Revised Health and Welfare Plans

With health care legislation as a top agenda for Congress, employers should have health and welfare plan issues on their priority list for the second half of 2009. Employers may have heard of the Consolidated Omnibus Budget Reconciliation Act (COBRA), but a range of welfare plan legal issues will need the attention of employers in the coming months. This article will highlight several key near term issues for employers, including special enrollment, Medicare reporting, privacy and security under the Health Insurance Portability and Accountability Act (HIPAA) and mental health benefits.

Special Enrollment

With all of employers’ focus on the COBRA changes this year, the federal Children’s Health Insurance Program (CHIP) Reauthorization Act, effective April 1, 2009, may have been overlooked. This law expands the special enrollment rights of employees and dependents beyond the two limited cases of acquiring a dependent (by birth, marriage or adoption) or losing other medical coverage that was in place at the time of initial eligibility.

Special enrollments are required to be offered when an employee or eligible dependent is covered under a Medicaid plan or state Children's Health Insurance Program (CHIP) and loses eligibility under that plan, or becomes eligible under a CHIP or Medicaid plan for premium assistance that could be used toward the cost of an employer health plan.

Employers should add the expanded right to any Special Enrollment Rights Notice to individuals enrolling on or after April 1, 2009.

What to do:

• Include the following statement on any special enrollment notices: “Effective April 1, 2009, you may be able to enroll within 60 days of losing coverage under the Medicaid or CHIP plan or within 60 days of becoming eligible for premium assistance under the Medicaid or CHIP plan.”

• Notify your employees of the expanded right.

• Have a claims administrator, health maintenance organizations (HMOs), or anyone that handles requests for special enrollment. Confirm that these requests can be and are being accommodated.

• Special enrollment rights now have a 60-day deadline, not the regular 31 days for other special enrollment rights, so you may require changes to your plan documents and Summary Plan Descriptions (SPD).

Medicare Reporting

Medicare, Medicaid and State Children’s Health Insurance Program Extension Act was signed into law two years ago and thirdparty administrators (TPAs) are now completing processes for the required filing of more detailed Medicare information.

This process has been designed to provide better data to Medicare and as of Oct. 1, 2009, employer health plans should begin submitting this information. The deadline has been extended one year for health reimbursement arrangements (HRA). There is, however, a penalty for not submitting the required data of $1,000 per day, per person.

What to do:

• Make sure that any self-insured sponsored plan, or insurer, or HMO for your insured plans are verified by the third-party administrators (TPAs) and the reporting being handled.

• Have the TPA confirm that SSNs and other needed data elements are available.

• Review options to obtain this data if it is not in the system. Also, review the TPA’s services agreement to verify any compliance errors and penalties are responsibility of the TPA.

HIPAA Privacy & Security

The bailout legislation passed earlier this year, with potentially extensive changes in the HIPAA privacy and security rules that affect employersponsored health plans, was barely noticed. Upon enactment (Feb. 17, 2009), the American Recovery and Reinvestment Act (ARRA) substantially increased the civil monetary penalties for HIPAA violations and enabled state attorneys general to bring actions to enforce HIPAA rights on behalf of state residents. However, neither of those changes required employer’s sponsoring group health plans to act quickly.

By contrast, plan sponsors must react to another significant HIPAA change, which requires notice of any “breach” of “unsecured” Protected Health Information (PHI) -For this purpose, “unsecured” essentially means Protected Health Information (PHI) that is not encrypted- Upon discovery of such a breach, an employer-sponsored health plan must notify each individual whose PHI was or is believed to have been disclosed, generally within 60 days. If the breach involves 500 or more people in the same state or other jurisdiction, media notice is required.

Ultimately, plan sponsors must report these breaches to the U.S. Department of Health and Human Services (HHS). If 500 or more individuals are involved, immediate notification is required. For fewer than 500 individuals, the plan may note the breach in a log and notify HHS annually. At its discretion, HHS may list these breaches on its web site.

Among other key HIPAA privacy and security changes in the legislation (becoming effective Feb. 17, 2010), there are:

• HIPAA’s privacy and security rules will now apply directly to business associates, such as TPAs and pharmacy benefit managers. Previously, these entities were only subject to the HIPAA rules through contracts with covered entities such as health plans and medical providers. This change will greatly increase compliance obligations for business associates.

• If a participant’s PHI is kept in an electronic format, the participant can request a copy of that information in an electronic format.

• Other HIPAA privacy and security changes in ARRA are not effective until after 2010.

What to do:

• Modify business associate agreements as needed to ensure that your vendors are responsible for providing any notices needed in the event of a breach of unsecured PHI.

• Be prepared to renegotiate business associate agreements with service providers by February 2010.

Mental Health Benefits

Time is running out quickly on most (if not all) treatment and financial distinctions that employer-sponsored health plans make between mental health and substance abuse benefits and regular medical and surgical benefits.

Under the Pete Domenici and Paul Wellstone Mental Health Parity and Addiction Equity Act, which takes effect Jan. 1, 2010 (for calendar year plans) there will be:

- Financial requirements—such as deductibles, co-pays, coinsurance and out-of-pocket caps—for mental health and substance abuse benefits may not be more restrictive than the most common requirements that apply to substantially all medical and surgical benefits.

- Treatment requirements—such as limitations on frequency of treatment, number of visits, days of coverage, or similar limits on scope or duration—for mental health and substance abuse benefits may not be more restrictive than the most common requirements that apply to substantially all medical and surgical benefits.

- Other specific restrictions will apply too, such as a bar on treatment limitations and financial requirements that apply only to mental health or substance abuse benefits.

- Group Health Plans with more than 50 employees. Small Employers exempted. According to the current 1996 Federal parity law, small employers of 50 or fewer employees are exempt from the requirements of the Act. State parity laws will continue to apply to these employers, as well as to individual plans.

What to do:

• Review your current group health plan, mental health and substance abuse benefit coverage.

• Plan for needed changes—and potential cost increases—in 2010.

• Also, begin preparing communications for open enrollment this fall to describe any mental health benefit coverage changes.

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