Creditable Coverage

Updated: 09 June 2023

What Does Creditable Coverage Mean?

Creditable coverage refers to coverage under a previous health insurance plan prior to enrollment in a new one. Ordinarily, under a new health plan, pre-existing health conditions (conditions for which treatment is sought within six months prior to enrollment), are excluded from the coverage within a year. Under a new law, the Health Insurance Portability and Accountability Act (HIPAA), if you applied for new coverage within 63 days of having previous coverage, the new plan cannot impose the exclusion. In other words, to offset the exclusion, the period of lapsed coverage must not be more than 63 days between the policies.

Insuranceopedia Explains Creditable Coverage

For example, John transfers to another company that offered better career opportunities and benefits. Six weeks after his resignation, he started his new position, which entitled him to a similar health benefit that covered his entire family. John has high blood pressure, and his wife and two children have previous records of asthma.

John spent three full years at his former company. His transfer temporarily put a stop to his health coverage for six weeks or a total of 42 days. Since the lapse period of no coverage is less than 63 days, John is entitled to creditable coverage under HIPAA, thereby effectively offsetting the new plan’s “pre-existing conditions” exclusion.

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