The Affordable Care Act eliminated the concept of preexisting condition exclusions as of 2014. From a 30,000-foot view, this may seem to spell the end of certificates of creditable coverage, a provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
As you probably recall, a certificate of creditable coverage is proof of health coverage, particularly important when employees change companies. Prior to the Affordable Care Act, carriers would have a preexisting existing exclusion period of six to 12 months, with an additional caveat that the exclusion could be waived so long as their creditable coverage did not indicate a coverage gap greater than 63 days.
So, now that preexisting conditions no longer matter, is the certificate of creditable coverage obsolete? Read on to learn why it is still crucial to nail down the dates of creditable coverage.
Existing Plan Renewals
Most media coverage affirmatively states that preexisting condition exclusions are banned after January 1, 2014. However, the fine print says that the ban takes effect for plan years beginning on or after January 1, 2014. As you know, health plans renew throughout the calendar year so many 2014 plans have not yet taken effect.
Hypothetical Scenario
Let’s say that your plan comes up for renewal in November 2014. Now time travel to September 2014. You’ve just hired someone who quit his previous job in February 2014 and lost health coverage on the same date. Your company’s pre-ACA health insurance plan has preexisting condition exclusions, and thus requires a certificate of creditable coverage. Your new employee’s old company didn’t bother to send a HIPAA certificate. Because your 2014 plan year had not yet begun when you hired the new employee, you need documentation to support application of the preexisting condition exclusion which would be in place until November 2014. If you ignore the preexisting condition exclusion and provide coverage anyway, you may be on the hook for claims incurred before November 2014 as the insurance company is not likely to pay claims for which coverage should not have existed.
It’s the responsibility of the previous employer (and your company, too) to issue HIPAA certificates of creditable coverage to avoid HR headaches like this. In fact, the Department of Labor requires the issuance of certificates of creditable coverage until at least December 31, 2014.
A Line in the Sand
Even for those who get coverage through the Marketplaces, and even after the transition of 2014, individuals will still need some type of paperwork that says when previous coverage ended. This way, everyone (old plan/new plan) can avoid confusing overlapping coverage situations. There has to be a defined cutoff date to facilitate coordination of benefits.
The Short Answer
Preexisting condition exclusions will eventually become the dinosaurs of the health insurance world. However, despite this fact, clear communication and plan coordination will remain crucial. Until we receive new Department of Labor guidance, you should plan to always send a coverage termination notice, any required COBRA notices and a HIPAA certificate of creditable coverage when an employee leaves your company.
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