Michelle's Law: Coverage during Medical Leave from College

Executive Summary:  A new Federal law will soon require group health plans to continue coverage for dependent college students who take a medical leave. If a college or university student, covered as a dependent on a parent's plan, takes a "medically necessary" leave of absence from school, the plan must continue the student's eligibility for benefits.  This medical leave continuation can last up to one year unless coverage would end earlier for another reason. 

Effective Date:  The changes required by Michelle's Law become effective for plan years that start on or after October 9, 2009.  Calendar year plans must comply starting January 1, 2010.

Background:  Most health plans extend dependent coverage to age 23 for children who attend college or university full time.  Thus, a dependent that must switch to part time status or leave school because of a serious injury or illness would lose coverage.  One such student was Michelle Morse, after whom the law is named.  Her battle with cancer affected her status as a full time student and she faced loss of health plan coverage at the very time she needed it most.

Impact On Group Health Plans:  Virtually all group health plans must comply with Michelle's Law if they offer dependent coverage to students in post secondary education institutions.  This includes plans that are fully insured or self-funded plans and are sponsored by private sector employers, most state and local governments, and churches.

If the sponsor changes carriers, coverage must continue as if the dependent has maintained student eligibility.

Two types of plan are exempt from Michelle's Law:  a group plan covering fewer than 2 employees, and certain self insured state and local government plans that take specific steps to opt out.

Eligibility under Michelle's Law:  The following conditions must be met for an individual to receive extended coverage under Michelle's Law:

·         The health plan offers coverage to dependents.

·         The health plan uses student status as one of the determinants of eligibility.

·         The student has group coverage immediately before the first day of the medical leave.

·         While a student, the dependent suffers a serious injury or illness that requires a leave from studies or a change in enrollment status.

·         The dependent's physician provides a written certification of the serious illness or injury and that it necessitates a leave of absence or change in enrollment status, that is, the leave is "medically necessary."

·         The medical leave or change in enrollment status would cause a loss of dependent coverage.

New Notice Requirement:  If the employer sponsor or the carrier requires a formal certification of student eligibility, then the materials that describe that requirement must also describe the student's right to continue coverage during a medically necessary leave or change in student status.  The materials or notice must also provide information on the process for obtaining that continuation of coverage.

Michelle's Law & COBRA:  Neither Federal lawmakers nor regulators have yet to provide explanation or guidance on the relationship between coverage under Michelle's Law and COBRA.  At issue, for example, is a situation where a dependent on student medical leave becomes eligible for COBRA because of the parent's loss of coverage.    When would COBRA start, at the end of the one year medical leave coverage or immediately?

Suggested Action Items for Plan Sponsors

Only those plans that offer dependent coverage with post secondary student eligibility need take action.  Such plans should consider the following steps:  [Regardless of the type of plan, the sponsor should ensure that all plan materials reflect the requirements of Michelle's Law and that any internal staffs [e.g., Human Resources staff] that coordinate benefits are familiar with the changes.]

·         Fully insured plans:  Insurance carriers should make the required changes to plan materials before the next open enrollment.  Prior to open enrollment, plan sponsors should review plan materials to ensure that they reflect the requirements of Michelle's Law.  This review should encompass: carrier's booklet or certificate of coverage, enrollment materials and any forms relating to student status certification. 

·         Self-funded plans:  The sponsor should ensure that the Plan Administrator or TPA revises all plan materials to reflect the requirements of Michelle's Law.  The following documents can require change: the plan document or certificate of coverage, the summary plan description, enrollment information pieces and any forms used for student status certification.

Mental Health Parity & Group Coverage

Executive Summary:  Beginning in 2010, a revitalized Federal law will require health plans to cover mental health and substance use disorders on a par with physical illness benefits.  The Mental Health Parity law applies to plans that provide both mental health and physical health benefits.  It does not require a plan to offer mental health or substance abuse benefits and small employers are exempt.  Under certain conditions, a plan may apply for an exemption if its total costs increase beyond a threshold percentage because of the parity mandate.

Background:  As part of the Bush era economic rescue legislation [aka Emergency Economic Stabilization Act of 2008], Congress enacted Mental Health Parity for certain group health plans.  In some respects, Mental Health Parity is not new.  The essential provisions were first enacted in 1996.  Despite being scheduled to end after several years, Parity was extended numerous times until it was made permanent by being added to the 2008 bailout legislation.

The parity provisions that were grafted onto the economic rescue legislation were originally constructed as the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.  The Wellstone Domenici bill added several new components to the original Parity Act.

Effective Date:  Congress deferred the original effective date of the Parity Act so that it takes effect with plan years that begin on or after January 1, 2010.

Who Must Comply?  Employer sponsored health plans and insurance policies that provide both physical and mental health benefits.  Both private and public sector employers must comply.  However, employers with an average of 50 or fewer employees in the preceding year ["Small Employers"] are exempt from the Parity provisions.

Key Components

The Act does not require coverage of mental health or substance use.  However, when the plan does cover both physical and behavioral disorders, there must be equity or parity between the benefits. The principal provisions or components of the Mental Health Parity include the following:

• Substance Use Disorders:  The Mental Health Parity Act adds "substance use disorders" to the mental health disorders that must receive equitable benefits.  Hereafter, the combined mental health and substance use disorders will be referred to as "behavioral" disorders.
• Benefit Coverage:  The Act mandates parity or equity between physical and behavioral benefits.  Essentially, parity means that financial coverage and treatment limitations for behavioral disorders "cannot be more restrictive" than for "the predominant" requirements for substantially all medical, surgical, outpatient plan benefits. 

o        Financial Coverage benefits include: cost-sharing [e.g., co pays and deductibles] and out-of-pocket limits. The Act excludes an aggregate lifetime limit and an annual limit.

o        Treatment Limitations include: days of inpatient coverage, number of covered office visits, out of network coverage and other similar limits on duration or scope of services.

Medical Necessity Criteria:  The Parity Act requires an employer sponsored plan to "disclose" to providers and to plan participants, both present and potential, the criteria that it uses to determine "medical necessity."

Cost Exemption:  A group health plan can apply for an exemption from the parity requirements. When Mental Health Parity bills were introduced in 2008 in both the House and the Senate, the Congressional Budget Office estimated that the average cost increase for a plan would be less than 0.4 percent.  To obtain the release from parity, a plan must submit an actuarial certification that parity will increase the plan's total cost of coverage by more than 2 percent in the first year and 1 percent in each subsequent year.  The exemption can only be claimed after a plan has complied with the Act for 6 months.

Suggested Action Items for Employers

Self-Funded Health Plans:  If the plan covers both behavior and medical/surgical benefits, revise all plan documents and materials to include the requirements of the Parity Act. 

Fully Insured Plans covering more than 50 employees:  Insurance carriers have the responsibility for plan compliance.

Executive Summary:  A Federal law that takes effect this year prohibits discrimination in health coverage and employment on the basis of genetic information.   The Genetic Information Nondiscrimination Act [GINA] applies to employers, health plans and insurance carriers and places restrictions on the acquisition, use or disclosure of an individual's genetic information.  Compliance actions will be required for employers with 15 or more employees and all self- funded health plans.

Responsibility for compliance with the health benefits provisions depends on the type of plan offered.  For fully insured health plans, carriers who issue the coverage will have total responsibility for complying with GINA.  Since the plan sponsor has ultimate responsibility for self-funded plan administration, it must ensure compliance.

The Major Provisions of GINA

The Genetic Information Nondiscrimination Act of 2008 or GINA amends ERISA, the IRS Code and HIPAA.  Federal regulators have issued rules for the Employment part but not for the Health Benefits provisions.  GINA has 2 major focuses or parts: Health Benefits Coverage and Employment.

·         Eligibility or coverage determinations.

·         The exclusion of preexisting conditions.

·         The development of premium rates for specific individuals.  This means that an individual cannot be charged a higher premium or contribution because of the genetically related disease or condition. However, the group's total premium can be increased because an individual has a disease or condition, even when genetically related. 

Genetic test results can be requested and used by plan administrators to make health insurance payment or claims decisions.

·         Prohibitions:
Employers cannot use genetic information as part of any employment related decision.  This includes: job application or employment termination, compensation, promotion, benefits, training, or any other terms or conditions of employment.  Further, genetic information cannot be used to classify an employee in a way that adversely affects employment status or opportunities.

·         Restricted Access:
Except for work related health or genetic monitoring programs or compliance with law, GINA denies employers access to individually identifiable genetic information.

·         Confidentiality Protections:
An employer must treat any genetic information in its possession as a confidential medical record.  This requirement includes storing the genetic information apart from other personnel records, securing the information [e.g., in a locked location] and restricting access to the genetic file.   Furthermore, GINA expanded HIPAA protections to specifically identify genetic information as "protected health information."

Suggested Action Items for Employers

For Self-Funded Health Plans:  Review plan administration to exclude the use of genetic information in all eligibility or underwriting decision processes. 

For Employers with 15 or More Employees: 

·         Audit current human resources practices to:

o        Identify any requests or use of genetic information in the decision processes relating to hiring, firing, promotions, or any terms of employment.

o        Take steps to end any such requests or use.

o        Develop and implement procedures that prohibit the use of genetic information in employment related decisions.

·         Develop and implement procedures for the confidential and separate storage of any necessary genetic information that is permitted to be retained under GINA.

·         Reporting for plans that are fully insured is the responsibility of insurance carriers.  Generally, employer sponsors of fully insured plans need take no direct action in relation to this mandate.

·         Data for any plan administered by a third party, a TPA, will be reported by the TPA.  Since self-funded employers are ultimately responsible for their plans, they should confirm with their TPAs that the required data is being reported to CMS.

·         If an employer both self funds and self administers its own plan, for example, pays its own claims, the employer or the plan fiduciary must report the required date to CMS.