HIPAA Regulation Explanation

Besides maintaining a regular source of income, carrying reliable health insurance coverage can be key to warding off potential bankruptcy in the event of sudden illness or disability. Health Insurance Portability and Accountability Act (HIPAA) regulations were put in place to fill potential gaps in health insurance coverage while at the same time instating confidentiality practices regarding patient records.

HIPAA

• HIPAA comprises the rules and regulations for health insurance practices. This piece of legislation, enacted in 1997, was put in place to prevent fraud and abuse practices when it comes to patient privacy, according to the United States Department of Labor. It also enables individuals to maintain health insurance coverage in the event of unemployment. Employers or health insurance companies who fail to comply with these regulations can be subject to legal penalties in the event of fraudulent or abuse practices.

Function

• Prior to the passing of HIPAA regulations, employers normally stopped paying on an employee’s group health coverage once his term of employment ended. According to the United States Department of Labor, HIPAA regulations provide a safety net for individuals who, for whatever reasons, find themselves unemployed and without health coverage as a result. In addition to ensuring continued coverage, employees with preexisting conditions cannot be denied coverage once they enter another employer’s group insurance plan.

Fraud Prevention

• Fraud prevention within the insurance industry can come in the form of exposing a person’s medical history to unauthorized third parties. Third parties can involve other insurance companies, databank services or potential employers. According to the United States Department of Labor, HIPAA regulations work to protect a person’s right to privacy regarding her medical history and overall physical condition. As a result of the rules put in place by HIPAA, incidents involving fraudulent practices have declined significantly.

Electronic Documentation

• The enactment of HIPAA regulation brought with it a system of electronic data storage and transmission for medical records, according to the United States Department of Labor. This change works to better secure patient records and prevent mishandling of sensitive information. In the process, a more efficient means for storing and transmitting medical information developed. These provisions required medical facilities, private offices and employers to update their record storage system in order to comply with HIPAA standards.

Preexisting Conditions

• According to the United States Department of Labor, preexisting conditions refer to any condition an individual had prior to enrolling in a group health insurance plan. Prior to HIPAA, insurance companies could deny coverage altogether or else impose limitations on the coverage provided. HIPAA regulation requires companies to cover preexisting conditions in which no treatment was provided within the previous six month period. This provision prevents companies from denying or excluding coverage for treatments received prior to this six month interim. In cases where treatment for a preexisting condition did occur within the prior six months, companies can only impose a 12 to 18 month waiting period before providing coverage for the condition.