Created: December 27, 2002

A: The Health Insurance Portability and Accountability Act (HIPAA) was passed by Congress in 1996 to reform the insurance market and simplify health care administrative processes. HIPAA is the single most significant federal legislation affecting the health care industry since the creation of the Medicare and Medicaid programs in 1965. The primary purposes of HIPAA are:

• Improve the portability and continuity of health insurance coverage for individuals and groups
• Combat fraud and abuse in the health care industry
• Promote the use of medical savings accounts
• Improve access to long-term care
• Enhance health care insurance and delivery systems by making them more efficient, simpler, and less costly
• Improve the privacy and security of individual health care information.
• HIPAA is broken into five distinct Titles or sections. A brief description of each Title is given below.

Title I: Health Insurance Reform

Title I includes provisions for certificates of coverage and portability of health insurance. Title I prohibits discrimination in enrollments and in premiums charged to employees and their dependents based on health status related factors. Its provisions primarily affect employers and health insurers and are currently in effect.

Title II: Administrative Simplification

Title II includes provisions to standardize the electronic transactions of healthcare data, to protect the privacy of individually identifiable health information, to provide individuals access to their health information, to eliminate fraud and abuse, and to increase coordination of Medicare related plans. Many of the provisions of this title are already in place while others are still being finalized. This title has the most impact on healthcare providers and their business operations.

Title III: Tax-Related Health Provisions

Title III provides for certain deductions for medical insurance, and makes other changes to health insurance law.

Title IV: Application and Enforcement of Group Health Plan Requirements

Title IV specifies conditions for group health plans regarding coverage of persons with preexisting conditions, and modifies continuation of coverage requirements.

Title V: Revenue Offsets

Title V includes provisions related to company-owned life insurance, treatment of individuals who lose U.S. citizenship for income tax purposes and repeals the financial institution rule to interest allocation rules.