Avoiding Lapses in Health Insurance Coverage

If you are in between jobs and previously had employer-based health insurance, it is critical that you avoid a prolonged lapse in medical coverage. Health insurance companies try to control costs by invoking “pre-existing condition” clauses, refusing to cover treatments for a medical condition they say you had before you purchased the health insurance policy. The Health Insurance Portability and Accountability Act, HIPAA, protects you from having conditions that were covered by your current health insurance plan being ruled “pre-existing” when you move form one job, and therefore one health insurance plan to another. However, the HIPAA protections only apply if there has not been a significant lapse in coverage. Under the law, you only have about two months for protection under HIPAA before a future health insurer can turn you down for a new policy based on a pre-existing condition. Under the federal HIPAA regulations if you have had health insurance for more than 18 months an insurance company cannot place a waiting period on pre-existing medical conditions if you haven’t been without medical coverage for over 63 days.

While you can maintain your health insurance under the COBRA provisions, COBRA is generally an expensive option. Most high-deductible health insurance plans, which have lower relative monthly premium costs, will meet the HIPAA requirements for “continuous coverage”. Some short-term health insurance policies may also keep you HIPAA eligible, but it is the exception rather than the rule for short-term plans because of their limited scope of coverage. It is best to check with a qualified health insurance professional before you assume that a short-term health insurance policy qualifies as “continuous coverage” under HIPAA.

Finally, keep in mind that HIPAA was designed to make the transition from health insurance plans from your new employer when switching jobs easier, and to avoid new waiting periods for pre-existing condition exclusions. The law does not guarantee that you will receive the same level of benefits, claim limits, etc. that you had with your previous health insurance plan.