‘Portable’ Health Benefits: How the New Law Will Affect You
Health insurance has evolved into one of the most precious commodities in the modern workplace, and the fear of losing it has become a major consideration for many workers when they consider changing jobs.
Anyone with a poor health history or with a chronically ill spouse or child has had to proceed very carefully or run the risk of losing desperately needed coverage. Many company plans excluded “preexisting conditions,” meaning that in many cases a new employee could not get coverage for the ailments most troubling to them.
Workers often have felt “locked in” to their current jobs, and those who were laid off or otherwise found themselves out of work faced economic catastrophe.
Late last summer, to ease this situation, Congress passed a law guaranteeing workers who had health insurance with their old employer the right to full coverage with their new employer, assuming they are not out of work too long and that the new employer offers health insurance. The law also protects anyone who leaves a company but continues to be covered under an individual policy and increases the enrollment options for employees.
But although regarded as a breakthrough, the details of the new law are not simple.
The federal government recently issued regulations--about 400 pages’ worth--to begin implementation starting June 1. But some employers won’t follow the rules until their next “plan year” starts, as late as next Jan. 1.
“This basically helps a lot of individuals in a lot of ways,” said Charles W. Bross of COBRA Quarterly, a publishing and consulting group in Calverton, N.Y. It will ease job lock, while giving workers “lots of special enrollment options,” he said, but “there are new administrative burdens.”
The law, known as the Health Insurance Portability and Accountability Act of 1996, covers every employer that offers health insurance, as well as insurers, HMOs and third-party administrators that operate plans for employers.
The lawmakers understood, of course, that workers would need to be able to show they had coverage before. So, beginning June 1, employers must begin providing “certificates of coverage” to any workers who have coverage and lose it, usually by leaving the company.
Employers also must send such a certificate, or a notice of the right to one, to any covered employee who left the company from Oct. 1, 1996, to June 1, 1997.
Finally, any worker who lost coverage from July 1, 1996, to Sept. 1, 1996, has a right to a certificate, but the company is not obligated to send one automatically. The worker has to ask.
Certificates must be provided for dependents. At first, if the employer doesn’t know dependents’ names, it can simply say “spouse coverage, or “family coverage” or the like, said Martha Priddy Patterson of KPMG Peat Marwick.
Next year, though, “they need to actually have the names,” she said, adding that employers currently “not tracking exactly who’s covered under their plan . . . should do that anyway for their own protection.”
The certificate requirement applies to all employers, regardless of whether their own plans have preexisting condition exclusions, said Chip Kerby of William M. Mercer Inc., a benefits consulting firm. “There are lots of different levels of understanding about this law and what it requires,” he said. Some employers take the view that since their plan does not have such an exclusion they assume they don’t have to give out these certificates, he said.
That’s wrong, he said. The certificates are for workers’ use in reducing or eliminating an exclusion in another company’s plan.
The actual restrictions on preexisting conditions and other new rules do not take effect until later this year or in 1998 for most workers. (However, many large employers are already more generous than the new law requires.)
General waiting periods will still be permitted. Thus, if a company requires new workers to wait 60 days, 90 days, or some other period before becoming eligible for coverage, that limit will remain. Employers will not, though, be allowed to tack a preexisting condition exclusion onto a waiting period.
The law also helps newly hired workers who hadn’t had insurance before. It forbids companies and their health insurers from excluding preexisting conditions for more than 12 months, or for 18 months for workers who don’t enroll in the plan until some time after they come on the job.
The law also tightens up the definition of preexisting condition. When it takes effect, a condition will be preexisting only if is something that was diagnosed and for which treatment was recommended within the last six months. So if you’ve got a bad foot and know it, it isn’t a preexisting condition unless you go to the doctor and get it diagnosed.
A common current standard, which holds that a condition is preexisting if a “prudent person” would have had it treated, will be eliminated. Genetic information, such as a predisposition to hemophilia, is not a preexisting condition. The law also makes it harder for insurers in general to turn down an applicant for an individual policy.
The law bars plans from charging higher premiums or imposing longer waiting periods or other restrictions on people with special situations, such as mental health problems, disabilities and dangerous hobbies. Kerby said that discounts for wellness programs are permitted, though they may not be tied to actual success of those programs. For example, a plan could offer a discount to people who join a cholesterol-lowering program but could not then charge different premiums at the end based on cholesterol levels.
Albert B. Crenshaw writes for the Washington Post
