Enrollment eligibility for self funded health ins.?

[Guest Paula]

Are there requirements spelled out by ERISA, or other legislation, on who must be allowed to enroll in a self funded employer health insurance plan (especially if the employee initially declined coverage during their open enrollment period)?

[Guest nac]

I think you're subject to basically the same provisions of ERISA, i.e. late entrant and/or lifestyle changes - as long as the employee meets the eligibility criteria.

[Guest Paula]

That's what I was wanting to know, what are those ERISA guidelines? What section of the ERISA code can I find the details in? Can you help me? Thanks for the reply btw.

Paula

[KIP KRAUS]

Paula:

If your self-insured plan is an ERISA plan, my suggestion is that your eligiblility requirements should be designed so that you treat every employee similarly situated in a non-descriminary fasion, i.e., if all full time employees are eligible to participate, then you cannot refuse one of them enrollment. Once you decide what class of employee is to be eligible, you must treat each employee in such class equally. Descrimination type legislation, in my opinion is the only legislation you need to be concerned about when estiblishing eligibility.

You may design your plan so that an eligible person must enroll within 30 days of first becoming eligible to do so. If the person does not enroll within this 30-day period, you may require him/her to wait until the next open enrollment period unless there is a change in family status.

It's hard to determine from your question, what your real concerns are. However, hopefully some of the answers you are getting may address the real problem. Good luck.

[Guest Paula]

Kip,

Thanks for the information. Recently a TPA who administrates a self-funded health plan for "company X" denied coverage for two people (on request from "company X") who had initially declined enrollment and now wanted to enroll (their health status had changed, of course). I was under the initial impression that the coverage couldn't be denied due to ERISA reg's. The more I learn though, the more it seems that enrollment eligibility must be something that is mandated by either state law, or the plan document itself. Having read through the ERISA code and the HIPAA documentation, I find nothing that requires coverage in the above instance. Is this the way you understand it?

Thanks,

Paula

[KIP KRAUS]

As long as there is no federal or state legislation prohibiting the total exclusion of a person who does not enroll when intitiially eligible to enroll, and as long as the plan document spells this out, and as long as any other persons similarly situated are treated the same, I guess this can be done. However, I would not want to administer a plan in this way. I would rather see the plan require medical evidence of good health before automatically denying coverage. In addition, I would prefer that the plan allow participation, but exclude coverage related to a pre-existing medical condition.

Having a self-insured health plan provides an employer with many options for plan designs which differ from those mandated by state insurance law, and this is one of the reasons employers opt to self-insur. However, sometimes employers out smart themselves by designing plans that could cause them grief and money in future law suits. I wish you the best of luck.

[Guest Kathleen Meagher]

Hi, Paula--

You may be thinking of the special enrollment rules, which were added to ERISA by HIPAA. These are set forth in Section 701(f) of ERISA. Under these rules, an employee who refuses coverage because he or she has other coverage, and who later loses that other coverage, must be permitted to enroll immediately. The same rule applies if the employee refuses coverage, and then marries or has a baby. Furthermore, ERISA (as changed by HIPAA) does not permit any requirement that a special enrollee show evidence of good health or other "insurability." Other than that, there are no particular rules for enrollment in ERISA, except that you should always be careful to comply with the plan document. State law would not apply, because, for self-insured plans, it is preempted by ERISA

If the employee who refuses coverage does not fall under either of the two special enrollment categories above, you can make him or her wait until the next open enrollment period or even exclude the employee altogether. Again, there can be no good health or insurability requirement.

Hope this helps.

[This message has been edited by Kathleen Meagher (edited 11-11-98).]

[Guest Paula]

Kathleen,

Thanks for your input. You have clarified the particular situation quite well. Both of the employees fit--

quote:

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who refuses coverage does not fall under either of the two special enrollment categories above, you can make him or her wait until the next open enrollment period or even exclude the employee altogether.

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So, they will wind up being excluded.

Thanks again,

Paula