Creditable Coverage
What Does Creditable Coverage Mean?
Creditable coverage refers to the coverage provided by a previous health insurance plan before enrolling in a new one. Typically, pre-existing health conditions (conditions for which treatment was sought within six months prior to enrollment) are excluded from coverage for one year under a new health plan. However, under the Health Insurance Portability and Accountability Act (HIPAA), if you apply for new coverage within 63 days of having previous coverage, the new plan cannot impose this exclusion. In other words, to avoid the exclusion, the gap between the two policies must not exceed 63 days.
Insuranceopedia Explains Creditable Coverage
For example, John transferred to another company that offered better career opportunities and benefits. Six weeks after his resignation, he started his new position, which provided a similar health benefit that covered his entire family. John has high blood pressure, and his wife and two children have a history of asthma.
John worked for his former company for three full years. His transfer temporarily interrupted his health coverage for six weeks, or a total of 42 days. Since the lapse in coverage was less than 63 days, John qualifies for creditable coverage under HIPAA, effectively offsetting the new plan’s exclusion for pre-existing conditions.
