Federal Protection on Medical Insurance

COBRA

In 1985 Congress enacted the Consolidated Omnibus Budget Reconciliation Act, which contained rules providing for transitional medical coverage in the event of job loss or a change in employment. Eligibility for continuation of benefits is triggered by a "qualifying event" such as job loss without cause or other circumstances detailed in the rules. The continuation is self-financed; the period for which it must be available depends on the circumstances.

Employers and plan administrators are obligated to advise employees of their continuation rights; the employee then has a specified period to decide upon whether to pursue continuation. It is possible, if the employee takes some time to accept, that benefits must be paid retroactively.

The plan sponsor of a group health plan must provide continued coverage to "qualified beneficiaries." Some employment agreements and contracts provide for continued coverage, in some cases with the cost to be borne by the former employer. In those instances, the plan sponsor is obligated even if not covered under the COBRA statute. If an employer has fewer than 20 employees, is one of certain government units or is a religious entity, the COBRA continuation rules may not apply.


HIPAA

Over the last twenty years we have seen a shift in paradigm for the medical insurance industry, into the realm of "managed care." Responding to some of the problems that changes in medical care delivery have wrought, Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996.

The law provides requirements for group health plans and HMOs regarding portability. HIPAA establishes limitations on preexisting condition exclusions, prohibitions on denying coverage based on health status and guarantees that health insurance coverage for plan years beginning after June 1997 are renewable.

Preexisting Conditions

To be eligible for HIPAA protection regarding preexisting conditions, the individual must meet certain criteria. Those include:

• At least 18 months of credible coverage without a break in coverage. Credible coverage is defined as health insurance coverage, group health plans, Medicaid, Medical, other public health plans and other types of coverage set forth in the HIPAA regulations. All plans covered under HIPAA must certify coverage for the individual.

• Most recent coverage must have been under a group health plan;

• Cannot currently be eligible for Medicare or Medicaid or covered by any other health insurance;

• Must have elected and exhausted any continuation coverage available under COBRA or a similar state plan.

Privacy Protection

Another of Congress' stated goals with HIPAA was the protection of personal health information. The Department of Health and Human Services was ordered to develop standards regulating health information. Stringent guidelines were issued restricting the ability of physicians and medical facilities to release a patient's records to anyone without the patient's written release.

The Fourth Circuit ruled on a constitutional challenge to HIPAA and found that Congress laid out an intelligible principle to guide agency action and HIPAA thus does not delegate the legislative function. The court found that the rules developed as a result of the HIPPA directive are not beyond the scope of the congressional grant of authority and that neither the statute nor the rules are impermissibly vague; thereby rejecting the argument of unconstitutionality.