Recocognition of Prior Group Health Plan Deductibles in Corporate Tran

[Guest Edward McElroy]

Is an acquiring corporation required to recognize and credit deductibles paid by participants under a prior group health plan following a corporate acquisition? For example, if following the acquisition the prior plan were maintained, the answer is obvious ... things would continue under the terms of the group health plan. What happens in an asset deal where the group health plan is not transferred to acquiring company? Do employees start all over with respect to deductibles under the new plan? I would guess that a company could do whatever it wanted with respect to this issue. Any thoughts? Thanks. Ed

[KIP KRAUS]

I would agree with you if the company is self-insured and were so inclined to give credit for deductibles paid under a prior employer’s plan. The problem may be however; finding out what deductibles the employees had paid under the other plan. That type of information may be hard to get from the other insurer, if so the employees may not be able to come up with their EOBs to prove they have met any deductibles.

If the plan is fully insured the insurer may or may not allow you to give credit under another employer’s plan. If, however, they look at it as taking over another group insurer’s business and there are no-loss-no-gain laws in the state they may have to give credit for the other plan’s deductibles.

Having said all of this, at the very least, the employer may want to credit the prior plan deductibles just for good employee relations.

Does this make any sense? It could be more complicated, but the bottom line as I see it good employee relations to do it if possible.