HIPPAA Prexisting Condition Rules - 63 Day Break in Coverage

[Guest Mfcavo]

If a group health plan provides that coverage ends when lifetime maximum is reached does this mean that the 63-day break in coverage period begins at that time. Even if the participant continues to work for the plan sponsor? Doesn't this result force the participant to find a new job before the 63 days are up?

[KIP KRAUS]

I’ve been in the benefits business since 1975 and I have never seen a person hit the lifetime maximum. That of course doesn't mean it doesn't happen. Typically, even plans with lifetime maximums allow a person to reinstate the lifetime maximum on an annual basis if medical evidence can justify the reinstatement, but in any event they usually allow for a minimum automatic reinstatement regardless of medical evidence.

Having said that, you pose an interesting question. I would be surprised if the drafters of HIPAA considered this possibility.

Are you posing a hypothetical question or do you have a client in this situation?

[jeanine]

I have seen someone reach the lifetime maximum. Actually, more than one. If the question was meant to ask if this counts against them only to the extent they are insurable (the portability aspect of HIPAA) how about this line of reasoning: Even though they have no benefit left, they are still covered under the plan, i.e., there is no break in coverage. Person still enrolled under the plan, just when benefit is computed, nothing is paid because the maximum has been met...sort of like a reverse deductible.

[papogi]

I agree with your reasoning. They still have the coverage, although the benefit of the coverage is worthless. As long as the employee is enrolled in the plan, there should be no break. Keep in mind that the IRS sees situations like this as a status change, and the employee can drop coverage to cease payroll deductions, as long as your plan allows it. Then, of course, the 63 day clock begins to tick.

[Guest Mfcavo]

This is a real situation. Child has exceeded $2,000,000 lifetime maximum benefits under employer-sponsored plan because off high medical costs associated with treatment of hemophilia.

The Lifetime Maximum applies separately to each covered family member. Plan provides that coverage terminates for individual when benefits paid on behalf of the individiual exceed $2,000,000. The plan does not provide for any annual reinstatement of benefits.

The child is eligible for Medicaid coverage under program sponsored by Massachusetts for disabled children. My research indicates that Medicaid coverage qualifies as "Certifiable Coverage" for the purposes of the HIPPAA portability rules. I would appreciate any input on this narrow issue or any other general comments you may have. Thanks for your help.

[papogi]

If the plan provisions say that the individual terminates as of the date the lifetime limit is reached, then a loss of coverage has occurred. As an aside, one would think this should be a COBRA event, although why would someone pay COBRA premiums for a plan in which the limit has been reached? There would be no benefit. Anyway, yes, Medicaid is certainly considered creditable coverage.

[mroberts]

Is the plan we're talking about an HMO or PPO? Most HMOs don't have lifetime maximums, so is it possible to set one up and slide this employee and dependent over?