Small Business Questions & Answers


Filed under Office & HR

Ask About HIPAA

by Not Hip | May 26, 2012

Subject :Insurance

Dear Toolkit,

I know I'm a little behind the times but can you give me a short course about HIPAA and health insurance portability? I seem to have a severe knowledge gap on this topic.

Dear Not Hip,

Congress enacted the Health Insurance Portability and Accountability Act (HIPAA) back in 1996. HIPAA makes it easier for employees to change jobs without fear of losing their health insurance coverage. It was designed to address problems inherent in the employer-based health system, such as the ability of insurers to deny coverage due to a preexisting condition.

Health insurance portability does not mean that a person is entitled to the same coverage that he or she had at a prior job. It means that the coverage offered by a new employer cannot be denied to the newly hired worker due to a preexisting condition or health history.

Nor did HIPAA limit the premiums for coverage of affected individuals. Some people or businesses have found that coverage is available, as mandated under HIPAA, but that it can cost several times what it would cost a healthy individual.

HIPAA was amended recently to address certain privacy concerns inherent in the universal data collection, compliance and reporting systems it proscribed. In short, everyone in the chain of care must ensure they are protecting the privacy and security of patients' medical information. (Hence the wads of brochures handed to you at physicians' offices and included in their bills, telling you of your right to privacy.)

HIPAA at the federal level imposes only minimum requirements. You can find the salient details at on the Portability of Health Coverage (HIPAA) page on the Department of Labor website. However, your state may offer you additional protections. For example, the grace period for a lapse of coverage may differ.

Although it is a federal law, HIPAA leaves enforcement of its provisions affecting individual coverage and fully insured employers up to the states. The states were given a number of options for coming into compliance. 

HIPAA is an important tool to help our mobile workforce remain insured at a time when millions of citizens are not protected with any kind of health coverage whatsoever. It's not a perfect law, but it's sure a step in the right direction.