Under HIPAA, credible coverage affects preexisting condition exclusions by:

• A. Credible coverage reduces the preexisting condition exclusion
• B. Credible coverage has no effect on preexisting condition exclusions
• C. Credible coverage increases the exclusion
• D. Credible coverage is unrelated to eligibility

Answer: (A)

Creditable coverage is prior health coverage that counts toward meeting the preexisting condition exclusion in a new health plan. When you enroll in a new policy, the time you’ve been covered before can reduce the length of the preexisting condition exclusion that the new plan may apply. The more credible coverage you had, the shorter the exclusion, and in some cases you can have no preexisting-condition exclusion at all if your prior coverage is sufficient.

For example, if a new plan could apply a 12-month preexisting condition exclusion but you had 6 months of credible coverage right before enrolling, that 6 months can be used to reduce the exclusion to 6 months. If you had 12 months or more of credible coverage, you might avoid the exclusion entirely. (Note: a gap in coverage longer than a certain period can prevent prior coverage from reducing the exclusion, so continuous credible coverage matters.)

So credible coverage reduces the preexisting condition exclusion.