Notice prior to termination of self-insured group health program

[Guest Gibson]

Does the sponsor of a self-insured group health program (the sponsor carries stop-loss) have to provide notice to plan participants (or others, such as state departments of insurance) prior to, or in conjunction with, the complete termination of the program? Thanks in advance

[KJohnson]

I believe that the only requirement is notice must be sent within 60 days after a "material reduction in covered services or benefits"

[KJohnson]

My answer was incomplete and I agree with the concerns raised above. The 60 day notice is the only statutory notice requirement of which I am aware.

Additional diclosure duties of fiduciaries is a "hot" topic in litigation right now. The "serious consideration" cases have generally involved the duty to disclose early retirement incentives in pension plans. In other contexts some courts have stated that ERISA and DOL regulations are explicit on disclosure requirements and that additional duites should not be "read into" the statute.

[JWK]

The summary of material reductions is one disclosure obligation. I'm not sure it's the only one.

I think there may be a general fiduciary duty under ERISA to announce the termination of the health plan. Also, at least in the 9th Circuit, there may be a fiduciary duty to announce the possible termination of the health plan as soon as the termination is under "serious consideration." Talk to your legal advisor on the requirements in your jurisidiction.

Don't forget to send certificates of creditable coverage. These will be very important for employees who have to go out in the individual market to purchase coverage. I also think it's appropriate to tell employees that they need to act quickly to apply for replacement coverage to avoid a 63 day break, which can cause them to lose guaranteed issue and subject them to preexisting condition exclusions.

Finally, is the plan funded through any kind of a trust? If so, you need to consider the excise tax under code section 4976 if there's a reversion to the employer.

There's a lot to think about in terminating a health plan--please talk to your professional advisors before you embark on this course of action.

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[Guest kclark]

JWK: Question for you....I was told by BlueCross/BlueShield that they are not subject to HIPAA Regulations relating to pre-existing or creditable coverage on individual policies....only group plans. Is this correct? I was researching this issue for an employee situation we have where we were trying to obtain an individual policy for a terminally ill employee.

[JWK]

HIPAA included specific individual health insurance reforms. Blue Cross may be telling you something that is literally true (the HIPAA provisions governing group plans do not apply to individual policies), but it is NOT true that HIPAA has no impact on individual policies. There are guaranteed issue requirements and limits on pre-existing conditions.

You also need to know what your state insurance statutes say. In Oregon, for example, there are limits on premiums for individual policies and there's also a state insurance pool. Analyzing your situation is beyond the scope of the message board, but I'd confirm any information you get from Blue Cross with an attorney, a knowledgeable insurance agent in your state, or your state's insurance department before taking any action.

[GBurns]

kclark, please dont make the mistake of confusing what a sales rep from BC/BS says with what BC/BS does. The rep is usually giving his opinion and is not binding on the company. HIPAA or a State version is applicable to individual policies, period. BC/BS will provide a written document on request stating their coverage. Many states have required that providers list with them their HIPAA guaranteed issue individual policies. Call your Dept of Ins and ask for a copy of GI HIPAA providers.

[Guest kclark]

JWK/GBurns: Thanks so much for your replies, they were very helpful. I am in the State of California and the employee I am trying to work with has moved to Utah (where I am trying to get information on an individual policy).

Our current medical plan provider - PacifiCare has no contracts outside of California, nor do we provide any benefits outside of California (we are a non-profit Church Plan).

I was told that the way HMOs get out of providing coverage to someone with a terminal or serious illness (pre-existing) is they require evidence of insurability----which, of course, the employee would NOT pass!

Any knowledge of Utah regulations?

Thanks again for the help!

[Guest registered user]

HIPAA related guaranteed access rules applicable to non-employer policies vary from state to state. The Federal law does not require guarantee issue to federal eligibles if the state has an acceptable alternative mechanism, which is usually an uninsurable risk pool. (Federal eligibles are people who have at least 18 months creditable coverage, most recently on an employer plan, who took and exhausted any available continuation coverage.)

A very understandable state by state compilation exists at:

http://data.georgetown.edu/research/ihcrp/hipaa/

[Guest kclark]

Tom: Thank you so VERY much for that website! That is a really cool thing! I actually had another situation come up yesterday with another person who moved to Oregon with a terminal illness needing similar assistance. I was able to find exactly what I needed at this site!

Thanks again so much, I really apprecaite the help!