Under HIPAA's portability rules, how is an individual's prior creditable group coverage treated when the individual moves to a new employer's group health plan?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
HIPAA portability protects people who move between group plans. The law limits how long a new plan may impose a preexisting condition exclusion and requires that prior creditable coverage, meaning time spent under another qualifying plan, be credited against any new exclusion period. As a result, an individual who maintained continuous coverage cannot be forced to serve a full new waiting period for the same conditions. This credit mechanism is the heart of HIPAA's portability and is supported by the HIPAA legislative-impact content under the federal anchors of the general concepts of medical and disability insurance (AH-III.B.4). Recognizing the credit rather than the exclusion is the tested point.
Why the other options are wrong
- B) Disregarding prior coverage would defeat the purpose of HIPAA portability. Creditable coverage must be counted against a new plan's preexisting condition exclusion, subject to continuity rules, so the new plan may not impose its full exclusion period on someone with continuous coverage.
- C) Deductibles and out-of-pocket maximums are plan-specific and do not transfer between plans under HIPAA. Only time spent in creditable coverage carries over, and it is used to reduce a new plan's preexisting condition exclusion, not to transfer cost-sharing amounts.
- D) Changing carriers does not extend an exclusion period. HIPAA exists precisely to prevent prior coverage from being ignored or penalized, so a move between group plans cannot be used to lengthen the exclusion the individual would otherwise face.
Memory hook
HIPAA credit: prior coverage chips away at the new plan's exclusion clock.