How Does the Insurance Portability in HIPAA Work With Cobra?

An employer's group health plan provides employees with low-cost insurance benefits that only last as long as an employee stays at the job. In an effort to protect a person's ability to maintain health care coverage, the federal government enacted HIPAA and COBRA laws. These laws make health insurance coverage a "portable" entitlement by protecting a person's rights to qualify for health care insurance when an employer's group plan is no longer available.

HIPAA Provisions

• Employers who offer group health plans must comply with a series of government regulations designed to ensure employees have access to available health coverage options. The Health Insurance Portability and Accountability Act of 1996, or HIPAA provides employee protections in terms of having access to an employer plan and maintaining health coverage when an employer plan ends. HIPAA regulations limit an insurance company's ability to exclude certain applicants due to pre-existing conditions and overall health status. HIPAA also makes it possible for people in-between jobs to maintain eligibility for health insurance coverage.

Creditable Coverage

• The Consolidated Omnibus Budget Reconciliation Act of 1986 --- also known as COBRA --- enables employees who lose their employer health coverage to remain eligible for the reduced rates provided through group health coverage. Under HIPAA regulations, COBRA insurance qualifies as a creditable form of health insurance coverage. Having prior, creditable insurance prevents insurance companies from denying a person coverage and limits any exclusionary periods applied in cases where a person has a pre-existing condition. Since HIPAA defines COBRA insurance as creditable coverage, someone who is out of work for a long period of time can also qualify for individual health insurance coverage once his COBRA plan runs out.

Portability

• Under HIPAA guidelines, employees covered under an employer's group health plan receive a certificate of creditable coverage upon leaving a job provided they meet certain conditions. This requirement applies for employers who have 20 or more employees covered under a group plan, according to the U.S. Department of Labor. An employee becomes eligible for a certificate provided a termination --- whether voluntary or involuntary --- is not due to gross misconduct. The certificate of creditable coverage represents HIPAA's "portability" aspect and enables a person to qualify for COBRA health coverage.

Special Enrollments

• Special enrollment periods are available for people who choose not to join an employer's group health plan. Someone may choose to do this in cases where a spouse's health coverage is available. In the event that the spouse's coverage ends, the person still has the option to join their employer's plan without waiting for the scheduled open enrollment period. A person who receives coverage under a spouse's COBRA insurance can also make use of the special enrollment option once she's exhausted the benefits available through COBRA. The portability provisions available under HIPAA laws are what make it possible for people to take advantage of special enrollment periods.