Health insurance is regulated by various types of laws from the federal government as well as individual states. State laws tend to focus on financial standards, appropriate market conduct as well as the accessibility, affordability and content of health insurance products. The regulation of health insurance varies by state including the coverages that are available for purchase. The main focus of state regulation is the improvement of access to health insurance coverage.
Guaranteed Issue
Many states have laws that prevent health insurers from excluding coverage based on the status of an individual's health. These laws tend to focus on small group health policies. As more insurance carriers began to restrict access to insurance because of health issues states began to enact various types of guaranteed-issue laws. These laws required health insurers to issues policies to new members of a business's group health insurance plan regardless of their medical condition. In 1996 this guaranteed-issue requirement became a federal law with the passage of the Health Insurance Portability and Accountability Act (HIPAA).
Renewability
The renewability of an insurance policy is the ability to continue with an insurance policy that is currently in force. When insurance companies began to cancel or non-renew policies because of medical conditions states began passing guaranteed renewability laws. These laws stated that an insurance coverage cannot be canceled or non-renewed because of an illness or any medical claim on a policy. Most states had some kind of guaranteed renewability law by the middle of the 1990s. With the passage of HIPAA all individual and group health insurance policies were required to have renewabilty guaranteed.
Marketing Practices
Insurers are prevented from certain types of marketing based on laws regulating unfair marketing practices. This meant that insurers needed to market their policies to all types of small businesses as well as individuals and not just to businesses with healthy workers. Marketing to only healthy workers was seen as an attempt to avoid guaranteed issue and renewability requirements. Currently, there is no federal law that regulates this type of marketing activity.
Special Populations
Special populations are groups of people such as newborn children and dependent handicapped individuals. Many states have laws that prevent insurers from canceling a health insurance policy for a handicapped dependent individual. The individual would need to have been a minor that was covered on his parent's health insurance policy. There is also a law in all states that requires insurers to provide health coverage for newborn children on their parent's policy for up to thirty days.
Continuation Laws
Many states have health insurance continuation laws that are designed to provide the option for individuals to continue on their former employer's group health plan. These continuation laws are similar to the Consolidated Omnibus Budget Reconciliation Act (COBRA) but apply to small businesses that are not subject to COBRA. There are currently 38 states that have some kind of continuation law that provides shorter coverage or provides more benefits than COBRA.
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