You asked whether federal law supersedes state laws with regard to exclusion of preexisting medical conditions in health care insurance policies.

SUMMARY

Federal law provides a floor with regard to the treatment of preexisting conditions in insurance policies. Federal and Connecticut law limit the period of time that health care insurers can exclude coverage for preexisting medical conditions under a group policy. Federal law also requires insurers to cover preexisting conditions if an individual who meets certain criteria moves from group to individual coverage. All insurers must meet the requirements of the federal law. Under the federal law, states can provide additional protections for consumers, as Connecticut does in several respects.

According to Insurance Department staff, most insurance policies for large groups cover preexisting conditions. Exclusions are more common in small employer and individual policies. Since individual policies are in part based on the individual's medical history, an insurer may deny coverage to a person with a preexisting condition, except as provided for by federal law. The state has a high-risk pool for such individuals, but coverage can be expensive.

Much of the information in this report regarding the federal law is taken from a fact sheet published by the U.S. Department of Labor, which is available on-line at http://www.dol.gov/ebsa/newsroom/fshipaa.html.

Health Care Insurance and Prior Medical Conditions

A preexisting conditions exclusion is a health insurance policy provision that excludes coverage for conditions that existed before the effective date of coverage. Concerns that such provisions can lock people into their jobs led the state and federal government to adopt legislation limiting such provisions.

Federal Law

The 1996 Health Insurance Portability and Accountability Act (HIPAA) was designed to allow employees to move from one job to another without the risk of losing their insurance due to their preexisting health problems. HIPAA also has protections for certain individuals who move from group plans to an individual health plan.

Group Coverage. In the context of group coverage, a “preexisting condition,” is one for which medical advice, diagnosis, care, or treatment, including use of prescription drugs, was recommended or received during the six months immediately preceding the enrollment date in a new plan or effective date of coverage.

Group health policies may not exclude an individual's preexisting medical condition from coverage for more than 12 months (18 months for late enrollees) after his enrollment date. A new employer's plan must give individuals credit for the length of time they previously had continuous health coverage, thereby reducing or eliminating the exclusion period. Previous coverage includes that provided under another group health plan, an individual health insurance policy, Medicaid, Medicare, and several other insurance programs. Coverage is considered continuous is there has been no break of 63 days or more. HIPAA establishes a process for providing certificates to insurers to document their prior coverage.

With regard to group policies, HIPAA also:

Individual Coverage. Under HIPPA, ''eligible individuals'' who lose group health insurance coverage are assured availability of coverage in the individual market. Such coverage must cover preexisting conditions, which are defined more broadly than under the act's group coverage provisions. To be eligible, (1) the individual must have at least 18 months of creditable coverage without a significant break (63 days or more) in coverage, (2) the most recent coverage must have been under a group plan, and (3) the individual must exhausted continuation coverage under COBRA or similar state plan. In addition, the individual cannot be eligible for a group plan, Medicare, or Medicaid.

HIPAA allows states to implement an alternative mechanism to provide coverage to eligible individuals, in which case insurers can deny coverage to those with preexisting conditions. In Connecticut, such individuals are entitled to coverage through the Health Reinsurance Association, a high-risk pool. The pool was established to provide insurance to residents who have a poor health history, are unable to buy coverage on the open market, or can acquire coverage only at a rate substantially above that offered by the high-risk pool. State Insurance Department staff note that coverage under the pool can be expensive.

In addition, under HIPAA, if an insurer in the individual market provides dependent coverage, it must cover preexisting conditions for children who have less than 18 months of creditable coverage but who were enrolled as a dependent under a group health plan within 30 days of their birth, adoption, or placement for adoption if they have not had a significant break in coverage.

Relationship to State Law. With regard to group policies, HIPAA allows states to impose stricter obligations on insurers in the several areas. Among other things, states may:

1. shorten the 6-month look-back period prior to the enrollment date to determine what is a preexisting condition;

2. shorten the 12-and 18-month maximum preexisting condition exclusion periods;

3. increase the 63-day break in coverage period; and

4. increase the 30-day period for newborns, adopted children and children placed for adoption to enroll in the plan so that and be covered for preexisting conditions

Connecticut Law

Connecticut's law regarding preexisting conditions (CGS § 38a-476) pre-dates HIPAA and was amended in 1997 to generally conform it to the federal law. It also sets a 12-month maximum preexisting condition exclusion period, even for late enrollees and allows for breaks in coverage of up to 120 days. In the case of newly insured group member whose previous coverage was terminated due to an involuntary loss of employment, the break can be up to 150 days, so long as the member or his dependent applies for the new coverage within 30 days of initial eligibility.

CGS § 38a-476a requires Connecticut insurers to comply with various HIPAA provisions. In addition, it specifies that that the statutory provisions concerning HIPAA requirements do not supersede other provisions of Connecticut law except to the extent that such provisions prevent the application of a requirement of HIPAA.

In addition to the group coverage provisions that are common to HIPAA, state law prohibits individual policies from excluding coverage for a preexisting condition beyond 12 months. The exclusion must relate to a condition that manifests itself or for which advice, diagnosis, care, or treatment is sought, recommended, or received twelve months before a policy's effective date.

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