ICHRA - Loss of Coverage

Since ICHRAs are still so new, I keep running into issues that I haven't encountered before. My client just terminated an employee who had himself and his Spouse on an individual plan in which he was receiving a reimbursement for. Now that the ICHRA has been terminated the reimbursement is gone and the insurance is too expensive. They would like to join the Spouse's group plan, but the issue we are running into is that the group carrier is saying they need to produce a Loss of Coverage letter showing an involuntary loss of coverage. The Loss Of Coverage letter will show a Voluntary drop though. 

The ICHRA administrator has told us this is indeed a QLE, but I'm trying to determine if it just opens a SEP to purchase another IFP plan or allows them to enroll in a Group plan as well. This is all I could find:

However, a loss of coverage due to a termination of employment or a reduction in the number of hours of employment generally is a loss of coverage due to a qualifying event. Thus, for example, an employee covered by an individual coverage HRA who, due to a reduction in hours, is moved to a class of employees who are not offered any group health coverage would have a right to COBRA or other group continuation coverage in the HRA, as would an individual who loses coverage under the HRA due to termination of employment. That HRA COBRA or other group continuation coverage would be conditioned on a timely election of COBRA or other group continuation coverage and payment of COBRA or other group continuation coverage premiums, as well as maintaining (or enrolling in) individual health insurance coverage.77 Alternatively, an employee who loses coverage under an individual coverage HRA for these reasons may qualify for an SEP to change his or her individual coverage either on- or off-Exchange.78  

https://www.govinfo.gov/content/pkg/FR-2019-06-20/pdf/2019-12571.pdf

Also I wasn't sure if the loss of an ICHRA could be considered a loss of employer contribution towards health coverage:

An individual loses eligibility for coverage under a group health plan or other health insurance coverage (such as an employee and his/her dependents' loss of coverage under the spouse's plan) or when an employer terminates contributions toward health coverage;

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/hipaa-compliance.pdf

Yeah ICHRA requires a (mostly interesting/fun) shift in many ways thinking.  One is that the ICHRA itself is the group health plan.  More importantly for these purposes, it's a non-excepted group health plan subject to the HIPAA portability rules, including special enrollment rights.  The underlying individual policy is not an ERISA plan and not connected to the employer in any way.

With that in mind--when an employee loses eligibility for the ICHRA (from termination of employment in this case), it's a HIPAA special enrollment event for the spouse in the same manner as if the employee had lost a traditional employer-sponsored group major medical plan.  That event gives the spouse the right to enroll the employee and spouse in the spouse's plan.  The underlying policy is irrelevant here.  

• More details: https://www.newfront.com/blog/hipaa-special-enrollment-events-2

Even with traditional employer-sponsored group major medical plans we have an issue of how to substantiate the loss of coverage since the end of HIPAA certificates of creditable coverage back in 2014.  The most useful is usually a letter from the employer showing the period of coverage.  In this case it would be the period of ICHRA coverage.

• More details: https://www.newfront.com/blog/documenting-prior-coverage-after-hipaa-certs-2

Here's a slide summary:

2024 Newfront HIPAA Training for Employers Guide

Thanks as always Brian! I appreciate the response, very helpful.

There are still so many people out there that have never heard of an ICHRA which makes these situation even more difficult to navigate. 

One other item that was brought up is whether or not the termination date of the Individual Policy has any effect on the effective date of the new group plan. My thought is no, since the termination of the individual plan isn't what triggered the special enrollment event. The loss of eligibility to participate in the ICHRA triggered the special enrollment event, so the effective date should be the first day following the last day in the month in which they were eligible for the ICHRA allowance?

Yeah the termination date on the individual policy is irrelevant here.  It might not have even terminated yet.  The ICHRA doesn't control the individual policy enrollment.

It'll all be the same as if the employee lost traditional employer-sponsored group major medical from the employer.  The employee will have 30 days from the loss of the ICHRA coverage to request enrollment in the spouse's plan.  Coverage under the spouse's plan must be effective by the first of the month following the date of the election change request. 

Any gap between the loss of ICHRA and the enrollment in the spouse's plan can be addressed the individual policy (which can be maintained regardless of ICHRA enrollment) and potentially also by COBRA (for continued access to the ICHRA payment stream).

Here's an overview--

https://www.newfront.com/blog/hipaa-special-enrollment-events-2

HIPAA Special Enrollment Events: General 30-Day Election Period

Employees must have a period of at least 30 days from the date of the event to change their elections pursuant to a HIPAA Special Enrollment Event.  Employers wishing to offer a longer election period should first seek approval from the insurance carrier (or stop-loss provider).

...

HIPAA Special Enrollment Events: General First-of-the-Month-Following-Election Effective Date Rule

The general rule is that an election to enroll in coverage pursuant to a HIPAA Special Enrollment Event must be effective no later than the first of the month following the date of the election change request. 

For example, assume that Jack marries Jill on January 19.  Jack submits the election change request to enroll Jill on January 22.  Jill’s coverage should be effective no later than February 1.

Now assume that Jack marries Jill on January 19, but does not submit the election change request to enroll Jill until February 14.  Jill’s coverage should be effective no later than March 1.

• For more details: When Mid-Year Election Changes are Effective

Here's a slide summary:

2024 Newfront Section 125 Cafeteria Plans Guide

Once again, Thank you very much Brian.