-insured,” check your Summary Plan Description (SPD) or

contact your plan administrator.

If you obtained your coverage under a private individual health insurance policy (not

through your employer), check with your State Insurance Commissioner’s Office

to learn if state law applies. (See Appendix H.)

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Special Notice Requirements under WHCRA

WHCRA also requires that group health plans, insurance companies, and HMOs

provide two notices regarding the coverage required by WHCRA. The following

information is intended to provide general guidance on frequently asked questions

about these notice requirements under the provisions of WHCRA that amend ERISA.

Are all group health plans, and their insurance companies and HMOs, Are all group health plans, and their insurance companies and HMOs,

required to satisfy the notice requirements under WHCRA?

All group health plans, and their insurance companies or HMOs, that offer coverage for

medical and surgical benefits with respect to a mastectomy are subject to the notice

requirements under WHCRA.

What are the notice requirements under WHCRA?

There are two separate notices required under WHCRA. The first notice is a one-time

requirement under which group health plans, and their insurance companies or HMOs,

must furnish a written description of the benefits that WHCRA requires. The second

notice must also describe the benefits required under WHCRA, but it must be

provided upon enrollment in the plan and it must be furnished annually thereafter.

How must these notices be delivered to participants and beneficiaries?

These notices must be delivered in accordance with the Department of Labor’s

disclosure regulations applicable to furnishing summary plan descriptions. For

example, the notices may be provided by first class mail or any other means of

delivery prescribed in the regulation. It is the view of the Department that a

separate notice would be required to be furnished to a group health plan

beneficiary where the last known address of the beneficiary is different than the last

known address of the covered participant.

When must the initial one-time notice under WHCRA be furnished to

participants and beneficiaries?

The one-time notice must be furnished as part of the next general mailing (made after

October 21, 1998) by the group health plan and its insurance companies or HMOs, or

in the yearly informational packet sent out regarding the plan; but in no event can

the one-time notice be furnished later than January 1, 1999.

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Does a group health plan that already provided the coverage required by WHCRA

have to send out the initial one-time notice?

A group health plan that, prior to the date of enactment of WHCRA (October 21,

1998), already provided the coverage required by WHCRA (and continues to provide

such coverage) will have satisfied the initial one-time notice requirement if the

information required to be provided in the initial notice was previously furnished to

participants and beneficiaries in accordance with the Department’s regulations on

disclosure of information to participants and beneficiaries.

What information must be included in WHCRA notices?

The notices must describe the benefits that WHCRA requires the group health plan, and

its insurance companies or HMOs, to cover. The notice must indicate that, in the case

of a participant or beneficiary who is receiving benefits under the plan in connection with

a mastectomy and who elects breast reconstruction, the coverage will be provided in a

manner determined in consultation with the attending physician and the patient, for:

reconstruction of the breast on which the mastectomy was performed;

surgery and reconstruction of the other breast to produce a symmetrical

appearance; and

prostheses and treatment of physical complications at all stages of the

mastectomy, including lymphedemas.

The notice must also describe any deductibles and coinsurance limitations applicable to

such coverage. Under WHCRA, coverage of breast reconstruction benefits may be

subject only to deductibles and coinsurance limitations consistent with those established

for other benefits under the plan or coverage.

Must a group health plan, and its insurance companies or HMOs, furnish

separate notices under WHCRA?

No. To avoid duplication of notices, a group health plan or its insurance companies or

HMOs, can satisfy the notice requirements of WHCRA by contracting with another

party that provides the required notice. For example, in the case of a group health plan

funded through an insurance policy, the group health plan will satisfy the notice

requirements with respect to a participant or beneficiary if the insurance company or

HMO actually provides the notice that includes the information required by WHCRA.

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Appendix A: Technical Bulletin: Notice of Changes under HIPAA to COBRA :

Continuation Coverage under Group Health Plans

Appendix B: IRS Notice 98-12: Deciding whether to Elect Cobra Health

Continuation Coverage after Enactment of HIPAA

Appendix C: Model Certificate

Appendix D: Model Description of Special Enrollment Rights

Appendix E: Model for Categories of Benefits (Alternative Method)

Appendix F: Sample Language for the Newborns Act Disclosure Requirement :

Appendix G: Effective Date for HIPAAs Certification Provisions :

Appendix H: State Insurance Commissioners Offices

Appendices Appendices

41

Appendix A Appendix A

Technical Bulletin: echnical Bulletin:

Notice of Changes under HIPAA to COBRA Continuation

Coverage under Group Health Plans Coverage under Group Health Plans

TECHNICAL BULLETIN

U.S. Department of Labor

Pension and Welfare Benefits Administration

Washington, D.C. 20210

PENSION AND WELFARE BENEFITS PROGRAMS

 ERISA TECHNICAL RELEASE No. 96-1

CONTACT: Division of Technical

Assistance and Inquiries

OFFICE: (202)219-8776

 FOR RELEASE: Tuesday, Oct. 15, 1996

Notice of Changes under HIPAA to COBRA

Continuation Coverage under Group Health Plans

On Aug. 21, 1996, the Health Insurance Portability and Accountability Act of 1996

(HIPAA) was signed into law (Pub. L. 104-191). HIPAA section 421 makes changes,

described below, to three areas in the continuation coverage rules applicable to group health

plans under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as

amended. These three areas relate to the disability extension, the definition of qualified

beneficiary and the duration of COBRA continuation coverage. These changes are effective

beginning Jan. 1, 1997, regardless of when the event occurs that entitles an individual to

COBRA continuation coverage.

Section 421(e) of HIPAA requires group health plans that are subject to COBRA to notify,

by Nov. 1, 1996, individuals who have elected COBRA continuation coverage of these

changes. The Department is issuing this release to apprize employers and plan administrators of

the changes in the continuation coverage rules made by HIPAA and to inform them of their

obligation under HIPAA to notify qualified beneficiaries of such changes. Such notification must

be given to qualified beneficiaries by Nov. 1, 1996. The following is a discussion of the specific

changes in the continuation coverage rules made by HIPAA.

Disability Extension. Under current law, if an individual is entitled to COBRA

continuation coverage because of a termination of employment or reduction in hours of

employment, the plan generally is only required to make COBRA continuation coverage

available to that individual for 18 months. However, if the individual entitled to the COBRA

continuation coverage is disabled (as determined under the Social Security Act) and satisfies the

applicable notice requirements, the plan must provide COBRA continuation coverage for 29

months, rather than 18 months. Under current law, the individual must be disabled at the time of

the termination of employment or reduction in hours of employment. HIPAA makes changes to

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the current law to provide that, beginning Jan. 1, 1997, the disability extension will also apply if

the individual becomes disabled at any time during the first 60 days of COBRA continuation

coverage. HIPAA also makes it clear that, if the individual entitled to the disability extension has

nondisabled family members who are entitled to COBRA continuation coverage, those

nondisabled family members are also entitled to the 29 month disability extension.

Definition of Qualified Beneficiary. Individuals entitled to COBRA continuation

coverage are called qualified beneficiaries. Individuals who may be qualified beneficiaries are the

spouse and dependent children of a covered employee and, in certain cases, the covered

employee. Under current law, in order to be a qualified beneficiary an individual must generally

be covered under a group health plan on the day before the event that causes a loss of coverage

(such as a termination of employment, or a divorce from, or death of, the covered

employee). HIPAA changes this requirement so that a child who is born to the covered

employee, who is placed for adoption with the covered employee, during a period of

COBRA continuation coverage is also a qualified beneficiary.

Duration of COBRA Continuation Coverage. Under the COBRA rules there are

situations in which a group health plan may stop making COBRA continuation coverage

available earlier than usually permitted. One of those situations is where the qualified beneficiary

obtains coverage under another group health plan. Under current law, if the other group health

plan limits or excludes coverage for any preexisting condition of the qualified beneficiary, the

plan providing the COBRA continuation coverage cannot stop making the COBRA

continuation coverage available merely because of the coverage under the other group health

plan. HIPAA limits the circumstances in which plans can apply exclusions for preexisting

conditions. HIPAA makes a coordinating change to the COBRA rules so that if a group health

plan limits or excludes benefits for preexisting conditions but because of the new HIPAA rules

those limits or exclusions would not apply to (or would be satisfied by) an individual receiving

COBRA continuation coverage, then the plan providing the COBRA continuation coverage can

stop making the COBRA continuation coverage available. The HIPAA rules limiting the

applicability of exclusions for preexisting conditions become effective in plan years beginning on

or after July 1, 1997 (or later for certain plans maintained pursuant to one or more collective

bargaining agreements).

Effect of this Release. As noted above, the Department is issuing this release to advise

employers and plan administrators of their obligation to notify, by Nov. 1, 1996, qualified

beneficiaries of these statutory changes. The Department, as a matter of enforcement policy, will

deem that supplying qualified beneficiaries with a written copy of the information described

above (or with a copy of this release) constitutes compliance with the notice requirement in

section 421(e) of HIPAA if this information is sent to each qualified beneficiary by first class

mail at the last known address of the qualified beneficiary by Nov. 1, 1996.

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Appendix B Appendix B

IRS Notice 98-12: Deciding whether to Elect COBRA

Health Continuation Coverage

after Enactment of HIPAA

IRS Notice 98-12 IRS Notice 98-12

Deciding Whether to Elect COBRA Health Care Continuation

Coverage After Enactment of HIPAA

INTRODUCTION

A key decision that millions of Americans face each year is whether to elect

“COBRA1 ” health care continuation coverage. The purpose of this notice is to help

people decide whether to elect COBRA coverage. In order to make that decision, they

need to know about two laws, COBRA and HIPAA.2 This notice provides information

— in the form of questions and answers — about some factors that employees and their

families should take into account in deciding whether to elect COBRA continuation

coverage.

An employer maintaining a group health plan is not required to provide this notice.

The information in this notice may be used by employers and plan administrators who

want to supplement the information they are required to give to covered employees and

beneficiaries. The notice may be modified to provide information specific to a plan. The

information in this notice is not a substitute for any of the notices required to be

furnished under COBRA or for any other information required by law to be furnished to

participants or beneficiaries in employer group health plans.

1 COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985, the law that added the health care

continuation coverage requirements.

2

 HIPAA is the Health Insurance Portability and Accountability Act of 1996.

49
SHOULD I ELECT COBRA HEAL SHOULD I ELECT COBRA HEALTH CARE

CONTINUATION COVERAGE?

Questions and Answers Questions and Answers

If you lose or leave your job, or if another event occurs that would cause you to lose

coverage under an employer’s group health plan, you may have the right to elect COBRA1

health care continuation coverage under the plan. In making this important decision, there are a

number of considerations you should take into account, including:

whether other group health coverage — such as coverage under another

employer’s plan — is available;

whether any other available health coverage would exclude benefits for a

medical condition that you or a family member has;

when you will have the right to enroll in the other coverage;

the cost, scope, and level of COBRA coverage compared with that of any

other available group coverage or individual health coverage; and

whether a guaranteed right to buy individual health coverage is important to

you.

The following questions and answers are divided into three parts. Read Part I for

background information about COBRA coverage and an important recent law, HIPAA2 , that

might affect your COBRA decision. Read Part II if group health coverage other than COBRA

coverage is available to you. Read Part III if you do not have other group health coverage

available. These questions and answers reflect the law as in effect in January 1998.3

These questions and answers are available at the IRS Internet site at:

http://www.irs.ustreas.gov

These questions and answers are also available at the Department of Labor (DOL) Internet

site at:

http://www.dol.gov/dol/pwba

and at the Health Care Financing Administration (HCFA) Internet site at:

http://www.hcfa.gov

1 COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985, the law that added the health care

continuation coverage requirements. 2 HIPAA is the Health Insurance Portability and Accountability Act of 1996.

3

 In most cases, HIPAA is effective by January 1998. However, a later effective date applies to certain

employer group health plans and certain health coverage. The questions and answers below assume that HIPAA is in

effect.

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PART I: Overview of COBRA and HIPAA

COBRA

What rights to health care continuation coverage does COBRA provide?

If you are covered by an employer’s group health plan, COBRA may give you the right

to stay covered even if something happens, like losing your job, that would otherwise

cause you to lose coverage. This continuation coverage under an employer’s plan is

called “COBRA coverage.” COBRA coverage usually lasts only for a limited time, and

you usually have to pay for it.

If you are covered by an employer’s group health plan, and an event occurs that would

otherwise cause you to lose that group health coverage, you need to understand

whether COBRA applies to your specific situation and, if so, what your rights are under

COBRA.

Which employer plans are subject to COBRA?

COBRA applies to most employer group health plans but not to all of them. For

example, it does not apply to plans of employers with fewer than 20 employees or to

church plans. Many plans of small employers, though, are subject to state laws

similar to COBRA. If you are covered under a plan of an employer with fewer

than 20 employees, you can contact the department or commission of insurance

in your state to find out if you have rights to continuation coverage under your

state’s insurance laws. (Federal employees, while not protected by COBRA, have

similar continuation coverage rights under another federal law.)

What events result in COBRA rights and for how long is COBRA coverage

available?

Even if COBRA applies to your group health plan, it gives rights only to certain people

who would be losing health coverage for certain specific reasons. Some of the most

common situations that give people COBRA rights are:

Loss of job. If you are covered by your employer’s group health plan and

you lose or leave your job, COBRA generally gives you the right to stay in

the employer’s plan for up to 18 months. The same rights apply if you are

the spouse or dependent child of an employee who loses his or her job.

(The 18-month period can be increased to 29 months if someone in the

family is disabled.)

Reduced hours. If you are covered by your employer’s group health plan

and your hours are reduced, the employer’s plan may provide that you lose

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coverage unless you elect COBRA. In this case, COBRA generally gives

you the right to stay in the employer’s plan for up to 18 months. The same

rights apply if you are the spouse or dependent child of an employee whose

hours are reduced. (The 18-month period can be increased to 29 months if

someone in the family is disabled.)

Death or divorce of spouse. You have the right to COBRA coverage if

you are covered by a group health plan of your spouse’s employer and you

would lose coverage because your spouse dies or you and your spouse

divorce or legally separate. In these cases, COBRA gives you the right to

stay in the plan for up to 36 months.

Death or divorce of parent. You have the right to COBRA coverage if

you are a dependent child covered by a group health plan of your parent’s

employer and you would lose coverage because your parent dies or your

parents divorce or legally separate. In these cases, COBRA gives you the

right to stay in the plan for up to 36 months.

Change of Status as Dependent. COBRA also gives you rights if you

are a dependent child covered by a group health plan of your parent’s

employer and you would lose coverage because you reach an age or

condition that causes you to no longer be covered as a dependent under the

plan. In these cases, COBRA gives you the right to stay in the plan for up

to 36 months.

If you become covered by another group health plan or by Medicare before your

COBRA coverage would otherwise end, you usually lose the right to COBRA

coverage. However, you do not lose the right to COBRA coverage if the new group

health plan does not cover illnesses or conditions because you had them before you

became covered under the plan.

What are the requirements for obtaining COBRA coverage?

If you want COBRA coverage, you can be required to elect it within 60 days after your

coverage would otherwise end. If you elect COBRA coverage, the plan is required to

continue the same coverage for you but can charge you for it.

Cost of COBRA coverage. If you elect COBRA coverage, the plan

can require you to pay for the entire cost of coverage, plus a small

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(2 percent) additional charge for administration. (If you are getting a

longer period of coverage because of disability, you may have to pay

more.) The cost of COBRA coverage will probably be more than what

you were paying for coverage before. You can pay for COBRA

coverage in monthly installments.

How can I get more information about COBRA?

COBRA has a number of special rules, and the information above covers only basic

points. The plan administrator of your group health plan is required to give you

information about your COBRA rights. You should read that information carefully. If

you have any questions about your COBRA rights or would like additional information

about COBRA and your group health plan, contact your plan administrator.

If you want to know more, the Department of Labor has a booklet called Health

Benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

You can request this booklet free of charge by calling 1-800-998-7542. The

booklet is also available on the Internet at:

http://www.dol.gov/dol/pwba

HIPAA

What is HIPAA and why is it important in deciding whether to elect COBRA

coverage?

HIPAA is a federal law that regulates employer group health plans and health insurance

companies. HIPAA is important to your decision whether to elect COBRA coverage

because HIPAA may affect when other coverage is available to you and the types of

other coverage available to you, including the extent to which coverage can be restricted

under a “preexisting condition exclusion.”

What is a preexisting condition exclusion?

Some employer group health plans do not provide coverage for an illness or condition

you had before you became covered under the plan. These illnesses or conditions are

commonly called “preexisting conditions.” A special limit on coverage for a preexisting

condition is called a “preexisting condition exclusion.”

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How are preexisting condition exclusions limited by HIPAA?

HIPAA imposes the following limits on the situations in which employer group health

plans may have preexisting condition exclusions and the length of time that such

exclusions can apply:

Treatment or advice received in 6 months before enrollment. An

employer group health plan cannot exclude coverage for a preexisting

condition you have unless medical advice, diagnosis, care or treatment

was received by you (or recommended to you) for the condition during

a 6-month period. If there is a waiting period to get into the plan, the

6-month period is the 6 months before the start of the waiting period.

If the plan has no waiting period, the 6-month period is the 6 months

before you enter the plan.

Preexisting condition exclusion cannot last for more than 12 (or 18)

months. An employer group health plan cannot exclude coverage for a

preexisting condition for more than 12 months after the start of the waiting

period for coverage. If there is no waiting period, the plan cannot exclude

coverage for a preexisting condition for more than 12 months after you

enter the plan. However, if you do not enroll when you are first eligible and

do not enroll when you have “special enrollment rights” (as described

below), the plan can refuse to cover preexisting conditions for up to 18

months after you enter the plan.

Previous coverage reduces length of exclusion. If you had other health

coverage — for example, under another group health plan (including

COBRA coverage) or under an individual insurance policy, Medicare, or

Medicaid — your new plan’s preexisting condition exclusion period

generally must be reduced by the period of your other coverage. For

example, if you were covered by your old employer’s plan for 4 months

and your new employer’s plan has a 12-month preexisting condition

exclusion, your new employer’s plan cannot exclude coverage for you for

any preexisting condition for more than 8 months. However, your new

employer’s plan does not have to count coverage before a 63-day break in

coverage.

63-day break in coverage. If there has been a break of 63 days or more

during which you had no health coverage, then the plan can disregard your

old coverage that preceded this break. Thus, if you had no coverage for at

least 63 days just before you began working for your new employer, the

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new employer’s plan can refuse to cover any preexisting conditions for up

to 12 months (or 18 months, depending on when you enroll in the new

plan). Time spent in any waiting period for coverage does not count toward

the 63-day break.

No preexisting condition exclusion permitted for pregnancy or for

newborn and adopted children. A plan cannot impose a preexisting

condition exclusion relating to pregnancy. In addition, a plan cannot impose

a preexisting condition exclusion on newborn children, adopted children,

and children placed for adoption who are covered under a plan on the 30th

day after their birth, adoption, or placement for adoption.

State insurance laws. State insurance laws may further limit the extent to

which insurance under an employer’s plan can exclude coverage for

preexisting conditions.

How does HIPAA affect my ability to enroll in an employers plan?

Special enrollment rights. HIPAA gives you and your family a special

opportunity to enroll in your employer’s plan in two situations: (1) if you

lose other coverage (including COBRA coverage); or (2) if you have a

new spouse or dependent. In these two situations, you (or your spouse

or dependent) can be enrolled in your employer’s plan even if the plan

normally would not allow enrollment at that time.

Special enrollment because of loss of other coverage. You (and

your spouse and dependents) might have been eligible to enroll in your

employer’s plan at an earlier time but you decided not to because at

that time you (or your family members) had other coverage (say, under

the plan of your spouse’s employer). In that case, if you (or your family

members) later lose the other coverage, your employer’s plan generally

must allow you (and your family members) to enroll. The plan has to

give you at least 30 days after that other coverage is lost to request

enrollment, and must allow enrollment by the first day of the month after

the plan receives your completed request.

This special enrollment right generally is available only if the

coverage is lost because it is no longer available (and not lost

because of failure to pay for it or for cause, such as making a

fraudulent claim). You are not required to elect COBRA coverage

in order to have a special enrollment right; however, if you do elect

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COBRA coverage, you must continue it for the entire period it is

available to you in order to preserve this special enrollment right.

Special enrollment because of a new spouse or dependent. If you

marry, then you, your spouse, and any new dependents you get as a result

of the marriage have special rights to enroll. If a new child is born, you

adopt a child, or a child is placed for adoption with you, then you, your

spouse, and the new child also get special rights to enroll.

To be entitled to special enrollment on account of a new spouse or

dependent, you must either be covered under the plan or be eligible

to be covered under the plan. The plan has to give you at least 30

days after the marriage, birth, adoption or placement for

adoption to request enrollment.

If you get married, the plan must cover you, your spouse and

any new dependent by the first day of the month after the plan

receives your completed request.

If you have a new child, the plan must cover you and your

spouse and the child from the date of birth, adoption or

placement for adoption.

The plan cannot exclude you (or make you pay more) based on

health status. HIPAA prohibits employer group health plans from

discriminating in their eligibility rules on the basis of your health.

For example, a plan cannot require you to pass a physical

examination before you can enroll in the plan, or prevent you from

enrolling because of your medical claims experience, medical

history, genetic information, evidence of insurability, or disability.

In addition, a plan generally cannot require you to pay a higher contribution

than similarly situated people covered under the plan due to your health or

any of these other factors.

Which employer plans are subject to HIPAA?

HIPAA’s limits on preexisting condition exclusions, special enrollment rights, and

restrictions on discrimination based on health status apply to most but not all employer

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group health plans. For example, HIPAA generally does not apply to plans where

fewer than 2 of the participants are current employees. In addition, special exceptions

apply to certain plans maintained by state or local governments and certain plans

maintained by church organizations. Further, the HIPAA rules generally do not apply to

coverage for certain types of excepted benefits.

Where can I get more information about HIPAA?

HIPAA has a number of special rules, and the information above covers only basic

points. If you want to know more about how HIPAA applies to group health plans, the

Department of Labor offers a booklet Questions and Answers: Recent Changes

in Health Care Law. You may request this booklet free of charge by calling 1-

800-998-7542. The booklet is also available on the Internet at:

http://www.dol.gov/dol/pwba

More information about HIPAA is also available at the Health Care Financing

Administration (HCFA) Internet site at:

http://www.hcfa.gov

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PART II: Should I Elect COBRA Coverage

If I Have Other If I Have Other Group Health Coverage Available?

The questions and answers in this part are designed to assist you if you have group

health coverage available in addition to COBRA coverage. In deciding whether to elect

COBRA coverage, an important factor is whether the other group health coverage has a

preexisting condition exclusion that applies to you.

How do I know if an employer group health plan has a preexisting

condition exclusion that applies to me?

You should first determine whether you received medical advice, diagnosis, care

or treatment (or they were recommended to you) for a medical condition during

the 6-month period before the start of the plan’s waiting period (or before you

enter the plan, if there is no waiting period). For this purpose, only medical

advice, diagnosis, care or treatment from a physician or other licensed or

authorized person counts.

If not, the employer’s group health plan cannot apply a preexisting condition

exclusion to you.

If so, contact the plan administrator to find out whether and for how long

the plan excludes your condition. Then, determine whether and to what

extent your prior health coverage will reduce any preexisting condition

exclusion period.

While you must be notified if the plan has a preexisting condition exclusion

before the exclusion can be applied to you, the plan is not required to give

you this notice before your coverage begins. You have to ask for the

information if you need it earlier.

How do I know how long I will be subject to the plans preexisting

condition exclusion?

A plan with a preexisting condition exclusion should specify the maximum period that

the exclusion can apply. That period is reduced by your prior health coverage, so you

will need to determine how much prior health coverage you had. Remember that if

there has been a break of 63 days or more during which you had no health coverage,

then the plan may be able to disregard your old coverage. Time spent in any waiting

period for coverage does not count toward the 63-day break.

Proof of Previous Health Coverage. Your old plan must give you a

certificate showing how much coverage you had under that plan. The plan

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must give you the certificate shortly after you become eligible for

COBRA coverage, shortly after your coverage ends, and at any other

time you request it while you are covered or up to 24 months after

your coverage ends. If you become covered by a plan that has a

preexisting condition exclusion, you may use the certificate to show

your new plan how long you had coverage under your old plan.

If you do not have a certificate, you can prove your prior coverage

by producing documentation or other evidence.

The new plan must notify you of any length of time that a

preexisting condition exclusion may apply to you after

counting your previous coverage.

What should I consider in deciding whether to elect COBRA coverage if I What should I consider in deciding whether to elect COBRA coverage if I

have other group health coverage available with a preexisting condition

exclusion that applies to me?

If you have other group health coverage available, and that coverage has a preexisting

condition exclusion that applies to you, your choices are to have: (1) COBRA

coverage instead of that other group coverage; (2) the other coverage instead of

COBRA coverage (despite the preexisting condition exclusion); or (3) both

COBRA coverage and the other coverage.

Your decision may depend on several factors, such as:

how long your new coverage will be subject to the preexisting condition

exclusion;

how likely you are to need treatment for the preexisting condition before it is

covered;

the seriousness of your preexisting condition, how much the treatment

would cost you in the absence of coverage, and the risks to you if treatment

is delayed;

the cost, level and scope of benefits of the COBRA coverage compared to

the other coverage; and

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the HIPAA rules that require plans to offer special enrollment rights in

certain cases and prohibit enrollment restrictions based on your health

status (as discussed in Part I and below in this Part II).

What should I consider in deciding whether to elect COBRA coverage if I What should I consider in deciding whether to elect COBRA coverage if I

have other group health coverage available with no preexisting condition

exclusion that applies to me?

If you have other group health coverage available that does not exclude coverage for a

preexisting medical condition you have, your decision whether to elect COBRA

coverage may be influenced by a variety of factors, including —

COBRA cutoff due to other coverage. In general, if you get coverage

from another employer’s group health plan that is not subject to a

preexisting condition exclusion, or from Medicare, your COBRA coverage

can be cut off. This means that in most situations you would have to decline

the other coverage if you decide you prefer the COBRA coverage. (Note

that if you have been receiving disability payments from Social Security, you

should not decline Medicare coverage without first consulting your Social

Security office or the Medicare program.)

Cost, scope and level of coverage. Plans differ in their cost and in the

level and scope of benefits (such as particular medical services) they

cover. You should take these differences into account in comparing

the COBRA coverage with the other available coverage.

Employers often pay for a large portion of the cost of group health

coverage for employees, while people on COBRA coverage

typically have to pay for the entire cost of the coverage. This means

it usually is cheaper to pay for the employee share of the cost of the

other coverage than to pay for COBRA coverage. However, you

might prefer more costly coverage if it provides more

comprehensive benefits for treatment you may need.

Waiting period before other coverage begins. If you (or your spouse or

parent) get a new job that offers health coverage after some waiting period,

you might want to elect to have COBRA coverage for that waiting period.

Special enrollment rights. If you elect COBRA coverage instead of

taking other available group health plan coverage, HIPAA generally gives

you the right to enroll in the new plan within 30 days after the

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COBRA coverage ends, or within 30 days after you get married or

have a new dependent child — even if the plan would not otherwise

allow you to enroll at that time.

But, once you have elected COBRA coverage, your special

enrollment right for the loss of the coverage applies only if you keep

the COBRA coverage for the entire period it is available to you.

(Thus, this special enrollment right does not apply if the COBRA

coverage ends because you stop paying for it.)

HIPAA limits on enrollment restrictions based on health status. If

you elect COBRA coverage instead of taking other group health plan

coverage, but you later decide you want to enroll in the new plan, your

new plan cannot exclude you (or charge you more) on the basis of

your health.

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PART III: Should I Elect COBRA Coverage If I ART III: Should I Elect COBRA Coverage If I

Do Not Have Do Not Have Other Group Health Coverage Available?

The questions and answers in this part are designed to assist you if you do not have

other group health coverage available.

Why do I need health coverage?

You need health coverage to help pay for medical services for any health problems you

might have after your current plan coverage ends.

Does HIPAA give me the right to buy individual health coverage?

If you meet certain requirements, HIPAA gives you the right to buy individual health

coverage with no preexisting condition exclusion, without having to give evidence of

good health. Depending on the state, the individual health coverage may be a

policy issued by an insurance company, or coverage through a state high-risk pool

or other governmental program. You must meet all of the following requirements

to have this right:

Your most recent period of health coverage must have been under an

employer group health plan.

If you were eligible for COBRA coverage (or coverage due to a similar

state provision) under that plan, you must have elected and continued

that coverage for the entire period it was available to you.

You would not have to continue COBRA coverage for the entire

period to maintain these rights if the only COBRA coverage available

was in an HMO and you ceased to reside, live or work in the HMO

service area.

You must have at least 18 months of prior health coverage,

disregarding coverage before a break of 63 days or more during which

you had no health coverage.

You must not have lost your most recent health coverage because you

failed to pay the premiums or because you committed fraud.

You must not now be eligible for coverage under any employer group

health plan, Medicare or Medicaid.

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You must not now have any other health insurance coverage.

For more information on your right to buy individual health coverage, contact your

State’s department or commission of insurance.

What should I consider in deciding whether to elect COBRA coverage?

COBRA coverage compared to individual health coverage. In

comparing COBRA coverage with any individual coverage you have

available, consider differences in cost and in the level and scope of benefits

(such as particular medical services) covered.

COBRA coverage compared to no health coverage. You may want to

elect COBRA coverage to make sure you are covered for any medical

services you need. Many people consider the benefits from having the

protection that COBRA coverage provides to be well worth the cost of

COBRA coverage.

You might also want to elect COBRA coverage because, in the

future, you could become covered under an employer group health

plan that has a preexisting condition exclusion. If you have a 63-

day break in coverage, then your existing coverage may be

disregarded. COBRA coverage can help you avoid having a 63-

day break in coverage and also counts toward reducing any

preexisting condition exclusion. See Part I for more information on

these rules.

COBRA coverage to protect your right to buy individual health

coverage with no preexisting condition exclusion. As described

above, if certain requirements are met, you and your family may have the

right to buy individual health coverage with no preexisting condition

exclusion, without having to give evidence of good health. These

requirements include electing COBRA coverage as long as it is available to

you. THUS, FAILURE TO ELECT COBRA COVERAGE MAY

CAUSE YOU TO LOSE YOUR GUARANTEED RIGHTS TO

PURCHASE INDIVIDUAL HEALTH COVERAGE.

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Is there any state-sponsored coverage available to me?

Individuals in a family whose income is temporarily reduced (for example, due to loss of

a job) may be eligible for low-cost or no-cost health insurance through public

programs. Children are especially likely to be eligible for low-cost coverage, such

as the Children’s Health Insurance Program (CHIP). Eligibility for these

programs varies by state and sometimes within a state. To find out more about

the CHIP Program in your state, call 1-877-KIDSNOW. You can contact other

state government officials to find out if you are eligible for additional programs.

CONCLUSION

There are many factors to consider in making the important decision whether to elect

COBRA continuation coverage for you and each of the members of your family. The

information above highlights factors that people in typical circumstances may want to take into

account in deciding whether to elect COBRA coverage. You will need to consider your own

family’s circumstances in making your decision.

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Appendix C Appendix C

HIPAA Model Certificate

CERTIFICATE OF GROUP HEALTH PLAN COVERAGE

* IMPORTANT - This certificate provides evidence of your prior health coverage. You may

need to furnish this certificate if you become eligible under a group health plan that excludes

coverage for certain medical conditions that you have before you enroll. This certificate may need

to be provided if medical advice, diagnosis, care, or treatment was recommended or received for the

condition within the 6-month period prior to your enrollment in the new plan. If you become

covered under another group health plan, check with the plan administrator to see if you need to

provide this certificate. You may also need this certificate to buy, for yourself or your family, an

insurance policy that does not exclude coverage for medical conditions that are present before you

enroll.

1. Date of this certificate:

2. Name of group health plan:

3. Name of participant:

4. Identification number of participant:

5. Name of any dependents to whom this certificate applies:

6. Name, address, and telephone number of plan administrator or issuer responsible for

 providing this certificate:

7. For further information, call:

8. If the individual(s) identified in line 3 and line 5 has at least 18 months of creditable

 coverage (disregarding periods of coverage before a 63-day break), check here ____ and

 skip lines 9 and 10.

9. Date waiting period or affiliation period (if any) began:

10. Date coverage began:

11. Date coverage ended:________(or check if coverage is continuing as of the date of this

 certificate: _______).

*Note: separate certificates will be furnished if information is not identical for the participant and

each beneficiary.

Model Certificate

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Appendix D Appendix D

HIPAA Model Description of Special Enrollment Rights Model Description of Special Enrollment Rights

Model Description of Special Enrollment Rights Model Description of Special Enrollment Rights

If you are declining enrollment for yourself or your dependents (including your spouse)

because of other health insurance coverage, you may in the future be able to enroll

yourself or your dependents in this plan, provided that you request enrollment within 30

days after your other coverage ends. In addition, if you have a new dependent as a

result of marriage, birth, adoption or placement for adoption, you may be able to enroll

yourself and your dependents, provided that you request enrollment within 30 days after

the marriage, birth, adoption or placement for adoption.

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Appendix E Appendix E

HIPAA Model For Categories of Benefits or Categories of Benefits

(Alternative Method) (Alternative Method)

Model for Categories of Benefits (Alternative Method) Model for Categories of Benefits (Alternative Method)

INFORMATION ON CATEGORIES OF BENEFITS

1. Date of original certificate:

2. Name of group health plan providing the coverage:

3. Name of participant:

4. Identification number of participant:

5. Name of individual(s) to whom this information applies:

6. The following information applies to the coverage in the certificate that

was provided to the individual(s) identified above:

a. MENTAL HEALTH:

b. SUBSTANCE ABUSE TREATMENT:

c. PRESCRIPTION DRUGS:

d. DENTAL CARE:

e. VISION CARE:

For each category above, enter “N/A” if the individual had no coverage within the

category or either (i) enter both the date that the individual’s coverage within the

category began and the date that the individual’s coverage within the category ended

(or indicate if continuing), or (ii) enter “same” on the line if the beginning and ending

dates for coverage within the category are the same as the beginning and ending dates

for the coverage in the certificate.

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Appendix F Appendix F

Sample Language for the Newborns Act Sample Language for the Newborns Act

Disclosure Requirement Disclosure Requirement

Sample Language for the

Newborns Act Disclosure Requirement Newborns Act Disclosure Requirement

The following is the amended sample notice that group health plan may use to satisfy

the Newborns’ Act disclosure requirement:

“Group health plans and health insurance issuers generally may not,

under federal law, restrict benefits for any hospital length of stay in

connection with childbirth for the mother or newborn child to less

than 48 hours following a vaginal delivery, or less than 96 hours

following a cesarean section. However, federal law generally does not

prohibit the mother’s or newborn’s attending provider, after consulting

with the mother, from discharging the mother or her newborn earlier than

48 hours (or 96 hours as applicable). In any case, plans and issuers may

not, under federal law, require that a provider obtain authorization from

the plan or the issuer for prescribing a length of stay not in excess of 48

hours (or 96 hours).”

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Appendix G

Effective Dates for HIPAAs

Certification Provisions rovisions

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Generally, a planadministrator’sobligation to providecertification ofcoverage applies toevents (i.e., peoplelosing coverage)occuring after June30, 1996. Suchcertifications are notrequired to beprovided underHIPAA until June 1,1997.

Plan administratorsare only required toprovide certificationupon written requestfor previous coverageduring this time peiod. Such certificationsare not required to beprovided underHIPAA until June 1,1997.

Plan administratorsare required toprovide certificationin all situations (i.e.,automatics and uponrequest) for preciouscoverage earnedduring this timeperiod. Suchcertifications are notrequired to beprovided underHIPAA until June 1,1997.

Although planadministrators canprovide certificationof previous coverageearlier, HIPAA doesnot require planadministrators to issueany certifcation beforeJune 1, 1997.

July 1, 1996 July 1, 1996 thru

September 30, 1996

October 1, 1996 thru

May 31, 1997

June 1, 1997 

Effective Dates for HIPAAs Certification Pro

Appendix H Appendix H

State Insurance Commissioners Offices State Insurance Commissioners Offices

Alabama Department of Insurance

200 Monroe St.

Suite 1700

Montgomery, AL 36104

Phone: 334/269-3550

Alaska Division of Insurance

Department of Commerce & Economic

P.O. Box 110805

Juneau, AK 99811-0805

Phone: 907/465-2515

Office of the Governor

American Samoa Government

Pago Pago, AS 96799

Phone: 011/684-633-4116

Arizona Department of Insurance

2910 North 44th St.

Suite 210

Phoenix, AZ 85018-7256

Phone: 602/912-8444

Arkansas Department of Insurance

1200 West 3rd St.

Little Rock, AK 72201-1904

Phone: 501/371-2600

California Department of Insurance

300 Capitol Mall

Suite 1500

Sacramento, CA 95814

Phone: 213/897-8921

Colorado Division of Insurance

1560 Broadway

Suite 850

Denver, CO 80202

Phone: 303/894-7499

Connecticut Department of Insurance

P.O. Box 816

Hartford, CT 06142-0816

Phone: 860/297-3800

Delaware Department of Insurance

Rodney Building

841 Silver Lake Blvd.

P.O. Box 7007

Dover, DE 19903

Phone: 302/739-4251

Insurance Administration District of

Columbia Government

441 Fourth St., N.W.

8th Floor, North

Washington, DC 20001

Phone: 202/442-7817

Florida Department of Insurance

200 E. Gaines St.

Tallahassee, FL 32399-0322

Phone: 850/922-3131

Georgia Department of Insurance

2 Martin L. King, Jr.

Dr. Floyd Memorial Bldg.

604 West Tower

Atlanta, GA 30334

Phone: 404/656-2070

Department of Revenue & Taxation

Government of Guam

Mariner Ave.

Building 13-1, 2nd Floor

Tiyan, Barrigada, Guam 96913

Phone: 011/671-475-1817

State Insurance Commissioners Offices State Insurance Commissioners Offices

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Hawaii Insurance Division

Department of Commerce & Consumer

Affairs

250 S. King St.

5th Floor

Honolulu, HI 96813

Phone: 808/586-2790

Idaho Department of Insurance

700 West State St.

3rd Floor

Boise, ID 83720-0043

Phone: 208/334-4250

Illinois Department of Insurance

320 West Washington St.

4th Floor

Springfield, IL 62767

Phone: 217/785-5044

Indiana Department of Insurance

311 W. Washington St.

Suite 300

Indianapolis, IN 46204-2787

Phone: 317/232-2395

Iowa Division of Insurance

Lucas State Office Building

6th Floor

Des Moines, IA 50319

Phone: 515/281-4241

Kansas Department of Insurance

420 S.W. 9th St.

Topeka, KS 66612-1678

Phone: 800/432-2484

Kentucky Department of Insurance

P.O. Box 517

215 West Main St.

Frankfort, KY 40602-0517

Phone: 502/564-6027

Louisiana Department of Insurance

950 North 5th St.

Baton Rouge, LA 70804-9214

Phone: 225/342-4717

Maine Bureau of Insurance

Department of Professional & Financial

Reg.

34 State House Station

Augusta, ME 04333-0034

Phone: 207/624-8475

Maryland Insurance Administration

501 St. Paul Pl.

Stanbalt Building

7th Floor South

Baltimore, MD 21202-2272

Phone: 410/468-2244

Commonwealth of Massachusetts

Division of Insurance

470 Atlantic Ave. 6th Floor

Boston, MA 02210-2223

Phone: 617/521-7794

Michigan Insurance Bureau

Department of Consumer & Industry

Services

611 W. Ottawa St.

2nd Floor North

Lansing, MI 48933-1020

Phone: 517/373-9273

Minnesota Department of Commerce

133 East 7th St.

St. Paul, MN 55101

Phone: 651/296-4026

Mississippi Department of Insurance

1804 Walter Sillers Building

Jackson, MS 39205

Phone: 601/359-2453

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Missouri Department of Insurance

301 West High St.

Room 630

Jefferson City, MO 65102-0690

Phone: 573/751-4126

Montana Department of Insurance

126 North Sanders

270 Mitchell Building

Helena, MT 59601

Phone: 406/444-2997

Nebraska Department of Insurance

Terminal Building

941 ‘O’ St.

Suite 400

Lincoln, NE 68508

Phone: 402/471-2201

Nevada Division of Insurance

1665 Hot Springs Rd.

Suite 152

Carson City, NV 89710

Phone: 702/687-4270

New Hampshire Department of

Insurance

169 Manchester St.

Concord, NH 03301

Phone: 603/271-2261

New Jersey Department of Insurance

20 West State St.

CN325

Trenton, NJ 08625

Phone: 609/292-5316

New Mexico Department of Insurance

P.O. Drawer 1269

Santa Fe, NM 87504-1269

Phone: 505/827-4601

New York Department of Insurance

160 West Broadway

New York, NY 10013

Phone: 212/480-6400

North Carolina Dept. of Insurance

4140 Dobbs Building

P.O. Box 26387

Raleigh, NC 27611

Phone: 919/733-7349

North Dakota Department of Insurance

600 E. Blvd.

Bismarck, ND 58505-0320

Phone: 701/328-2440

Ohio Department of Insurance

2100 Stella Ct.

Columbus, OH 43215

Phone: 614/644-2658

Oklahoma Department of Insurance

3814 N. Santa Fe

Oklahoma City, OK 73118

Phone: 405/521-2828

Oregon Division of Insurance

Department of Consumer & Business

Services

350 Winter St., N.E.

Room 200

Salem, OR 97310-0700

Phone: 503/947-7226

Pennsylvania Insurance Department

1326 Strawberry Sq.

13th Floor

Harrisburg, PA 17120

Phone: 717/787-2317

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Puerto Rico Department of Insurance

Cobian’s Plaza Building

1607 Ponce de Leon Ave.

Santurce, PR 00909

Phone: 787/722-8686 ext. 2320

Rhode Island Insurance Division

Department of Business Regulation

233 Richmond St.

Suite 233

Providence, RI 02903-4233

Phone: 401/222-2223

South Carolina Department of

Insurance

1612 Marion St.

P.O. Box 100105

Columbia, SC 29202-3105

Phone: 803/737-6160

South Dakota Division of Insurance

Department of Commerce & Regulation

500 E. Capitol

Pierre, SD 57501-3940

Phone: 605/773-3563

Tennessee Department of Commerce

& Insurance

4th Floor, Davy Crockett Tower

500 James Robertson Pkwy.

Nashville, TN 37243-0586

Phone: 615/741-2218

Texas Department of Insurance

333 Guadalupe St.

P.O. Box 149104

Austin, TX 78714-9104

Phone: 512/463-6464

Utah Department of Insurance

3110 State Office Building

Salt Lake City, UT 84114-1201

Phone: 801/538-3800

Vermont Division of Insurance

Department of Banking, Insurance &

Securities

89 Main St., Drawer 20

Montpelier, VT 05620-3601

Phone: 802/828-2900

Virginia Bureau of Insurance

State Corporation Commission

P.O. Box 1157

Richmond, VA 23219

Phone: 804/371-9741

United States Virgin Islands

Division of Banking & Insurance

1131 King St., Christiansted

St. Croix, VI 00820

Phone: 340/773-2226

Washington Office of the Insurance

Commissioner

14th Ave. & Water Sts.

P.O. Box 40255

Olympia, WA 98504-0255

Phone: 360/753-7301

West Virginia Department of Insurance

P.O. Box 50540

Charleston, WV 25305-0540

Phone: 304/558-3386

State of Wisconsin

Office of the Commissioner of Insurance

121 E. Wilson

Madison, WI 53707-7873

Phone: 608/266-0102

Wyoming Department of Insurance

Herschler Building

122 West 25th St.

3rd East

Cheyenne, WY 82002-0440

Phone: 307/777-7401

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