COBRA Subsidy Issue

[mal]

A multi-employer group health plan received an audit notice from the IRS relating to the COBRA subsidy application. They want copies of the "Request for Treatment as AEI" forms submitted by those eligible for the subsidy.

As counsel we reviewed the audit request and assumed that one of the HIPAA exceptions would apply. However, no exceptions appear to cover a general information request that is not accompanied by a summons or subpoena. We also found an IRS memo (2004-034) from the Office of Chief Counsel confirming that plans cannot supply PHI pursuant to a simple information request. (Note that the same information in the hands of an employer is not PHI-- per EBIA and regs).

This problem was brought to the attention of the IRS and the agent is attempting to help us work through these issues. However, they are apparently unwilling to issue a subpoena or summons. Instead the plan is being told that if it chooses not to comply, it will lose the subsidy. Their office is apparently being told that the COBRA subsidy applications are not PHI, even though the DHHS preamble to the HIPAA regulations states that enrollment and disenrollment information is PHI.

Any great ideas on how to proceed? Is there a HIPAA exception that would allow the group to comply without risk of violating the privacy regulations? The group doesn't want to lose the subsidy, but is also aware that HIPAA enforcement is going to ramp-up next year.

It would seem that the Service would need to have some mechanism to deal with this problem. It is not reasonable to ask a GHP to risk violating the HIPAA regulations to collect a subsidy to which it is entitled.

[oriecat]

Don't you have a separate COBRA enrollment form? We require our enrollment form, and then the Form to qualify for the subsidy would be an additional form, and therefore it would not be enrollment/disenrollment information, since it is not related to the enrollment at all, it is simply relating to the amount they will be required to pay.