Hipaa guaranteed issue for individuals

[Guest parrot87]

This is a re-post and any help would be appreciated.

A small employer recently terminated their group plan. There were four people on the plan. Those people decided to move to individual coverage. Under Hipaa, individual coverage is guaranteed issue with no pre-existing conditions clauses If:

* You do not currently have health insurance.

* You had coverage for at least 18 months before you applied, most recently from an employer-based plan.

* You didn't lose your previous health plan because of fraud or nonpayment.

* You've accepted and used up any extension of health benefits from your previous plan through COBRA or a state program.

* You aren't eligible for any employer-based health insurance, Medicare or Medicaid.

* You're requesting the coverage within 63 days of losing your old coverage.

according to this site - http://www.revolutionhealth.com/insurance/...insurance/hipaa

One person was denied coverage. She applied to independence blue cross as they are the designated hipaa insurer for the philadelphia area. The rep she spoke with on the phone said she is not eligible for the guaranteed hipaa individual insurance since she did not enroll & exhaust her COBRA.

The problem here is that:

1 - an employer with less than 20 employees cannot offer COBRA (an employer can offer COBRA if they want to but insurance carriers are not required to cover claims)

2 - There is no group plan in place anymore to offer COBRA.

We tried to explain this to the blue cross rep but she went into recorder mode and recited that in order to be eligible for the hipaa insurance, COBRA must be exhausted. There's something fishy here. Any help or documentation would be greatly appreciated.

Thank you

[GBurns]

Check with the state Dept of Insurance regarding the state's rules for eligibility, certificate of prior coverage etc.

Also try to get the BC reps statements in writing of some sort. How did she know that her application was declined?

I also do not understand why she is arguing with a telephone rep rather than the writing agent.

[Don Levit]

Matthew:

You are absolutely correct.

The only modification I would make is "If the individual has been offered the option of continuing coverage under COBRA, and he has elected and exhausted the continuation coverage.

The "If" is important, for as you say, the employer did not have to offer COBRA

This can be found at CFR Title 45, Sec 148.103.

In sec. 148.102 it states, "The requirements of this part that pertain to guaranteed availability of individual health insurance coverage apply to all issuers of individual health insurance coverage in a State, unless the State implements an acceptable alternative mechanism as described in Sec. 148.128.

Does your state have a high-risk pool?

This is normally an alternative mechanism.

Don Levit

[masteff]

I think we're all in agreement w/ you that your employee is getting the run around.

http://www.ins.state.pa.us/ins/lib/ins/con...2003_health.pdf

Page 12: have used up any COBRA continuation coverage for which you were eligible

Don't go thru a normal phone rep... you'll keep getting the run around. You need to escalate and find someone who's able to go off script. You may need to issue a letter on company letterhead informing the participant that she is not eligible for COBRA. That letter along w/ HIPPA certificate can be submitted to BCBS.

Your next course of action, if you can't find someone to escalate to who will listen, is to contact your state insurance department. You may have to be assertive to get routed to someone who can help explain to BCBS how the rule works in this case... they will also have backoffice contacts at BCBS which can help get past the script readers.

[Don Levit]

masteff:

Excellent detective work!

Should this person go ahead and apply for coverage, and submit page 12 with the application?

The 63 day clock is ticking.

Don Levit

[masteff]

Could also point them to their own publication on Cobra, specifically the Q&A that explains Cobra ends if the employer ceases to maintain any group health plans. http://www.ibx.com/pdfs/employers/employer..._manual_ibc.pdf (page numbered 5, physical page 7)

[Guest parrot87]

Thank you very much Don and Masteff, that's exactly what I was looking for. This is for PA and we do not have a high risk pool, but they mandate conversion coverage and one at least hipaa compliant insurance carrier per region.

P.S. if your around the philly area, I owe you lunch for your services.

[Guest Quicksilver]

Along this line we know of an employer who is considering reducing the plan life time max. to force a very sick individual off their plan and onto an individual guarantied issue policy. So would exhausting the life time limit qualify him for the individual policy? I envision more than a few problems. ADA at the top of the list. Any thoughts

[J Simmons]

HIPAA nondiscrimination ought to be explored before proceeding.

[Don Levit]

John:

When you wrote about discrimination, are you referring to reducing the lifetime max?

I was under the impression that can be done, as long as it is in the next fiscal year.

Don Levit

[J Simmons]

Hey, Don,

It may be HIPAA permitted to reduce the lifetime max; I don't know off the top; the situation as described gives me the HIPAA 'willies' because there is health information about one employee that is being taken into account in a plan design move that effectively limits that employee's benefits going forward; it's something I'd check out (and get legal opinion on) before going ahead.

[Don Levit]

John:

McGann v. H&H Music Co., 946F.2d 401(5th Cir. 1991).

Retroactive changes to the lifetime benefits do not violate the anti-discrimination provisions of ERISA Section 510.

Don Levit

[J Simmons]

Hi, Don,

Thanks for the cite regarding ERISA.

Do you have one regarding HIPAA nondiscrimination--HIPAA was passed in 1996, five years after the case you cite.

Thanks,

[Don Levit]

John:

No, I do not.

Can you explain the distinction between HIPAA and ERISA in regards to discrimination?

In particular, if a change is made to the plan which satisfies ERISA but not HIPAA.

Don Levit

[J Simmons]

Hi, Don,

The type of ERISA discrimination alleged in the McGann case was that prohibited by ERISA section 510.

It shall be unlawful for any person to ... discriminate against a participant or beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this title, or the Welfare and Pension Plans Disclosure Act

ERISA section 510 discrimination would be problematic for the situation in post #8 reviving this thread that "we know of an employer who is considering reducing the plan life time max. to force a very sick individual off their plan and onto an individual guarantied issue policy. So would exhausting the life time limit qualify him for the individual policy". Consider the following language from the McGann case you cited, discussing Vogel v Independent Federal:

McGann cites only one case in which a court has ruled that a change in the terms and conditions of an employee-benefits plan could constitute illegal discrimination under section 510. Vogel v. Independence Federal Sav. Bank, 728 F.Supp. 1210 (D.Md.1990). In Vogel, however, the plan change at issue resulted in the plaintiff and only the plaintiff being excluded from coverage. McGann asserts that the Vogel court rejected the defendant's contention that mere termination of benefits could not constitute unlawful discrimination under section 510, but in fact the court rejected this claim not because it found that mere termination of coverage could constitute discrimination under section 510, but rather because the termination at issue affected only the beneficiary. Id. at 1225. Nothing in Vogel suggests that the change there had the potential to then or thereafter exclude any present or possible future plan beneficiary other than the plaintiff. Vogel therefore provides no support for the proposition that the alteration or termination of a medical plan could alone sustain a section 510 claim. Without necessarily approving of the holding in Vogel, we note that it is inapplicable to the instant case. The post-August 1, 1988 $5,000 AIDS coverage limit applies to any and all employees.

McGann effectively contends that section 510 was intended to prohibit any discrimination in the alteration of an employee benefits plan that results in an identifiable employee or group of employees being treated differently from other employees. The First Circuit rejected a somewhat similar contention Aronson v Servus Rubber, Div. of Chromalloy, 730 F.2d 12 (1st Cir.), cert. denied, 469 U.S. 1017, 105 S.Ct. 431, 83 L.Ed.2d 357 (1984). In Aronson, an employer eliminated a profit sharing plan with respect to employees at only one of two plants. The disenfranchised employees sued their employer under section 510, claiming that partial termination of the plan with respect to employees at one plant and not at the other constituted illegal discrimination. The court rejected the employees' discrimination claim, stating in part:

"[section 510] relates to discriminatory conduct directed against individuals, not to actions involving the plan in general. The problem is with the word 'discriminate.' An overly literal interpretation of this section would make illegal any partial termination, since such terminations obviously interfere with the attainment of benefits by the terminated group, and, indeed, are expressly intended so to interfere. This is not to say that a plan could not be discriminatorily modified, intentionally benefitting, or injuring, certain identified employees or a certain group of employees, but a partial termination cannot constitute discrimination per se. A termination that cuts along independently established lines--here separate divisions--and that has a readily apparent business justification, demonstrates no invidious intent." Id. at 16 (citation omitted).

For HIPAA nondiscrimination, see ERISA § 702 (added by HIPAA) and DoL Regs § 2590.702 prohibiting discrimination based on a health factor.

[Don Levit]

John:

Thanks for providing those 2 citations.

In 29CFR2590.702(b)(2)(i)© it states, "For purposes of this paragraph, a plan amendment applicable to all individuals in one or more groups of similarly situated individuals under the plan and made effective no earlier than the first day of the first plan year after the amendment is adopted is not considered to be directed at any individual participants or beneficiaries."

Don Levit

[Guest Quicksilver]

Immediately above your quote is the following

Whether any plan provision or practice with respect to benefits

complies with this paragraph (b)(2)(i) does not affect whether the

provision or practice is permitted under any other provision of the Act,

the Americans with Disabilities Act, or any other law, whether State or

federal.)

[Don Levit]

Quicksilver:

Once we finish with HIPAA, we can go on to other laws.

One at a time makes the task a bit easier.

Don Levit

[GBurns]

Don

Many issues overlap or intertwine. For example ERISA 702 and other sections were added by HIPAA. How can you have any serious discussion if you only address one and exclude even passing reference, or note of another, especially if referenced by the one that is being immediately discussed ??

[Don Levit]

George:

I thought it would make the discussion more understandable.

If the group thinks it would be more beneficial to include all relevant laws at one time, we can give it a try.

Don Levit

[J Simmons]

John:

Thanks for providing those 2 citations.

In 29CFR2590.702(b)(2)(i)© it states, "For purposes of this paragraph, a plan amendment applicable to all individuals in one or more groups of similarly situated individuals under the plan and made effective no earlier than the first day of the first plan year after the amendment is adopted is not considered to be directed at any individual participants or beneficiaries."

Don Levit

Can it be fairly said, Don, that the plan amendment applies to all similarly situated individuals when it only impacts one that is the very target of the amendment by the employer? Maybe. Maybe not. But that question appears merely academic given the McGann result that makes doing so a violation of ERISA sec 510.

[Don Levit]

John:

I have only a summary of the McGann case.

If you would E-mail the entire case, I can provide specific excerpts.

Here is the summary.

The Fifth Circuit has held that retroactive modifications to the lifetime benefits available under an employer's health plan do not violate the anti-discrimination provisions of ERISA Section 510. The court decided that the plan sponsor's action in capping benefits was not discriminatory in that it affected all participants in the plan and not just those participants who were under treatment for AIDS.

Sec 2590.702 would seem to confirm this action.

Don Levit