HIPAA, COBRA and PHI, oh my!

In the story of The Wizard of Oz, Dorothy and her friends sang a similar song about lions, tigers, and bears as they made their way down the yellow brick road. They later realized they had nothing to fear from these animals (armies of flying monkeys led by a witch notwithstanding). I routinely answer questions from people who have similar fears and misunderstandings about HIPAA, COBRA, and to a lesser extent, PHI.

For the record, HIPAA is not a female hippo and COBRA is not a snake. COBRA is what you take if you leave a job and you want to continue your health insurance from your company. The key word is continue. Many people think that COBRA is a government or other type of "program." It’s really just a law that says if you worked for a company with at least 20 employees and you were covered under their health insurance, you may elect to keep your coverage if you left your job. While your employer pays at least 50% (some pay 100%) of the total health insurance cost for you while you are employed, COBRA must be paid 100% by you when you leave. In addition, because your former employer has to keep you on their plan, they are allowed to charge an extra 2% to cover administration expenses.

You may have a bit of sticker-shock when you see what your employer was paying. Healthcare is expensive, no two ways about it. (Be sure you smile at the boss next time you’re in the elevator together.) Another thing about COBRA is that you can’t keep it forever. Generally, you are eligible for 18 months (in certain instances such as death or divorce you can keep an additional 18 months, for a total of 36 months).

What happens after it expires and you are not employed or covered by another health insurance policy? If you are relatively healthy, you could apply for an individual policy. If you aren’t healthy or are otherwise uninsurable, there was a time when you would have had less chance of getting coverage than Dorothy did getting back to Kansas. Starting in 1996, that all changed with the passing of HIPAA.

If you’ve gone to a doctor after April 2006, HIPAA is familiar to you as just one more form that you have to sign before you receive care. In a few words, it protects your privacy. Specifically it protects your PHI or Personal Health Information. Protecting your PHI means your health issues can’t be used to discriminate against you in situations such as employment. (It CAN be used legally to underwrite, or determine whether an insurance company will insure you, but only with your permission.) As we’ll see in a moment, HIPAA allows you to bypass the underwriting process, provided you meet certain conditions.

While the health privacy issues went into effect on April 14, 2006, HIPAA actually went into effect in 1996. What it did was to allow people who were coming off of COBRA or other qualified coverage to get health insurance with no health qualification. Because HIPAA is a Federal Act, the government has some very clear-cut rules as to who qualifies. They are:

1) Your last coverage before applying for a HIPAA plan must be one of the following coverage types:

     a) Group (employer-based)
     b) Government coverage
     c) Church-sponsored coverage

2) You must not have a gap of more than 63 days

3) If you were offered continuance-coverage (like COBRA), you must have taken it to the end (18 or 36 months).

Now, as you know, we’re dealing with the government here. As such, navigating the system is usually complicated. The federal government said that the states could make up their own rules as long as it was at least as good as what the federal government recommended. So while each state can dictate what constitutes a HIPAA plan, to list what every state enacted would be a bit much for this column, so we’re just going to explore what the federal government suggested, which is that every insurance company had to offer their two best plans. They then suggested they be called "Basic" and "Standard" (nobody said the government was creative), which most states adopted. The problem with these plans? You guessed it…cost. HIPAA plans are typically expensive. You can expect to pay at least 75% higher rates (or more) than regular rates. But if you’re uninsurable or faced with high medical bills it may seem like a bargain.

What do you do if you can’t afford your HIPAA or COBRA plans? Well, like Dorothy looking for the "magic" of the wizard to send her home, it was the good witch Glenda that provided her the means. This means that there are always options. And that is the subject of our next column. Until then, stay healthy!