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Mistakenly Late Enrollment for Newborn Child


Guest mgostein
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Guest mgostein

I'm wondering if others can provide information on how their companies deal with a situation I am currently experiencing with my employer's health plan. The situation has resulted in the plan denying coverage for my newborn.

Recently my wife and I had a second child. My wife and I and our first child were enrolled in my employer's health plan at the Family coverage level, for which premiums are independent of the number of children. The pregnancy was being covered by the health plan also. Following birth, the newborn received treatment by the hospital and by our regular providers, who filed claims with the insurance company.

Approximately 50 days after birth, we received a notice from the insurance company stating that the newborn was not covered because he was not enrolled. We realized that we had neglected to enroll the newborn within the 31 day period stated in our plan booklet. We hadn't previously thought about enrollment because we were already at the Family coverage level and because the insurance company already had notice of our child’s birth and care. The plan refused to enroll the child at this point, since the 31 day period had expired, and we were told we would have to wait 10 months until the next open enrollment. In the interim, the plan would be covering me, my wife, and just one of our two children! We would therefore have to find (and pay for) interim coverage from another source for the newborn.

We filed an appeal with my employer's ERISA committee requesting that they add the newborn immediately, using the committee to review our special circumstances and grant an exception to the normal 31-day rule. It seemed to us that our appeal should be granted since, given the circumstances of our case, there was no material difference to the company whether the child was added late or not, and since it was clear we had intended him to be enrolled when we had our regular plan-affiliated providers treat him and file claims for him after birth. Furthermore, there is no way in which we could have benefited by intentionally not enrolling the newborn, so it seemed obvious that our actions were a simple mistake.

The company's benefits supervisor who reviewed our appeal agreed that our case had merit and that our request was reasonable. However, the appeal was rejected on the grounds that all "similar" appeals had been rejected in the past, constituting an unwritten policy with which the company must maintain consistency. No explanation was given of the origins or purpose of the policy. (In my understanding, and as confirmed to me by others, this policy is not required to comply with HIPAA or Section 125.) The implication is that the company's appeals review board feels unable to distinguish between cases in which the company's interests could be legitimately harmed and those in which they would not, and therefore they reject all appeals.

The benefits supervisor explained to me that he felt the current policy was misguided and told me that it was under review within the company, hopefully to be replaced with a more flexible process.

I feel the company's current policy and actions are indeed misguided, and that they furthermore act against the company's interest by denying promised benefits to employees and therefore hurting employee retention. (Apparently there are many cases similar to mine within the company, which is a very large employer.)

I'd like to help the process of my company's review of this policy by gathering some information from members of this site.

Could others comment on how their company would deal with this issue? What new revised policies would you recommend? I'd like to get feedback from as many people as possible. Thanks for your input.

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I work for a large, nation-wide employer and we, too, would have rejected your appeal. Contrary to what you think and what others have told you, employer ARE required to follow Section 125, HIPAA and plan provisions. HIPAA allows a 30 day "special enrollment" period in which to add a newborn. Section 125 does not specifiy a time period, but all changes made to coverage under a Section 125 plan must be consistent with the event and non-discriminatory, that is applied to all employees in the same way. In addition, most plans have written in their provisions and detailed in the summary plan description and certificate of coverage the time frame for adding newborns. Should the company plans be audited by the IRS and find that they are administrating the plan any differently, there would be severe penalties.

By the way, we base the answers on appeals on the plan provisions, the governing regulations (both federal and state), and consistent administrative practices, not on whether there would be any "legitimate harm" to the company. I'm sure most employer committees follow these guidelines, too.

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While I feel your case has merit versus someone trying to get enrolled in the medical plan after they found out they had cancer, they still have to follow Federal law as Mary C has indicated. Once you start letting the picture become gray rather than black and white, then that's where the employer can get sued.

On the flip side, I would just ensure that there wasn't an error on the carrier or employer's side first. You may have already done this since you already filed an appeal under ERISA, but a lot of employers use an automatic enrollment that does not record any dependents until claims come in. This is done by the insurance carrier to lessen administration.

Being on the carrier side, this would seem like a simple enough fix and I know many employers would go ahead and grant this exception even though they could be subject to some kind of penalty in the future, however, it seems like your employer has already made its decision.

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Guest mgostein

Thanks to Mary C and mroberts for their replies.

An additional point: HIPAA does not require that newborns be enrolled within 30 days from birth. Rather, it requires that the plan allow at least 30 days for a newborn's enrollment. (This is according to a booklet I received from the U.S. Dept. of Labor, and according to language in the Federal Register.)

I think the distinction is important. It seems to me that the plan could grant my appeal to its 31-day rule and still be in compliance with HIPAA and Section 125. In doing so, of course, it would have to apply a fair and nondiscriminatory standard of judgement in reviewing similar appeals.

Any thoughts on this view?

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While the government and the booklet may regard the 30 day timeframe as "at least" in reality that is all many if not most benefit administrators allow. In addition, fair and non-discriminatory means following a set guideline for all members - if 31 days is the rule and you did not do it within that time, there should be no special provisions for you that are not made for others, regardless of your feelings.

As a mother, I personally feel empathy for you, but in a highly regulated environment which is what benefits has become, I also see the need to follow the plan provisions.

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What does the SPD say on this? I am a member or our appeal board, we would have denied this due to the wording in the SPD. All our plans have the same sentence, in bold print, in the Eligibility and Enrollment section. "If you or your spouse has a newborn or newly adopted child, the child's coverage begins the day of birth or date of adoption, provided you enroll the child within 31 days of that event."

Other language makes it clear that if you don't enroll in this 31 day period you must wait for the next open enrollment.

As a member of the board, it is my job to ensure we follow the plan to the letter. We can't allow some and then deny some. It is the responsibility of plan participants to know and follow the provisions of the plan in order to receive benefits.

I know it sounds harsh - but that's the way it has to be to stay out of court.

JanetM CPA, MBA

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