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HIPAA Compliance

HIPAA And Insurance

by Dina Kayed

Under HIPAA, insurance companies' capacity to refuse coverage to those with pre-existing conditions is diminished. Notably, these regulations improve the coverage prospects of those trying to secure insurance within the group market. For example, employees enrolling in their companies' group healthcare plans may no longer be excluded based upon conditions they last suffered from more than six months earlier.

In addition, the impact of such exclusions, where they are permitted, is also lessened by HIPAA regulations. One prominent example is the extent to which a person's previous coverage can reduce the amount of time he or she can be excluded from a new plan. In certain cases, prior insurance coverage can eliminate the exclusion period on a new plan outright.

The Effect of HIPAA on Insurance

While these changes may at first seem to create greater risk for insurance companies, it is important to remember that HIPAA's regulations also significantly reduce occurrences of insurance fraud. Insurance fraud can be a nightmare for small business owners, as well. Buying insurance coverage for employees can be expensive, and insurance fraud can greatly increase these expenses. In fact, statistics show that insurance fraud costs small business owners billions of dollars in any given year.

Penalties for non-compliance with HIPAA regulations are clearly prescribed and often quite harsh, as is common with non-compliance penalties for other major federal laws. If the penalties were of no consequence the regulations would not be effective in helping to eliminate healthcare fraud.

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