Understanding a "Certificate of Creditable Coverage"

January 1, 2010

A "Certificate of Creditable Coverage" is a creation of the federal Health Insurance Portability and Accountability Act (often referred to as HIPAA) designed to ensured that individuals who change health insurance plans will enjoy continuous coverage for ongoing medical treatments. A Certificate of Creditable Coverage applies when a person is joining a new employer-sponsored group health insurance plan and, in a few cases, when enrolling in a state-assisted individual insurance plan.

Without this federal law, new enrollees in a health plan might be subject to another  waiting period before coverage is offered for pre-existing medical conditions.This could be deterrent for employees who want to change jobs.

The Certificate of Creditable Coverage provision in HIPAA provides that once you have been continuously insured for at least 18 months there is no need to satisfy another waiting period when you change health insurance. 18 months is the maximum length of a waiting period but many group health polices have a more liberal waiting period of only 6 months. A gap in coverage of less than 60 days does not jeopardize the "continuous coverage" but it is important to maintain a short term medical insurance plan if there is going to be a gap of more than two months between group health insurance plans.

The Certificate of Creditable Coverage program is designed to be largely automated and requires little effort on the part of health plan members. Certificates are automatically generated by every health insurance company within a few weeks of a member's termination. If you do not receive a Certificate by mail within 30 days of termination, contact the insurer and verify your mailing address. A growing number of health insurance companies are now developing technology to deliver Certificates via Internet download on demand.

If you are in between jobs, a Certificate of Creditable coverage is available from the COBRA plan administrator (if applicable) or the administrator of any short term major medical insurance. Supplemental insurance, foreign medical insurance and international travel insurance plans do not provide a Certificate of Creditable Coverage.

When you receive a Certificate of Creditable Coverage from the old insurer, check it for accuracy. It must include the name of each person covered under the former policy, along with the starting date and ending date of coverage. For this reason, it is not possible to obtain a Certificate prior to the termination date of your former insurance. Simply forward a copy to your new health insurance company. Keep a copy for our own records. You might want to store the certificate inside the cover of the new health insurance policy itself for easy reference later.

Certificates of Creditable Coverage are not useful for the purpose of obtaining coverage for pre-existing conditions when enrolling in a health plan that never offers this benefit in any circumstance. Short term medical insurance policies fall under this category; they never cover pre-existing medical conditions. Also be aware that most of the lower cost individual health insurance plans also do not cover pre-existing medical conditions.

There is a common misconception that a person with a Certificate of Creditable Coverage is eligible for any health insurance plan they may choose with a full take-over benefit for pre-existing conditions. This is simply not the case since most health insurance plans for individuals (as opposed to employer-provider group coverage) have eligibility requirements that preclude individuals with prior health problems.

Certificates of Creditable Coverage are available, but not necessary, when an entire business changes health insurance because the new group health insurance is issued with full takeover benefits for all eligible members enrolled on the date that the new insurance starts.

Finally, be aware that the federal law regarding Certificates of Creditable Coverage is unrelated and independent of specific state laws designed to address issues regarding take-over benefits and eligibility for insurance. While federal benefit laws override state laws in the event that there is a direct conflict in the application of the rules, the states still hold complete control for health insurance plans within their own jurisdiction. One example of this type of legal conflict is that certain states do not recognize Certificates of Creditable Coverage from individual health insurance as valid for entry into state-sponsored high risk health insurance pools. These enrolling members are still subject to an additional waiting period for some benefits. Since these specific issues vary from state-to-state they are not addressed in this article. See your benefits adviser or ask your health insurance company for a list of state-specific mandates that apply in your situation.


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