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Creditable Coverage 101

What if My Health Insurance Wasn't As Comprehensive As The New Coverage?

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HIPAA allows health plans the option of refusing to give complete "credit" for prior coverage that was less comprehensive than the coverage under the new plan.

HIPAA requires that basic health care be credited. Beyond that, HIPAA allows employers to break down health coverage into 5 types of services:

  • Mental health services
  • Substance abuse treatment
  • Prescription drugs
  • Dental care
  • Vision care

Employers can impose separate pre-existing condition exclusions for each of the five types of services. If the prior plan did not cover one of those services, a new employer may impose a Pre-Existing Conditions Waiting Period but only on those services that were not covered under the prior plan.

For example, Jennie takes medication for high cholesterol. She moved from one job to another. The health insurance under her old job did not cover prescription drugs. The new plan has to give her credit for the old coverage towards the Pre-Existing Waiting Period except that the new plan can provide that coverage for her medications is postponed until she has been covered for 12 months since her prior plan did not cover prescriptions.

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