Health Insurance Portability and Accountability Act (HIPAA)

Written By
Paul Tracy
Updated December 7, 2020

What is the Health Insurance Portability and Accountability Act (HIPAA)?

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that promises continued health insurance coverage and ensures health information privacy for those covered by health insurance plans.

How Does the Health Insurance Portability and Accountability Act (HIPAA) Work?

HIPAA was passed in 1996 as an amendment to two previous laws: the Public Health Service Act (PHSA) and the Employee Retirement Income Security Act (ERISA). It ensures continuous health insurance coverage by mandating that plans may be renewed in advance from year to year, that plan holders have full access to health services and that plans are transferable between employers without loss of coverage or benefits.

Subsequent changes to HIPAA reinforced the confidentiality of patient information communicated between providers in a healthcare network. In addition, HIPAA now mandates more efficient administration among insurers and providers as part of its efforts to streamline access to services and billing. Criminal and/or civil penalties may be applied to insurers and providers found to be noncompliant with HIPAA regulations.

Why Does Health Insurance Portability and Accountability Act (HIPAA) Matter?

HIPAA was an important step forward for those with chronic conditions as well as those changing jobs while in the midst of long- or short-term treatments for illnesses. HIPPA makes it easier for those people to have continuity in their treatment situations and prohibits a new plan from denying coverage as long as the patient has prior, continuous coverage in place.

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