Massachusetts Health & Accident Insurance Practice Exam

Under HIPAA, what limitation is placed on employer-sponsored groups regarding preexisting conditions?

1. They can exclude all preexisting conditions indefinitely

2. They can exclude individuals only based on their age

3. They can exclude individuals unless they have credible coverage

4. They cannot exclude individuals based on preexisting conditions

The correct answer is: They can exclude individuals unless they have credible coverage

The correct answer highlights an important provision under the Health Insurance Portability and Accountability Act (HIPAA) concerning employer-sponsored health plans. HIPAA allows employer-sponsored groups to impose certain limitations on preexisting conditions. Specifically, they can exclude individuals from coverage for preexisting conditions, but only if those individuals do not have credible coverage. Credible coverage refers to health insurance coverage that meets certain standards set by HIPAA, which typically includes prior health insurance plans that have been in effect for a certain period. If an individual has maintained credible coverage before enrolling in the new employer-sponsored plan, the new plan cannot impose exclusions based on preexisting conditions. This ensures that individuals who have had continuous health coverage are protected from being denied benefits due to their medical history, promoting greater access to healthcare. The other options present limitations or conditions that are not aligned with HIPAA's actual provisions regarding preexisting conditions in employer-sponsored plans. The act was designed to ensure that the rights of individuals—especially with regards to their health coverage—are upheld across different insurance scenarios.