Federal agencies are rushing young adult dependent coverage interim final rules into effect without going through the usual comment period.

The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, has posted a preliminary version of the interim final rules on its website.

The Internal Revenue Service, an arm of the U.S. Treasury Department, and the Office of Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services also worked on the rules.

The agencies are set to publish the final version of the interim rules in the Federal Register Thursday.

The rules implement a provision in the new federal Affordable Care Act — the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act — that requires insurers to let insured parents keep children on the parents’ health coverage until the children are 26.

The ACA young adult coverage provision is set to take effect Sept. 23, but most major carriers say they will implement the provision earlier.

Federal agencies normally provide time for members of the public to comment before implementing major regulations. The agencies are implementing the young adult coverage interim rules before the comments come in because the secretary of Labor, HHS and the Treasury “have determined that it would be impracticable and contrary to the public interest to delay putting the provisions in these interim final regulations in place,” officials write in a preamble to the interim rules. “Having a binding rule in effect is critical to ensuring that individuals entitled to the new protections being implemented have these protections uniformly applied.”

Officials are estimating that, in 2011, the program will lead to about 1.2 million young adults having new health coverage, and that about 650,000 of those young adults will be people who were previously uninsured.

The number of uninsured young adults who gain coverage through the program in 2011 could range from 200,000 to about 1.6 million, officials estimate.

Although officials use the term “dependent” in connection with the regulation, group health plans can no longer use factors such as whether a child of an insured is a tax dependent in deciding whether to issue coverage to that child, officials write.

“Examples of factors that cannot be used for defining dependent for purposes of eligibility (or continued eligibility) include financial dependency on the participant or primary subscriber (or any other person), residency with the participant or primary subscriber (or any other person), student status, employment, eligibility for other coverage, or any combination of these,” officials write.

Implementing the young adult coverage program will require that the children who were denied coverage, or whose coverage ended, receive alerts about the new enrollment opportunity, officials write.

Federal agencies want to hear ideas about ways to minimize the burden on the notice senders and on the individuals who must fill out the notices, officials write.

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House Bill 2851 (HR 2851), otherwise known as Michelle’s Law, is a federal law that requires health plans and issuers of health insurance coverage to continue coverage for college students who are forced to take a leave of absence or change their enrollment status due to a serious illness or injury. This law applies to fully insured and self-funded (ERISA and non-ERISA) Group and Individual medical, pharmacy, behavioral health and, when part of the health plan, dental and vision coverage.

The requirements of the new law are effective October 9, 2009, and apply to all policies that are issued or renewed on or after that date. The following is a list of requirements:

• A dependent child who is eligible for continued coverage under Michelle’s Law is entitled to the same level of benefits during a medically necessary leave of absence as would be available to the child if he/she had not taken a leave of absence.
• Additionally, if the child experiences a change in coverage during the leave of absence, the child remains eligible for continued coverage under the changed plan to the same extent that he/she would have been eligible for continued coverage under the prior plan, so long as the changed plan continues to provide coverage for dependent children as beneficiaries.

The coverage must be continued until the earlier of:

• the date that is one year after the first day of the medically necessary leave of absence (or change in enrollment); or
• the date on which such coverage would otherwise terminate under the terms of the plan or health insurance coverage. For instance, if a dependent child on medical leave attains the maximum dependent age under the terms of the group health plan, their coverage will terminate.

Comparison to State Law

• This law is similar to a New Hampshire law which was enacted by the New Hampshire Legislature in 2006. The New Hampshire law was named after Michelle Morse, a college student who had to continue her studies on a full-time basis after being diagnosed with cancer in order to avoid losing health coverage under her parents’ plan.
• Since 2006, several other states have adopted their own versions of Michelle’s Law, including California, Maine, Vermont, Virginia and Wisconsin. New York has a similar law, which was enacted in 1999.
• States are entitled to enact more demanding laws, to the extent that they are not inconsistent with HR 2851. State laws generally apply to fully insured plans and, possibly self-funded non-ERISA plans. Self-funded ERISA plans will only be subject to the federal Michelle’s Law.
• HR 2851 applies only when the dependent is eligible under the terms of the plan or health insurance coverage by virtue of his or her student status. It will not have an impact on state laws that generally require coverage for all dependents through a specified age regardless of student status.

Frequently Asked Questions about Michelle’s Law:

1. What is the basic structure of the new law?

This law requires health care plans and issuers of health
insurance coverage to continue coverage for college
students who are forced to take a leave of absence or change
their enrollment status due to serious illness or injury.

2. What types of health coverage are subject to Michelle’s Law?

This law applies to Group and Individual Medical (HMO,
PPO, Indemnity), Pharmacy, Dental, Behavioral Health and
Vision. Michelle’s Law does not apply to Medicare Supplement.
Funding Type: The law applies to fully insured, minimum
premium insured, self-funded non-ERISA and self-funded
ERISA plans.

3. What takes priority – state or federal parity legislation?

Whichever is the more demanding will prevail. The state
laws remain subject to the broad preemption language
in ERISA, and will generally only apply to fully insured
plans, and possibly self-funded non-ERISA plans. Standard
preemption provisions of state law apply; therefore,
Michelle’s Law would preempt state insurance law to the
extent that state law would prevent the application of
Michelle’s Law.

4. The law states that an eligible dependent may continue coverage for up to 12 months. Are we going to cover the entire 12 months, as required by the mandate?

Yes. We will cover the entire 12 months as required by the
mandate. The coverage must continue until the earlier of
the date that is 1 year after the first day of the leave or the
date the coverage would have otherwise terminated.

5. What is the expectation when the 12-month continuance eclipses the dependent’s birth date and puts the dependent over the maximum student age?

Michelle’s Law applies only when the dependent is eligible
under the terms of the plan or health insurance coverage
by virtue of his or her student status. This means that when
the plan’s maximum policy age is met, the student’s coverage
will terminate and they will be offered continuation coverage
through COBRA, state continuation or a conversion policy,
if available.

6. What does the federal law define as the maximum student age?

Michelle’s Law will not have an impact on state laws that
generally require coverage for all dependents, regardless
of student status, through a specified age. Michelle’s Law
applies only when the dependent is eligible under the terms
of the plan or health insurance coverage by virtue of his or
her student status. This means that when the plan’s
maximum policy age is met, the student’s coverage will
terminate and they will be offered continuation coverage
through COBRA, state continuation or a conversion policy,
if available.

7. What defines a serious illness?
Serious illness is defined by medical necessity which is
certified by the dependent’s physician.

8. Are pharmacy benefits considered under medical?

Yes. Pharmacy benefits should be considered under Medical.

9. When do the provisions of the federal Michelle’s Law
go into effect?
The requirements of the new law are effective October 9,
2009, and apply to all policies that are issued or renewed
on or after that date.

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Illinois law states continuation of health insurance coverage is only available to an employee or member who has been continuously insured under the group policy (and for similar benefits under any group policy which it replaced) during the entire 3 months period ending with such termination or reduction in hours below the minimum required by the group plan. However, for an employee or member who is involuntarily terminated between September 1, 2008 and December 31, 2009, continuation is available if the employee or member was insured under the group policy on the day prior to the termination.

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Tags: 2009 Illinois Continuation of Health Insurance Change, Illinois continuation law, Illinois Continuation Law Change, Illinois continuation of coverage

For existing Blue Cross and Blue Shield of Illinois individual plan members who were members prior to June 1, 2009, the open enrollment window to enroll dependents under age 26 (and eligible military veterans under age 30) will take place from January 1, 2010 through March 31, 2010. Please note that beginning in November 2008, BCBSIL stopped removing dependents from coverage who would have otherwise aged out.

This pertains to the new law in Illinois that allows young persons under age 26 to join their parents have health insurance policy as a dependent as long as they are not married until their 26th birthday. This also applies to young persons under the age of 30 whose mom or dad served in the military as long as the young person lives in Illinois and is unmarried.

To obtain Blue Cross and Blue Shield of Illinois individual plans and quotes, visit the BCBSIL website.

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Tags: 2009 Illinois dependent age limitation, BCBSIL individual plans for dependents, Blue Cross and Blue Shield of Illinois under 26, Blue Cross Blue Shield of Illinois - dependent law change, Illinois dependent age change, Illinois health insurance dependent law change

As we head into July, the federal debate has become more defined as four of the five Congressional committees with jurisdiction over health reform have released draft health reform bills. On June 19th , the Education and Labor, Energy and Commerce, and Ways and Means Committees in the House of Representatives released a joint tri-committee draft health reform bill. Earlier in June, the Senate Health, Education, Labor, and Pensions (HELP) Committee released its health reform bill. The final committee with jurisdiction over health reform, the Senate Finance Committee, is expected to release its health reform bill soon after the 4th of July Congressional recess. House and Senate leadership hope to pass legislation in their respective chambers before August and get a final compromise bill to the President in October. Key components of the recently released House tri-committee bill include:

National Health Insurance Exchange: By 2013, a National Health Insurance Exchange is to be established to replace the current individual health insurance market and provide an option for employers and public program enrollees in Medicaid and the Children’s Health Insurance Program (CHIP). States would be allowed to apply to the federal government to establish state or regional exchanges. The Exchange is to establish health plan standards, facilitate the provision of comparative information, enrollment, billing, and other administrative functions, administer coverage subsidies, and respond to consumer grievances.

Public Plan: No later than 2013, the Department of Health and Human Services is to develop and offer a Public Plan through the Exchange to compete with private insurers. The Public Plan is to comply with the same requirements as other private health plans participating in the Exchange, but provider payments from the Public Plan are to be similar to Medicare rates and providers participating in Medicare would be required to participate in the Public Plan for five years. The federal government would provide start up funding for the Public Plan, but it must become self-sustaining after initial start up.

Insurance Market Reform: The legislation requires changes to the individual and group markets that prohibit pre-existing condition exclusions, prohibit premium rating based on health status, gender, or occupation and limit rating by age, require guarantee issue and renewal of coverage, require a medical loss ratio of 85 percent, prohibit annual or lifetime benefit limits and limit annual cost sharing, establish a Benefits Advisory Committee to recommend a minimum benefit package and three additional standard benefit plans, and establish a risk spreading mechanism to minimize unequal risk selection in health plans.

Coverage Mandates: By 2013, all individuals would be required to have health insurance coverage. Those not complying with the mandate are to be assessed a tax up to the cost of the minimum benefit plan. Exceptions to the mandate are granted for religious objection and financial hardship. Employers would be required to provide 72.5 percent for single coverage and 65 percent for family coverage of the lowest cost minimum benefit set plan or pay an eight percent tax on wages. Certain small businesses with payroll below a set level would be exempt.

Coverage Subsidies: Sliding scale subsidies varying by income would be available through the Exchange for individuals and families with incomes below 400 percent of the federal poverty level ($88,000 for a family of four) so that premiums would not exceed 10 percent of income. Sliding scale subsidies varying by employee income and employer size worth up to 50 percent of premium would be available to employers with less than 25 employees whose average wage is below $40,000.

Medicaid Reform: The legislation expands Medicaid eligibility for all individuals to 133 percent of the federal poverty level ($14,000 for an individual) and requires an 85 percent medical loss ratio for Medicaid managed care organizations. It also establishes new preventive services benefits, increases payments for primary care, and implements a medical home pilot project to reduce costs and improve outcomes through use of preventive services and care coordination.

Medicare Reform: The legislation restructures provider payment rates and requires the Department of Health and Human Services to develop new payment methods to promote coordinated care and reward quality and efficiency in areas such as hospital readmissions, post-acute care, imaging, and primary care. The bill reduces payment rates and establishes an 85 percent medical loss ratio for Medicare Advantage plans. The legislation also eliminates the coverage gap (donut hole) in Part D by 2023 and reauthorizes Special Needs Plans (SNPs) that integrate care for beneficiaries with coverage through Medicaid and Medicare.

Other Health System Reforms: The legislation also makes investments in the health care workforce to improve access to primary care, makes investments in prevention and public health programs, establishes national centers for quality improvement and comparative effectiveness research, establishes mechanisms to simplify administrative functions, and enhances efforts to reduce fraud, waste, and abuse.

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Tags: House Health Committee bill, House Health Subcomittee, House insurance bill, House of representative insurance proposal

The House and Senate have approved a compromise budget resolution that sets parameters for spending and revenue legislation. As requested by the President, the budget resolution includes a reserve fund for health care reform initiatives that must be deficit-neutral for fiscal years 2009 through 2014 or fiscal years 2009 through 2019. The resolution allows Medicare physician payment legislation, that would likely prevent cuts to physician payment rates for two years, to be exempt from the deficit-neutral requirement.

The budget resolution also allows for the ability to consider health care reform legislation under the reconciliation process. Reconciliation is a procedure that Congress may use to make it easier to pass budget bills related to tax and entitlement spending programs. A reconciliation bill can not be filibustered as debate is limited to 20 hours, and this allows a bill to be passed quickly with a simple majority vote.

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Tags: Health care reform, health care reform agreement

1) What is the effective date of changes mandated by Public Act 95-0958?

The changes need to be reflected in individual and group health insurance policies and HMO contracts as they are delivered, issued, or renewed on and after June 1, 2009. Policies in force prior to June 1, 2009, will have to reflect the changes on the first renewal date after June 1, 2009, and no later than May 31, 2010.

2) Does the law require group and individual policies to provide dependent coverage?

No. The law only applies if dependent coverage is included in the policy.

3) Who must be covered under the law?

Policies that include dependent coverage must allow unmarried dependents under the age of 26 to apply for coverage. In addition, policies must allow military veteran dependents under age 30 to apply for coverage if the military veterans:1) are Illinois residents; 2) are not married; 3) have served in the active or reserve components of the U.S. Armed Forces (which includes the National Guard); and 4) have received a release or discharge other than a dishonorable discharge.

To prove that they have served in the U.S. Armed Forces and received a release or discharge other than a dishonorable discharge, veterans must submit to insurers a DD2-14 (Member 4 or 6), otherwise known as a “Certificate of Release or Discharge from Active Duty.”

A policy shall not condition eligibility for dependent coverage on enrollment in any educational institution.

4) Do covered dependents need to re-apply for coverage?

No. After June 1, 2009, dependents covered under a policy at the time of that policy’s delivery, issuance or renewal do not need to re-apply. After June 1, 2009, dependents not covered at the policy’s delivery, issuance or renewal may need to re-apply for coverage.

5) When will dependents be allowed to enroll?

a) Policies in force as of June 1, 2009 must provide for a 90-day open enrollment period for all dependents that meet the criteria established in (3) beginning on the policy renewal date, but not later than May 31, 2010. During the initial 90-day enrollment period, requirements for creditable coverage, continuous coverage or breaks in coverage may not be applied, but preexisting condition limitations may be applied if creditable coverage has not been established.

b) Policies issued on or after June 1, 2009 must provide for a 90-day open enrollment period for all dependents that meet the criteria established in (3). The 90-day open enrollment requirement only applies to policies issued on or before May 31, 2010. During the initial 90-day enrollment period, requirements for creditable coverage, continuous coverage or breaks in coverage may not be applied, but preexisting condition limitations may be applied if creditable coverage has not been established.

c) After the initial 90-day open enrollment period, insurers must provide eligible dependents not already covered under the policy annual enrollment during an open enrollment period. For policies that do not currently provide for an open enrollment period, enrollment must be allowed for the 30-day period prior to the policy’s annual renewal date or anniversary date if the policy does not have a renewal date. During this annual enrollment period the insurer may decline coverage if the dependent does not meet the requirement of 90 days of continuous coverage without a break in coverage of more than 63 days. If the dependent meets these requirements, preexisting condition limitations may not be imposed.

d) This law does not change HIPAA special enrollment requirements. As such, an eligible dependent that meets the limiting age requirements of P.A. 095-0958, may be added to a group policy if a HIPAA special enrollment event occurs.

6) Can the insurer decline coverage for eligible dependents due to health conditions?

No policy may decline coverage to an eligible dependent due to age (as defined in P.A. 095-0958), health status, or enrollment in an educational institution. The law does not otherwise restrict the definition of dependent. However, the Division will take appropriate enforcement action if the Division finds that an insurer imposed any eligibility requirement as a proxy for age (e.g., restricting coverage based on IRS dependency rules).

During the annual enrollment period, the insurer may decline coverage if the dependent does not meet the requirement of 90 days of continuous coverage without a break in coverage of more than 63 days. If the dependent meets these requirements, preexisting condition limitations may not be imposed.

7) Will companies be required to amend existing policies in order to comply with new enrollment and eligibility requirements?

Yes. Companies must amend an existing policy if the policy does not currently contain a provision for annual open enrollment or if the definition of “dependent” does not conform with these new requirements. For example, an individual policy that is guaranteed renewable and contains no open enrollment provision and has no renewal date must be amended to establish an enrollment period for the 30-day period preceding the annual anniversary date. In addition, if the policy’s definition of dependent varies from the requirements established by this new law, that definition will need to be amended.

Any required amendments to in-force polices must be incorporated by way of a rider that must be filed with and approved by the Director.

After the effective date of the new law, policies will either need to be refiled or amended to accommodate these new requirements or must be issued with a rider in order to be in compliance.

8.) Does the dependent coverage law apply to dental and vision plans?

Yes. Because the new law applies to all accident and health plans, the dependent coverage requirement applies to dental and vision plans.

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Tags: HB 5285, Illinois dependent age increase, Illinois dependent age limit change, Illinois dependent age limit frequently asked questions, Illinois depenent age law, Illinois insurance dependent age law

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 requires that group health plans and group health insurers apply the same treatment and financial limits to mental health and substance use disorder benefits as they do to medical and surgical benefits. These FAQs are intended to provide an overview of the Mental Health Parity Act specifically as it applies to health insurance plans.

1. What is the basic structure of the new law?

The Mental Health Parity Act amends the existing federal mental health parity requirements found in the Employee Retirement Income Security Act (ERISA), Public Health Service Act (PHSA) and Internal Revenue Code (IRC).

2. What types of health coverage are subject to the Mental Health Parity Act?

The Act applies to ERISA group health plans and to health insurers that provide coverage to group health plans. Medicaid health plans and the State Children’s Health Insurance Program (SCHIP) are also subject to the Mental Health Parity Act. Within UniCare, this includes all of our group health plans (insured and self-funded; branded and unbranded; and National Accounts), FEP, State-Sponsored and Medicare Advantage (if offered through a large group ERISA health plan). Insurers that provide “excepted benefits” to group health plans (such as disability income insurance and long-term care and Medicare supplemental insurance coverage that is offered separately) are not subject to the new law.

3. Are all employers subject to the new law?

Only those employers with 51 or more employees are subject to this law. Employers with 50 or fewer employees, including companies in states that apply group insurance laws to “groups of one,” are exempted from the law.

4. Does the Mental Health Parity Act require plans to cover mental health or substance use disorder benefits?

No. The Mental Health Parity Act does not mandate coverage of mental health or substance use disorder benefits. Health insurance carriers may, however, be subject to state laws that mandate coverage for some or all of these benefits.

5. What takes priority, state or federal parity legislation?

Stronger state mental health parity laws are not preempted by the federal law. If, for example, a state law requires parity for all diagnoses listed in the Diagnostic and Statistical Manual of Mental Disorders (DSM), this state requirement remains in place, as do state laws that require parity for specific diagnoses (usually, a list of severe mental illnesses). In addition, the act does not override an obligation created in state law to either cover or offer mental health benefits. If a state parity law does not include substance use disorder, but a plan covers substance use disorder, the coverage must be at the federal parity level.

6. What diagnoses are included?

The act imposes no requirements as to what mental health and substance use disorder conditions must be covered and did not select the DSM as the source for included codes. (Subject to state mandates when applicable as noted above.)

7. How does the Mental Health Parity Act govern the provision of mental health or substance use disorder benefits?

Health insurance plans that provide coverage for mental health or substance use disorder benefits must do the following:

Annual and Lifetime Limits
In general, the existing parity requirements applicable to annual and lifetime financial and treatment limits were unchanged. As a result, if the health insurance plan includes an aggregate annual or lifetime financial or treatment limit on substantially all medical and surgical benefits, it must either:

• apply the same applicable limits to mental health and substance use disorder benefits or
• not include an aggregate annual or lifetime financial or treatment limit for mental health or
  substance use disorder benefits that is less than the limits applied to medical and surgical benefits

Financial Requirements
“Financial requirements” are defined in the Mental Health Parity Act as including deductibles, copayments, coinsurance and out-of-pocket expenses. The financial requirements applied to mental health or substance use disorder benefits must not be more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits. In addition, the health insurance plan may not apply a separate financial requirement to mental health or substance use disorder benefits that is not applicable to medical and surgical benefits.

Treatment Limitations
“Treatment limitations” are defined as including limits on the frequency of treatment, number of visits or days of coverage or other similar limits on the scope or duration of treatment. The treatment limitations applied to mental health or substance use disorder benefits must not be more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits. In addition, the health insurance plan may not apply a separate treatment limit to mental health or substance use disorder benefits that is not applicable to medical and surgical benefits.

How does the new law affect out-of-network coverage?

Health insurance plans that cover mental health or substance use disorder benefits must provide out of- network coverage for such benefits if the plan provides out-of-network coverage for medical and surgical benefits. The parity requirements apply to the out-of-network coverage for medical and surgical benefits as well as mental health and substance use disorder benefits.

9. Can utilization reviews be applied?

Health insurance plans are not restricted from applying utilization review, medical necessity determinations or other tools to encourage appropriate and effective care. However, the act requires disclosure of the criteria for medical necessity determinations (and reasons for denials of coverage) regarding mental health or substance use disorder benefits to any current or potential participant, beneficiary or contracting provider upon request.

10. When do the provisions of the Mental Health Parity Act go into effect?

The requirements of the new law are effective for plan years beginning on or after one year from the date the legislation was signed into law (October 3, 2008). As a result, the provisions apply to new contracts and renewals on or after October 3, 2009.

• For groups with plan year benefits, the parity changes will take effect on the first renewal after
  10/3/2009. For groups with calendar year benefits, the parity benefits will take effect on a January 1, 2010 purchase or renewal.
• For collective bargaining agreement plans, the effective date is the later of January 1, 2010 or
  the date the collective bargaining agreement expires.

11. Are self-insured (ASO) groups included?

Yes. Self-insured groups (ASO), which are typically exempt from state regulations, are subject to the federal mental health parity legislation. These plans were previously subject to the 1996 federal parity law and are now included in this new legislation.

12. What are the cost implications of this act for an ASO group?

Actuarial analyses conducted both internally and externally estimate the cost impact for employers that currently comply with state parity mandates to be in the 0.2 – 2% range.The primary external source for this information is a Milliman Actuarial Study4, which projects cost increases of 0.1% to 0.6% depending on the level of management in place. The Congressional Budget Office has projected an average increase of 0.4% for plans. Please note that the figures in the Milliman study do reflect a scenario in which the copay for a Behavioral Health provider changes from $25 to $10.

The magnitude of the cost impact will depend on several factors, including the group’s current costsharing, whether or not out-of-network benefits are currently excluded, and whether or not out-patient behavioral health services are currently managed.

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Q1: What is the new COBRA subsidy provision contained in the stimulus package signed by the President?

The stimulus package, which was enacted as the American Recovery and Reinvestment Act of 2009 (ARRA) temporarily reduces the premium for COBRA coverage for eligible individuals. COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) allows certain people to extend employer-provided group health coverage, if they would otherwise lose the coverage due to certain events such as divorce or loss of a job.

Individuals who are eligible for COBRA coverage because of their own or a family member’s involuntary termination from employment that occurred from September 1, 2008 through December 31, 2009 and who elect COBRA, may be eligible to pay a reduced premium. Eligible individuals pay only 35% of the full COBRA premiums under their plans for up to 9 months. The employer (or other responsible entity) may recover the remaining 65% of the premium by taking the subsidy amount as a credit on its quarterly employment tax return. This premium reduction is generally available for continuation coverage under the Federal COBRA provisions, as well as for group health insurance coverage under state continuation coverage laws.

If the individual was offered Federal COBRA continuation coverage as a result of an involuntary termination of employment that occurred at any time from September 1, 2008 through Feburary 16, 2009, and that individual declined to take COBRA at that time, or elected COBRA and later discontinued it, he/she may have another opportunity to elect COBRA coverage and pay a reduced premium.
________________________________________

Q2: What plans are subject to the premium reduction provisions?

The COBRA premium reduction provisions apply to all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules under the Employee Retirement Income Security Act of 1974 (ERISA). They also apply to plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act, and plans in the Federal Employee Health Benefits Program (FEHBP). The premium reduction is also available for group health insurance that is required by State law to provide comparable continuation coverage (such as “mini-COBRA”).
________________________________________
Q3: Who is eligible to receive the COBRA premium reduction?

ARRA makes the premium reduction available for “assistance eligible individuals.” An Assistance Eligible Individual is a COBRA qualified beneficiary who meets the following requirements:
Is eligible for COBRA continuation coverage at any time during the period from September 1, 2008 through December 31, 2009;
Elects COBRA coverage (when first offered or during the additional election period provided by ARRA); and
The COBRA election opportunity relates to an involuntary termination of employment that occurred at some time from September 1, 2008 through December 31, 2009. However, if the individual is eligible for other group health coverage (such as through a new employer’s plan or a spouse’s plan) or Medicare he/she is not eligible for the premium reduction. If the employee’s termination of employment was for gross misconduct, the employee and any dependents generally would not qualify for COBRA or the premium reduction.

Electing the premium reduction disqualifies the individual for the Health Coverage Tax Credit. Additionally, certain high-income individual may have to repay the amount of the premium reduction through an increase in their income taxes. If the amount earned for the year is more than $125,000 (or $250,000 for married couples filing a joint federal income tax return), individuals may have to repay all or part of the premium reduction through an increase in their income tax liability for the year. For more information, visit the IRS web page on ARRA.
________________________________________
Q4: Who is eligible for the second election opportunity for COBRA coverage?

Qualified beneficiaries whose qualifying event was an involuntary termination of employment during the period from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA but are no longer enrolled (for example, those who dropped COBRA coverage because they were unable to continue paying the premium) have a new, second election opportunity. Individuals eligible for the extended COBRA election period must receive a notice informing them of this opportunity. This notice must be provided by April 18, 2009 and individuals have 60 days after the notice is provided to elect COBRA. However, this special election period does not extend the period of COBRA continuation coverage beyond the original maximum period (generally 18 months from the employee’s involuntary termination). COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009.

Under ARRA, this special election period opportunity is not required to be provided with respect to State continuation coverage that is provided pursuant to State insurance law. A State can take action, however, to provide an additional election period in its continuation coverage program for individuals involuntarily terminated from September 1, 2008 through February 16, 2009 in order for them to request premium assistance based upon involuntary termination occurring during that period. For more information on rights and responsibilities regarding election periods under State law, contact your State insurance commissioner’s office or CMS.

________________________________________
Q5: Does ARRA impose any new notice requirements?

Yes, plans and issuers are required to notify qualified beneficiaries regarding the premium reduction and other information about their rights under ARRA as follows:
A general notice to all qualified beneficiaries, whether they are currently enrolled in COBRA coverage or not, who have a qualifying event during the period from September 1, 2008 through December 31, 2009. This notice may be provided separately or with the COBRA election notice following a COBRA qualifying event.
A notice of the extended COBRA election period to any Assistance Eligible Individual (or any individual who would be an Assistance Eligible Individual if a COBRA continuation coverage election were in effect); who had a qualifying event at any time from September 1, 2008 through February 16, 2009; and who either did not elect COBRA continuation coverage or who elected but subsequently discontinued COBRA. This notice must be provided within 60 days following February 17, 2009. Unless specifically modified by ARRA, the existing COBRA notice manner and timing requirements continue to apply.

Under the State programs, the issuer of the group health plan must provide the notice to qualified beneficiaries with the information on how to apply for the premium reduction. These notices must be provided within the time required by State law.
________________________________________
Q6: What information must the notices include?

The notices must include the following information:
The forms necessary for establishing eligibility for the premium reduction;
Contact information for the plan administrator or other person maintaining relevant information in connection with the premium reduction;

• A description of the second election period (if applicable to the individual);
• A description of the requirement that the Assistance Eligible Individual notify the plan when he/she becomes eligible for coverage under another group health plan or Medicare and the penalty for failing to do so;
• A description of the right to receive the premium reduction and the conditions for entitlement; and
  If offered by the employer, a description of the option to enroll in a different coverage option available under the plan.

________________________________________
Q7: Has the DOL developed model notices?

Yes. The Department of Labor has developed model notices that are available.
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Q8: Can employees currently enrolled in COBRA continuation coverage switch to a different coverage option offered by the plan?

Yes. Group health plans are permitted, but not required, to allow qualified beneficiaries to enroll in coverage that is different than the coverage they had at the time of the qualifying event. ARRA provides that changing coverage will not cause an individual to be ineligible for the COBRA premium reduction, provided that:
The premium for the different coverage is the same or lower than the coverage the individual had at the time of the qualifying event;
The different coverage is also offered to active employees; and
The different coverage is not limited to only dental coverage, vision coverage, counseling coverage, a flexible spending account, or an on-site medical clinic.
If the plan permits individuals to change coverage options, the plan must provide the individuals with a notice of their opportunity to change. Individuals have 90 days to elect to change their coverage after the notice is provided.
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Q9: If the employee is required to pay only 35% of the premium, how is the employer reimbursed for the remaining 65% of the premium?

The employer (or other responsible entity) may recover the subsidy provided to Assistance Eligible Individuals by taking the subsidy amount as a credit on its IRS Form 941 quarterly employment tax return.
For more information on the Form 941 credit and the tax provisions in ARRA, visit the IRS web site.
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Q10: Does the premium reduction apply to premiums paid for periods of coverage prior to enactment of the ARRA?

No. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.
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Q11: If a plan receives payment of 100 percent of the premium for coverage for March or April from an individual determined to be eligible for the premium reduction, what does the plan do with the overpayment?

If an individual meets the requirements of an Assistance Eligible Individual and pays 100 percent of the premium in March or April for coverage in those months, the overpayment can be applied as a credit toward subsequent premiums as long as it can be used within 180 days of the overpayment. Otherwise, the overpayment must be reimbursed to the individual within 60 days of receipt.
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Q12: If the employer denies the employee’s request for the premium reduction does the employee have appeal rights?

Yes. Individuals who are denied treatment as Assistance Eligible Individuals and thus denied eligibility for the premium reduction may request an expedited review of the denial. The Department of Labor will handle appeals related to private sector employer plans subject to ERISA’s COBRA provisions. The Department of Health and Human Services will handle appeals for Federal, State, and local governmental employees, as well as appeals related to group health insurance coverage provided pursuant to state continuation coverage laws. The Departments must make a determination within 15 business days of receipt of a completed request for review. The Department of Labor is currently developing a process and an official application form that will be required to be completed for appeals. The process will include obtaining information from the employer, plan or insurer where appropriate. There will be a very short turn around time for submission of this information due to the short time for the determination.

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Tags: ARRA, COBRA stimulus, Employer COBRA Stimulus FAQ

With an upcoming State House vote expected on the Health Insurance Consumer Protection Act (House Bill 3923), legislation establishing key reforms on health insurance in Illinois, AARP released the following letter to State Legislators today alerting them that the Association will record roll call votes on the bill, and inform its 1.8 million members in Illinois how their legislator voted.

According to exit polls, roughly 1 out of every 4 voters in the past election was a member of AARP. Nearly 100% of AARP members are registered to vote, while over 70% vote in every local, state and federal election.

“Illinoisans need and deserve to know where their State Senators and Representatives stand on the issues, and AARP will ensure they have that information on issues such as health insurance reform,” said Robert Gallo, AARP Illinois Senior State Director.

With record numbers of people losing their employer-based health insurance and now purchasing coverage in the private insurance market, the Health Insurance Consumer Protection Act, introduced by Representative Greg Harris, will establish several critical consumer protections. The Senate’s vote on the legislation will also be tracked and reported as it happens.

The legislation will:

• Require insurance companies to spend at least 75% of premium dollars on medical care rather than on executives’ salaries, marketing, and profits.
• Establish an Office of Consumer Health Insurance to conduct external independent reviews of denied claims and rate increases.
• Simplify the complicated application process for both individual and small group markets by creating a standard application, making it easierfor them to get coverage.

AARP is urging all legislators to pass the measure; getting the bill signed into law is a top priority for the Association.

Following are excerpts from the letter sent by Gallo to State Legislators:

“AARP members are looking to us to keep them informed about what issues are dominating the policy debates in Illinois and where their elected officials stand on these issues.

“Our members care deeply about fixing our broken health care system; including addressing the unfair and inconsistent practices in the private health insurance market. They want to know both how AARP is representing their concerns and how the Illinois State Legislature is responding to our efforts.

“We believe that people make the right choices when they understand the issues and the positions taken by their elected officials. People need and deserve to know where their Representatives and Senators stand on the issues that matter most.

“Therefore, AARP will be recording House and Senate roll call votes on key issues, and informing our Illinois members of the results of these key votes — and how their elected officials voted.

“AARP will track and report the upcoming House vote on House Bill 3923, the Health Insurance Consumer Protection Act, introduced by Representative Greg Harris. With record numbers of people losing their employer-based health insurance and now purchasing coverage in the private insurance market, the legislation will establish several critical consumer protections.

“The legislation will require insurance companies to spend at least 75% of premium dollars on medical care; establish the Office of Consumer Health Insurance to conduct external independent reviews of denied claims and rate increases; and simplify the application process for both individual and small group markets by creating a standard application.

“AARP strongly urges you to vote in favor of this legislation.”

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Tags: aarp, AARP Illinois Insurance, Illinois Health Insurance News, Illinois Health Insurance Reform