Ms. Franzoi recently answered another reader's question about insurance and gave the reader some advice regarding what kind of policies to apply for. She suggested seeking a HIPAA policy if one's COBRA is about to run out and one is not eligible for what I assume is "regular" insurance due to a medical condition. What is a HIPAA policy? I'm familiar with the enactment of HIPAA, but thought it pertained to regular COBRA insurance (in addition to privacy practices). I didn't realize there were special policies out there referred to by that term.

An insurance company that sells individual health policies must extend coverage to an individual who has had group coverage (such as COBRA) as long as the individual did not have a break in coverage that is greater than 63 days. The plan that is extended cannot apply a pre-exisitng condition clause to that individual that is greater than 12 months. And with respect to those 12 months, the insurer must recognize prior periods of coverage (called Creditable Coverage) towards that pre-existing exclusion period. For example, after 18 months of COBRA, if you apply for an individual policy and have not had a break in coverage of 63 days or more, the new policy would have to recognize your 18 months of Creditable Coverage under your COBRA policy towards any pre-existing exclusion period it might have. Therefore, none would apply to you. This is part of a law, the Health Insurance Portability and Accountability Act of 1996 (HIPAA). If you applied for a policy with the insurer, although they could deny you coverage under a policy issued at standard rates, they would have to offer you a HIPAA policy (as long as you did not have a break in coverage of 63 days). HIPAA policies are typically more expensive and their level of benefits differ from that of a standard-rated policy.