Can a PCE more liberal than law requires be a violation of HIPAA?

[Guest sdussault]

I am being advised by counsel that the Pre-ex condition exclusion in our self-funded health plan may be a violation of HIPAA because it includes a health status related factor. My understanding is that the maximum PCE is 12 months from the enrollment date (or 18 months for late enrollees.) Our plan provides that the PCE is 12 months, however, it can be reduced if the participant remains treatment free from the condition for 6 consecutive months. It would appear that our plan, even though it DOES impose a health related status factor to the PCE, that factor serves to reduce the length of time that the PCE will be in effect.

The advice that I am given by the attorney for our TPA is that ANY imposition of a health related factor is a violation of HIPAA. Would you agree? I am of the mind that since the limitation imposed only will serve to reduce the otherwise statutory 12 month period, it should not be a violation. Of course, this exclusion is only applicable when there is no creditable coverage (or not enough) to reduce or eliminate the PCE. Any input would be greatly appreciated! Thank you.

[Guest kchristy]

Pre-existing limitation clauses are by nature health-related, so this attorney's opinion seems odd to me.

HIPAA regulates the *length* of preexisting condition exclusion periods; it doesn't exclude their use. Health plans can have pre-ex periods of as long as 12 months; credit for "time served" must be given for those new enrollees who had group coverage for up to twelve months prior, and individual coverage for up to 18 months prior (with some breaks in coverage allowed during time in between jobs and in waiting periods).

As for ending the preex period early if the enrollee is six months treatment-free, so much the better. We actually advise our clients to dump preex clauses altogether, and most do. They aren't interested in wriggling off the hook for paying for claims that their employees and their dependents are incurring while under their employ. Who wants an employee who has a financial crisis as well as a health crisis? Makes for a pretty unproductive - and potentially resentful - worker.