News Release

HHS Issues Final Regulation on Access to Group Health Coverage

The Department of Health and Human Services today announced a final regulation under the provisions of the 1996 law on health insurance portability that give workers greater access to group health plan coverage.

"In an era when American workers often change jobs, and even careers, several times in the course of their lives, it is important that they are able to respond to the modern workplace without having to fear for their health insurance," HHS Secretary Tommy G. Thompson said. "This regulation implements an important law that will help them do that."

"We have listened to public comment and worked to craft a rule that will provide maximum protection for consumers, while minimizing the burden on health plans," said Mark B. McClellan, M.D., Ph.D, administrator of the Centers for Medicare & Medicaid Services.

The final regulation, which went on display today at the Office of the Federal Register, implements provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that provide greater portability and availability of group health coverage when workers and family members change or lose a job.

The provisions set limits on preexisting condition exclusions that could be imposed and require group health plans and group health insurance issuers to offer "special enrollment" upon certain life events.

Identical regulations are being issued simultaneously by the Departments of Labor and Treasury with a joint explanatory preamble.

The regulation finalizes portions of an interim final regulation published on April 8, 1997, that limits the use and duration of preexisting condition exclusions imposed by group health plans and group health insurance issuers. It requires these entities to offer an immediate "special enrollment" opportunity to certain individuals who lose eligibility for other group health coverage or other health insurance, and to otherwise eligible new dependents.

The final regulation, which becomes effective for plan years starting on or after July 1, 2005, does not significantly modify the framework of the 1997 interim final regulation. However, in response to comments received during the public comment period, the final regulation contains features that are intended to bolster HIPAA's consumer protections while minimizing the burdens imposed on group health plans and group health insurance issuers. For example, the final regulation:

• Requires group health plans and group health insurance issuers to include, concurrently with the certificate of creditable coverage provided to individuals when they lose coverage under the plan, an educational statement on their HIPAA rights.
• Includes model language that group health plans and group health insurance issuers can use for the new educational statement.
• Recognizes health plans maintained by foreign governments, and by the U.S. government (such as Veterans Administration coverage) as creditable coverage that can be used to reduce the length of or eliminate a preexisting condition exclusion.
• Offers sample language that plans and issuers can use to satisfy their obligations to provide participants notices of preexisting condition exclusions.
• Clarifies that certain plan benefit restrictions are in fact preexisting condition exclusions that must comply with HIPAA's limitations on such exclusions.

HHS, Labor and Treasury also are publishing a proposed regulation that solicits comments on some potential additional aspects of HIPAA group health plan requirements. For example, the proposed regulation:

• Would provide an extension of time for individuals to exercise certain HIPAA portability rights, in situations where the individual must exercise those rights within a certain number of days after losing coverage, but the individual is not promptly notified through a certificate of creditable coverage that he or she has lost coverage.
• Would specify that group health plans and group health insurance issuers must provide a certificate of creditable coverage when an individual leaves a group health plan while taking leave under the Family and Medical Leave Act, and that any period of time during which a person does not have coverage while under such leave does not count against him with regard to HIPAA's protections.
• Would set forth a mathematical formula for counting the average number of employees employed by an employer during a year (various HIPAA health insurance reform provisions require the determination of such an average number).

Also today, the department is jointly publishing with Labor and Treasury a Request for Information about experiences with benefit-specific waiting periods imposed by group health plans and group health insurance issuers. It also seeks suggestions for devising an appropriate test for determining when a benefit-specific waiting period is a preexisting condition exclusion. Some group health plans and group health insurance issuers impose benefit-specific waiting periods on specific conditions or treatments, such as a two-year restriction on benefits for transplants. To the extent such a waiting period constitutes a preexisting condition exclusion, the waiting period is subject to HIPAA's limitations on preexisting condition exclusions.

The final regulation, the proposed regulation, and the Request for Information will be published in the Dec. 30, 2004 Federal Register.

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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.

Last Revised: December 29, 2004