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North Carolina HIPAA Guaranteed Health Insurance Information

HIPPA "Guaranteed Issue" Individual Health Insurance

All private insurance companies that sell individual health insurance must offer a choice of at least two "guaranteed issue" plans for qualified HIPAA-eligible individuals. Those two plans must contain benefits that are similar to those offered under the insurance company's other plans. Companies that choose not to designate two plans for HIPAA-eligible individuals must offer all of their individual insurance policies. However, there are no restrictions on the rates that insurance companies can charge HIPAA-eligible individuals for these plans, as long as there is an actuarial basis for the rates. This means that the policies HIPAA-eligible persons are entitled to buy tend to be rather expensive. To qualify as a "HIPAA-eligible individual," you must meet all of the following requirements:

• You must have had at least 18 months of continuous "creditable coverage," of which at least the last day must have been under an employer group health plan.
• You must have used up any COBRA or State Continuation coverage for which you were eligible.
• You must not be currently eligible for coverage under Medicare, Medicaid or another group health plan.
• You must not presently have health insurance. (If, however, you know your group coverage is about to end, you can apply as a HIPAA eligible individual for coverage to go into effect when your group coverage ends.)
• You must apply for health insurance as a HIPAA eligible individual no later than 63 days after losing your group coverage.

For more information on this topic, see "Your HIPAA Rights and Guide to Individual Health Insurance" on the Department of Insurance's Web site, www.ncdoi.com.

Fully Insured Vs. Self-Funded Group Health Plans

Fully Insured

Fully insured group health insurance policies are offered by licensed insurance companies. The insurance company collects premiums and uses the money collected to pay claims. These types of policies are regulated by the North Carolina Department of Insurance,and are protected by the Life and Health Guaranty Association in the event that a licensed insurance company becomes financially insolvent. If this occurs, the Association provides up to $300,000 per person to cover unpaid claims.

Self-Funded or Self-Insured

Some employers and labor unions provide group health benefits for their employees or members through what is called a self-funded health plan. In a self-funded plan, the employer or group collects premiums itself and uses those funds to pay for claims. While an insurance company or other company may be responsible for administering the plan (provider network, claims processing, customer service, etc.), the employer retains responsibility for making sure that there are enough funds to pay claims. Self-funded health plans do not involve a health insurance policy; therefore, they are not

insurance plans, and are not subject to North Carolina insurance laws or the North Carolina Department of Insurance's regulatory authority. In addition, the North Carolina Life and Health Insurance Guaranty Association does not cover self-insured plans in the event of plan insolvency. Single employer and union sponsored self-funded health plans are regulated by the U.S. Department of Labor's Employee Benef its Security Administration, under the guidelines of the Employees' Retirement Income Security Act (ERISA) of 1974.

As noted earlier, self-insured MEWAs (which cover multiple employers) are licensed and regulated by the North Carolina Department of Insurance, but are not covered under the Guaranty Association.