Getting the Most From Your Health Insurance

Learn about these important laws and make your health insurance benefits work for you.

According to the U.S. Census Bureau, the majority of Americans -- 84.4% -- are covered by some form of health insurance, mostly through a current or former employer or union. Simply having coverage is not enough, however. In order to get the most from your health insurance coverage, you must know what legal rights and protections you have.

There are a number of federal laws that govern your health insurance. These laws address everything from interruptions in coverage to coverage for newborn babies to mental health coverage. Read on to learn more about any of the following laws.

• The Consolidated Omnibus Budget Reconciliation Act, which helps people keep their group health insurance coverage even after losing or leaving a job.
• The Newborns' and Mothers' Health Protection Act, which protects women and their newborns from being prematurely released from the hospital after childbirth.
• The Mental Health Parity Act, which prohibits health plans and insurers from providing less coverage for mental disorders.
• The Health Insurance Portability and Accountability Act, which, among other things, protects people who suffer from what the insurance industry calls "pre-existing conditions."
• The Women's Health and Cancer Rights Act, which governs how your health insurance company treats women who suffer from breast cancer.

The Consolidated Omnibus Budget Reconciliation Act

If you have just lost or left your job, this law -- commonly called COBRA -- will help you and your family keep your group health coverage while you make the transition to a new plan.

COBRA requires most employers to offer employees and their families the opportunity for a temporary extension of health coverage under certain circumstances -- such as job loss, job transition, job reduction, divorce, or death of the covered employee -- after which their health plan coverage would ordinarily end. These instances are called "qualifying events," and the extension can last anywhere from 18 months to 36 months, depending on the situation.

• If the reason that you are losing coverage is because you quit your job, because your employer reduced your hours, or because your employer terminated your employment (for reasons other than "gross misconduct"), you can continue coverage for yourself, your spouse, and your dependent children for a period of 18 months.
• If you were covered under your spouse's health plan and are losing that coverage because of divorce, separation, or the death of your spouse, you can continue coverage for you and your dependent children for a period of 36 months.
• If you were covered under a parent's health plan and are losing that coverage because you are no longer a dependent of your parent, you can continue coverage for yourself for a period of 36 months.

Unfortunately for your pocketbook, COBRA is not free coverage. Those who lose their coverage because of an involuntary termination of employment (their own or that of a spouse or parent) may be eligible for a partial subsidy of the cost (see New COBRA Rules: Stimulus Package Subsidizes Continued Health Insurance); everyone else has to pay the full cost of continued coverage themselves. Still, COBRA ensures that you will pay for that coverage under the group rate that was paid by your employer, which might be less than individual rates.

You, your employer, and your health plan all have responsibilities under the law. For example, the plan must inform you generally about your rights under COBRA. Employers must notify the plan of an employee's death, termination of employment, or reduction in hours. The employee or covered family member must notify the plan of a divorce, legal separation, or disability. The employee or covered family member must also notify the plan when a child loses dependent status. If you want to continue coverage under COBRA, you have 60 days from the date when your employer-paid coverage would end to notify the plan that you want to continue coverage.

The Newborns' and Mothers' Health Protection Act

This Act, signed into law in 1996 and effective for group health plans since 1998, protects a woman and her newborn child from being prematurely released from the hospital after childbirth. It guarantees that a woman and her newborn baby will be allowed to stay in the hospital for at least 48 hours after a vaginal delivery or 96 hours after a cesarean delivery.

A mother can leave the hospital after a shorter length of time only if she and her attending healthcare provider -- such as a physician or a nurse midwife -- agree that the shorter stay is sufficient. However, the law prohibits health plans and insurers from giving the mother or the provider any incentives (either positive or negative) that might encourage a shorter stay.

The Mental Health Parity Act

This law seeks to end the practice by health plans and insurers of providing less coverage for mental disorders than they do for physical disorders. Data from the federal Bureau of Labor Statistics indicate that, prior to the Act, approximately 90% of policies offered fewer benefits for mental health than for physical health. Indeed, the typical caps for mental illness coverage were $5,000 per year and $50,000 over the course of a lifetime. These caps may seem high until you compare them to the caps for physical disorders: no caps per year and $1 million over the course of a lifetime.

One key limitation of the Act is that it applies only to health plans and insurers that cover mental disorders in the first place. It does not mandate coverage for mental disorders where none is provided. Another limitation is that the law does not cover businesses with 50 or fewer employees.

An additional limitation is that the Act covers only mental illness; it does not cover treatment for substance abuse or chemical dependency. Because the law is about parity, and not about mandating coverage for mental illness, the law does not define mental illness. Rather, the law applies to "mental health services" as the term is used by the individual health plans. Whatever mental health services the plan covers, it must cover at the same level as physical health services.

Critics of the Mental Health Parity Act have argued that it has too many loopholes and too many exclusions to truly end the practice of providing less coverage for mental health than for physical health. Fortunately, many states have passed their own parity laws, many of which provide broader protection. To learn whether your state has a more comprehensive law, visit insure.com at www.insure.com/health/mentalstate.html.

The Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act (HIPAA) provides a range of protection to millions of working Americans who have some sort of health-related condition or characteristic that makes them vulnerable to exclusions, limitations, and discrimination in group healthcare coverage. HIPAA applies mainly to employer-based health coverage. Therefore, if you get your health insurance through your employer, and if you have what is called a "pre-existing condition" (see below) or some other health-related characteristic that makes you "undesirable" in the eyes of an insurance company, you should get to know HIPAA so that you can use it to protect yourself and your family.

A pre-existing condition is a condition for which you received medical advice, diagnosis, care, or treatment in the six months prior to enrolling in your current health plan. Cancer and high blood pressure are common pre-existing conditions. For example, you may have received treatment for breast cancer in June, and enrolled in a new group health plan in July. Prior to this Act, you faced the possibility that your new health plan would not cover your breast cancer treatment for several years -- or at all -- simply because you received treatment for it previously.

The intent of HIPAA is to turn the tables on health plans and insurance companies by limiting the ways in which they can exclude coverage of such conditions:

• Pregnancy is no longer considered a pre-existing condition. Therefore, if you are pregnant and want to switch group health plans, you can do so without risking a break in your coverage. But be careful: There are some large loopholes in this protection. HIPAA applies only to women who switch from one group health plan to another. Therefore, if you had no coverage and then obtained group coverage through a new job after you got pregnant, your pregnancy may not be covered or you may have to wait for a period of time before it gets covered. (Ironically, this waiting period may last longer than your pregnancy.) Similarly, if you had individual coverage and then switched to either group coverage or to another individual plan after you got pregnant, your pregnancy may not be covered at all or for a specified period of time.
• Health plans and insurers cannot apply the pre-existing condition exclusion to newborns or to children younger than 18 who are adopted or who are put up for adoption so long as the newborn or the child entered the health plan within 30 days of birth, adoption or placement for adoption.
• Genetic information may not be treated as a preexisting condition in the absence of a diagnosis. If your coverage is through an insurance company or offered through a health maintenance organization, state law may provide additional protections.
• The Act places a six-month "look back" limit on identifying pre-existing conditions. This means that if you have a condition for which you received medical advice, diagnosis, care, or treatment longer than six months prior to enrolling in your new plan, that condition is not pre-existing and cannot be excluded from coverage on that basis.
• If you do have a pre-existing condition and you have group health insurance, you face shorter pre-existing condition exclusion periods than you would have faced prior to HIPAA. In other words, you can get covered for your condition faster than before. The maximum exclusion period is generally 12 months from the date on which you enrolled in the plan.
• If you switch from one group health plan to another as the result of a job change, you will not face new pre-existing condition exclusions so long as there is no more than a 63-day break in your health coverage. This enables you to switch jobs despite your health status without fear that you will lose coverage for certain conditions.

In addition to protecting you from exclusions based on pre-existing conditions, HIPAA also protects you from discrimination based on health-related characteristics. The Act prohibits health plans and insurers from excluding you from coverage or charging you more for coverage because of your health status.

Finally, HIPAA requires health care providers, including doctors and hospitals, to improve their efforts to keep your medical records and health information confidential.

The Women's Health and Cancer Rights Act of 1998

If you are a woman who must have a mastectomy due to breast cancer or another medical condition, this law places some requirements on how your group health plan, insurance company, or health maintenance organization must treat you. Under the Act, you are entitled to:

• reconstruction of the breast on which the mastectomy was performed
• reconstruction of your other breast to produce symmetrical appearance, and
• prostheses and treatment of physical complications at all stages of the mastectomy, including lymphedemas.

The Women's Health Act applies only to plans that already provide medical and surgical benefits with respect to a mastectomy. If your plan does not provide such benefits, then it is not covered by this Act and you are not entitled to the Act's protections.