Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Man with HIPAA paperwork

HIPAA stands for Health Insurance Portability and Accountability Act and was enacted by Congress in 1996 as a step to improve health care.

HIPAA was passed to improve consumer options to continue coverage.

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The act was designed to fight against inefficiency, fraud and abuse in health care claims which were driving up health insurance costs, to protect the privacy of health records for Americans, and to reduce costs through administrative ease and electronic standardization of records.

The Health Insurance Portability and Accountability Act has five parts to the legislation.

Part one of HIPAA essentially is to protect individuals and their families with continued coverage when they change or lose a job.

Part two of HIPAA was drafted to develop national standards for care and privacy for consumer’s medical records as well as to provide administrative ease to both providers and insurance companies.

Part three of HIPAA was developed to encourage the use of pre-tax medical savings accounts. Finally, parts four and five focused on reform that affected insurance companies and employers tax revenues for life insurance premiums.

How does HIPAA affect you as a consumer?

It affects you in many ways. HIPAA protects you if you lose or change jobs by requiring your employer to offer COBRA insurance, which is intermediate insurance that will cover you until your next health insurance policy kicks in.

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Why is COBRA so important?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. This allows you to remain on your company’s health insurance plan for a certain period of time, given certain conditions. This is to ensure that you are not without the opportunity to obtain insurance when between jobs. Your insurance rates will be higher with COBRA, but still better than being without any coverage at all.

Why is the portability component of HIPAA so important?

The portability component of HIPAA is so important because it prevent people with pre-existing conditions from losing health care coverage when they change jobs.

Imagine that you have health insurance coverage that pays for prescription medication for your blood pressure or heart medicine. If you switch to new company their group insurance provider could deny you coverage for a full year until HIPAA was enacted.

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Why is the accountability component of HIPAA so important?

The accountability component of HIPAA is so important because HIPAA also protects your health records. You may recognize this term from filling out HIPAA compliance forms at your doctor’s office. The physician is required to let you know about HIPAA, the privacy obligations that office has to you as a patient, and make sure that you sign off certifying your understanding. This law helps to enforce the doctor-patient confidentiality clause, but further, it makes sure that your information is protected even better than before.

Not every one loves the act. Many administrators complain that it is just one more piece of red tape that makes it more difficult to obtain the health records of patients when needed.

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Should I sign the HIPAA paperwork?

After you read through the paperwork and understand exactly who does and does not have the right to access your records you will probably want to sign. This is protection in your favor and extends your coverage as needed.

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