What Is the HIPPA Law?

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HIPAA stands for "Health Insurance Portability and Accountability Act." Bill Clinton signed the bill into law on August 21, 1996. It is said to be the most significant act of Federal legislation to affect the health care industry since Medicare and Medicaid were rolled out in 1965. The law officially became effective on July 1, 1997.


The HIPAA law is a combination of regulations aimed at reducing waste, fraud and abuse in the health care industry. It is intended to simplify the industry as a whole. HIPAA ensures continued insurance coverage for American workers and their families as they change jobs. It also enacts strict security standards for the protection of personal health information. Besides offering federally mandated protection for personal information, the law is expected to significantly lower the number of fraudulent practices in the health industry as well as to improve data storage systems.


The HIPAA law has changed the face of the health insurance industry. Prior to the HIPAA law, moving from one job to the next meant that your new insurance company could refuse to pay for anything related to previously diagnosed medical issues based on the "pre-existing condition" clause that most carried. This clause usually prohibited payment for services needed for pre-existing medical conditions for at least one year, during which time the insured person continued to pay his full premiums.

Read More: What Are Some Pros & Cons of HIPAA?


The HIPAA law does more than prohibit pre-existing condition clauses. It also requires that insurance is offered to all employees (with the exception of very small businesses) regardless of health information. Insurance providers are also forbidden to charge higher premiums based on the health information of a company's employees. This way, health insurance coverage remains affordable even through life changes. The idea is to prevent hard working people from going without health insurance due to job loss or change.


The HIPAA law also addresses the exchange of health information between health care providers, pharmacies, health insurance companies, employers, and patients. With the advent of technology and ease of information transfer, it's really easy to breach a patient's privacy---whether intentionally or otherwise. The Department of Health and Human Services (HHA) is empowered by HIPAA to create strict standard policies for the storage, maintenance, and transfer of private information. This includes a standard and specific coding system to identify medical and administrative expenses. The HHA also provides regulations for obtaining health information and requires the protection of privacy in regard to health and other personal information.


You've probably been given a HIPAA pamphlet and a form to sign by your medical provider. The pamphlet outlines the HIPAA law as it applies to your medical and personal records. The form is simply an acknowledgement that you've received the information, so don't worry that you're signing away your rights or agreeing to anything. While it may be tempting to just sign the form, take a few minutes to read and understand the pamphlet and ask questions if there's anything that concerns you.