Guest Article

Modify Special Enrollment Rules To Clearly Include QMED-based Coverage

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Summary: Federal regulatory and statutory language should be modified to clarify that children have special enrollment rights under the Health Insurance Portability and Accountability Act (HIPAA) due to the issuance of a qualified medical child support order (QMED) or a QMED's expiration under another group health plan, according to final recommendations by the federal Medical Child Support Working Group. However, the group was unable to reach a concensus on how pre-existing condition exclusions should apply when QMEDs are involved.

(Sept. 6, 2000) - In an August report, the federal Medical Child Support Working Group made 76 recommendations to the U.S. Departments of Health and Human Services (HHS) and Labor (DOL) on improving the medical child support system. Among the recommendations was changing HIPAA' regulatory and statutory language.

The working group consists of representatives from the federal and state government, child advocacy groups, human resource and group health plans. Under a congressional mandate in the Child Support Performance and Incentive Act of 1998, the group has been addressing impediments to medical child support enforcement over the last year.

Regarding HIPAA, the group's report noted that the law generally requires group health plans and health insurance issuers to offer special enrollment periods for:

(1) individuals who originally declined (or were denied) group health coverage:

but did not have other coverage, because they had other coverage, or for health related reasons before their health plans became subject to HIPAA; and

(2) new dependents due to birth, adoption, placement for adoption and marriage.

For medical child support purposes, the report noted that the key special enrollment issues relate to: (1) individuals who originally declined group health coverage because they had other coverage; and (2) certain new dependents.

Under the first category, an individual who was eligible to enroll in a group health plan but declined enrollment due to other coverage must be permitted to enroll in the plan if he or she becomes ineligible for the other coverage under certain circumstances.

Under the second category, if an individual who is enrolled in a group health plan acquires a new dependent through marriage, birth, adoption or placement for adoption, under certain circumstances the new dependent (and the spouse in the case of birth or adoption) are entitled to a special enrollment period.

The report indicated that a child who has coverage under the obligated parent's plan due to a QMED can lose that coverage under circumstances that would not apply to other dependents. For example, if the effective period for the order expires, the plan is no longer obligated to provide coverage. However, the report noted that HIPAA does not address whether the expiration of a QMED triggers a special enrollment right.

Accordingly, the working group recommended that HHS and DOL "request guidance" from the appropriate federal agencies on that issue. Furthermore, the group called for the DOL to issue regulations clarifying that HIPAA's special enrollment rules under ERISA (for individuals losing other coverage) permits a child to be specially enrolled in a new plan, after prior coverage obtained through a QMED is terminated, if the coverage ends during, or at the end of, the period covered by the order.

The group also stated that Congress should amend HIPAA's special enrollment language under ERISA (for new dependents) to include children who are issued QMEDs.

No Consensus on Pre-existing Condition Language

Although the working group was able to reach a consensus on recommended changes to HIPAA's special enrollment rules, doing so regarding HIPAA's pre-existing condition provisions was not as successful.

The report indicated that under HIPAA, if a child is enrolled in creditable coverage within 30 days of birth, adoption or placement for adoption, group health plans and health insurance issuers cannot impose pre-existing condition exclusions against that child. Furthermore, ERISA Section 609(c) has additional protections for adopted children, according to the report. Under 609(c), if a child is adopted or placed for adoption while a participant is eligible for plan coverage, the plan may not impose a pre-existing condition exclusion once the child is enrolled -- regardless of the timing of the enrollment.

The working group discussed extending similar protections to children covered based upon QMEDs, or who lose coverage because a QMED expires. However, the report indicated that the group was unable to reach a consensus for two reasons.

1. Some group members felt that prohibiting such exclusions could leave plans vulnerable to adverse selection, because parents could wait until children were sick before seeking or enforcing a QMED.

2. The group also struggled with the fact that HIPAA's protections only apply where the child's enrollment is within a specific time frame. The QMED process makes it difficult to identify a corresponding enrollment period for QMED children.

Therefore, the working group declined to make a formal recommendation, and just merely stated that "it was important to note that current law permits plans to apply pre-existing condition exclusions of up to 12 or 18 months against children [covered based upon QMEDs]. These exclusions make it difficult for these children to obtain seamless coverage through their parents' group health plans."

An executive summary and full copy of the 260-page report, 21 Million Children's Health: Our Shared Responsibility, is posted on the HHS web site at http://www.acf.dhhs.gov/news.

Excerpted from the September 2000 supplement to Employer's Guide to the Health Insurance Portability and Accountability Act, published by Thompson Publishing Group, Inc.

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