Transcript M.E.P.A. Mississippi Employment Protection Act

COBRA and The Recovery Act
www.brunini.com
©2009
Today’s Topics
Recent Legislative Enactments Impacting:

Consolidated Omnibus Budget Reconciliation Act (COBRA)
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Health Insurance Portability & Accountability Act (HIPAA)
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Family and Medical Leave Act Amendment Act (FMLA)
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Children’s Health Insurance Programs (CHIPs)

Miscellaneous Employment Issues
What is COBRA?

COBRA = “Consolidated Omnibus Budget Reconciliation
Act of 1986”
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Amended ERISA, Internal Revenue Code & Public
Health Service Act
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Requires most group health plans to provide temporary
continuation of group health coverage that might
otherwise be terminated
“Types” of COBRA

2 “Types” of COBRA: Federal and State
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Federal COBRA:
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Generally, applies to all private-sector group health plans
maintained by employers that have at least 20 employees on more
than 50% of its typical business days in the previous calendar year
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State (Mississippi) COBRA:
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Miss. Code Sec. 83-9-51 - Generally, applies to any employer that:
• Offers a group accident and health insurance policy or group certificate delivered
or issued for delivery in Mississippi by an insurer;
• A non-profit hospital, medical and surgical service corporation;
• A health maintenance organization (HMO);
• A fully insured multiple employer welfare arrangement; or
• Any combination thereof.
Who is Entitled to “Continuation Coverage”?
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A group health plan is required to offer continuation coverage
only to “qualified beneficiaries” and only after a “qualifying event”
has occurred
“Qualified Beneficiary” – An individual covered by a group health
plan on the day before a qualifying event and who is either a
covered employee, the employee’s spouse or former spouse, or
the employee’s dependent child
In some cases, retired employees may become “qualified
beneficiaries” (i.e., bankruptcy of the employer)
Agents, independent contractors, and directors who participate
in the group health plan may also be “qualified beneficiaries”
“Qualifying Events”
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“Qualifying Events” – Events that cause an individual to lose group health
coverage.
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Examples of “Qualifying Events” for Covered Employee:
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The type of “qualifying event” determines who the qualified beneficiary are for
that event and the period of time that a plan must offer continuation coverage
Termination for any reason other than “gross misconduct”; or
Reduction in hours worked by covered employee.
Examples of “Qualifying Events” for Spouse & Dependent Child of
Covered Employee:
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Termination of covered employee for any reason other than “gross misconduct”;
Reduction in hours worked by covered employee;
Covered employee becomes entitled to Medicare;
Divorce or legal separation of the spouse from covered employee;
Loss of dependent child status or
Death of a covered employee.
COBRA Benefits
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COBRA Continuation Coverage must be identical to the coverage that is
currently available under the plan to similarly situated individuals who are
covered under the plan and not receiving “continuation coverage”
•
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Generally, this is the same coverage the beneficiary was receiving immediately
before the “qualifying event”
Mississippi (State) Continuation Coverage
•
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This is the same coverage the beneficiary was receiving immediately before the
“qualifying event”
Maximum continuation period = 12 months
Benefits in addition to hospital, surgical or major medical benefits (i.e., dental,
vision & other benefits) are not continued
Duration of COBRA
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Duration of COBRA Coverage depends on the “qualifying event”

If “Qualifying Event” = Termination or Reduction in Hours
• Qualified beneficiaries entitled to 18 months of continuation
coverage
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If “Qualifying Event” = Employee’s Death, Divorce or Legal Separation;
Employee becoming entitled to Medicare; or Dependent losing
dependent status
• Qualified beneficiary entitled to up to 36 months of continuation coverage
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If “Qualifying Event” = Termination or Reduction in Hours AND
Employee became entitled to Medicare less than 18 months before
“qualifying event”
• Beneficiaries entitled to up to 36 months from date employee became
entitled to Medicare
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Ex: Employee becomes entitled to Medicare 6 months before he is terminated.
Termination is “qualifying event.” Beneficiaries are entitled to 30 months of
COBRA continuation coverage (36 months minus 6 months)
Exceptions to COBRA Duration
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Early Termination of COBRA Continuation Coverage
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COBRA coverage may terminate early for the following reasons:
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Premiums not paid in full on a timely basis
Employer ceases to maintain the group health plan
Qualified Beneficiary begins coverage under another group health plan
Qualified Beneficiary becomes entitled to Medicare benefits
Qualified Beneficiary engages in conduct that would justify the termination of coverage
of a similarly situated individual not receiving continuation coverage (i.e., fraud)
Notice must be provided upon early termination
Extensions of COBRA Continuation Coverage
• When a Qualified Beneficiary is “disabled”
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If certain requirements are met, entire family can receive 11 month
extension (up to 29 months) at an increased premium (150%)
• When a 2nd “Qualifying Event” occurs
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Certain limitations apply
Paying for COBRA Continuation Coverage
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Group health plans can require can require payment for COBRA
Continuation Coverage (optional)
Maximum amount cannot exceed 102% of cost of typical plan
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100% of costs paid by both employee and employer
2% to cover administrative costs
• For Continuation of State Coverage, cost is no more than 100% of full group
rate at due date of each payment
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COBRA charges can increase, if the cost of the plan increases
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Must allow for payment on monthly basis at beneficiary’s election
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Generally, must be fixed in advance of 12-month premium cycle
May allow for other options (weekly, quarterly, etc.)
COBRA plans cannot require initial premium payment until 45 days
after election
Coordination with Other Benefits
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COBRA and Family and Medical Leave Act (FMLA)
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Taking FMLA leave ≠ “Qualifying Event” for COBRA
During FMLA leave, employee receives typical coverage under group health
plan; not “continuation coverage” under COBRA
COBRA and Health Insurance Portability & Accountability Act (HIPAA)

In some cases, HIPAA requires special enrollment periods for individuals who
previously declined coverage
• No waiting until next “open enrollment period” under plan

Under HIPAA, any pre-existing condition exclusion period that would apply under
a group plan is generally reduced by the number of days of “creditable coverage”
that occurred without a break in coverage, up to 63 days
COBRA & Mississippi Workers Compensation Act
COBRA and The Recovery Act
The Recovery Act
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The American Recovery & Reinvestment Act (ARRA) was signed
into law on February 17, 2009
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The Recovery Act modifies some COBRA Continuation Coverage
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The Recovery Act applies to:
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ERISA plans
Public Health Services Act enrollees
Federal Employee Health Benefit Plan enrollees
Plans covered under a State program (i.e., Mississippi COBRA)
The Recovery Act’s Key Modification to COBRA:
A federally-funded COBRA premium reduction/subsidy for eligible
individuals
Who is Eligible for the Premium Subsidy?
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The Premium Subsidy is available to “Assistance Eligible Individuals” (AEIs)
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What is an “Assistance Eligible Individual” (an AEI)?:
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An Employee or a member of his/her family who is:
• A “Qualified Beneficiary”; and
• Where covered employee has been Involuntarily Terminated between
September 1, 2008 and December 31, 2009
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Thus, does not apply to other categories of “Qualified Beneficiaries”
For Individuals ≥ $125,000 / Couples ≥ $250,000:
• Potential tax consequences for accepting premium subsidy
What is the COBRA Subsidy?
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The Premium Reduction/Subsidy provides:
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Employer pays 65% of the COBRA Continuation Coverage Premium
• Presumably, 65% of 102% of typical premium
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65% of 100% on State plan
“AEI” pays for 35% of COBRA Continuation Coverage Premium
• Presumably, 35% of 102% of typical premium
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35% of 100% on State plan
Employer entitled to offset of its payroll tax liability for each subsidy paid
Duration of COBRA Subsidy
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Premium Subsidy may last up to 9 months
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Thus, latest subsidy date would be September 2010
Premium Subsidy will end early if:
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“AEI” becomes eligible for other group health coverage (including plan offered by
a new employer or spouse’s new employer)
• Does not apply to plans offering only dental and/or vision coverage
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“AEI” becomes eligible for Medicare
Maximum period for COBRA Continuation Coverage ends for the “AEI”
• The Unexplained Termination
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“AEI” has responsibility to notify employer of end of eligibility for subsidy
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Notification must be in writing
Subject to requirements to be specified by the Dept. of Labor
Failure to notify = Penalty to “AEI” of 110% of Premium Subsidy
Employer’s Responsibilities
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Review of Terminated Employees during subsidy period
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Determine nature of termination
If involuntarily terminated, determine
Continuation Coverage was requested
whether
COBRA
• If so, notify of the Premium Reduction
• If declined, notify of the new Premium Reduction opportunity
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Special enrollment period for “AEI”s who initially declined COBRA
Continuation Coverage, or who accepted and then dropped COBRA
Continuation Coverage
Special enrollment does not apply to State COBRA plans
Employer’s Responsibilities (cont’d)
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Set up Protocols for Maintaining mandatory documents.
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Information on the receipt, including dates and amounts of the AEI’s 35% share
of the premium
For insured plans, a copy of invoice or other supporting statement from
insurance carrier & proof of timely payment of fully premium to carrier
For self-insured plans, proof of premium amount and proof of the coverage
provided to the AEI
Attestation of involuntary termination, including:
• Date of Involuntary Termination for each covered employee
Proof of AEI’s eligibility & election for COBRA Continuation Coverage at any time
during period
Record of SSN’s of all covered employees, the amount of the subsidy
reimbursed with respect to each covered employee & whether the subsidy was
for 1 or more individuals
Other documents necessary to verify the correct amount of reimbursement.
Mechanics of Reimbursement
New Federal Form 941
Mechanics of Reimbursement
New Federal 941 Instructions
Department of Labor Updates
www.dol.gov/ebsa/COBRA.html
HIPAA and The Recovery Act
The Health Information Technology for
Economic and Clinical Health Act
(The HITECH Act)
Title XII of the Recovery Act
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Effective with passage of the Recovery Act on February 17, 2009
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The Recovery Act greatly expands existing federal regulations on
health information technology
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Title XII of the Recovery Act – “The HITECH Act”
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Requires Business Associates to comply with HIPAA Privacy & Security
Rules
Mandates compliance with new notification policies for breaches of
unsecured protected health information (“PHI”)
Increases enforcement of penalties for violations of Privacy & Security
Rules
Application of Privacy & Security Rules to Business Associates
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Prior to the Act, Privacy & Security Rule Penalties only applied to Covered Entities
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Who is a “Business Associate”?
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An individual or corporate “person” that performs any function or activity on behalf of the
covered entity involving the use or disclosure of PHI and is not a part of the entity’s workforce
Under the Act, Business Associates under contracts with covered entities are
required to be in full compliance with Privacy & Security Rules
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Business Associates complied with these Rules through their contracts with these entities
Penalties limited to breach of contract
Subject to same civil & criminal penalties as the covered entity
Must meet the requirements of HIPAA’s Security Rule & Privacy Rule
Covered entities will need to amend their Business Associate agreements to reflect
these heightened requirements
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Most provisions under the Security/Privacy Rules have a February 17, 2010 compliance date
Breach Notifications
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What is a “Breach”?
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Unauthorized acquisition, access, use or disclosure of PHI which compromises the security,
privacy or integrity of PHI
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Prior to the Act, Covered Entities were not required to provide notice to patients or
HHS of breaches
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Under the Act, Covered Entities now required to notify individuals whose “unsecured
PHI” has been accessed or disclosed as the result of a breach
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Also, Business Associates are to notify Covered Entities of such breaches
What is “unsecured PHI”?
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PHI that is not secured through the use of a technology or methodology specified by HHS
HHS will issue guidance by May 16, 2009 as to the appropriate technology or methodology
to be used to encrypt/secure
Breach Notifications (cont’d)
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Notice must be in writing, via first class mail to last known address, “without
reasonable delay” to the individual or next of kin (if deceased)
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No later than 60 days after discovery of breach
Substitute notification permitted in certain situations
Notice must:
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Briefly describe what happened
Date of occurrence
Date of discovery
Type of information breached
Steps the individual should take to protect themselves
Brief description of the investigation and mitigation process
Contact information
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Additional notification requirements for breaches of multiple individuals, including
notification to HHS
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Further guidance on Breach Notification Provisions due by August 16, 2009
Disclosures of PHI
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Accounting of Disclosures:
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Previously, HIPAA grants patients right to receive accounting of certain disclosures of
their PHI for 6-year period prior to their request
Under the Act, Covered Entities must now account to patients for disclosures of their
PHI for purposes of treatment, payment or health care operations for 3-year period
prior to request
• Not previously required as part of accounting
• Will require health care entities to reevaluate their electronic health record (EHR) technology
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Patients’ Access:
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Under the Act, individuals are given the right to obtain a copy of their PHI in electronic format (if
entity uses EHR)
Restrictions on Disclosure:
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Entities that did not have EHR as of 1/1/09 have until 1/1/2011 to comply (or until they acquire EHR)
Entities that had EHR on 1/1/09 have until 1/1/2014 to comply
Under the Act, Covered Entities required to grant requests for restrictions on disclosures, if
disclosure is to health plan to carry out payment or health care operations and the PHI pertains to
service for which the patient paid out-of-pocket
“Minimum Necessary”: Act requires HHS to issue guidance by August 17, 2010
Enforcement
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Criminal Penalties
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Under the Act, individuals may now be held criminally liable for obtaining or
disclosing, without authorization, identifiable health information maintained
by Covered Entity
Civil Penalties
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Under the Act, HHS is now required to investigate any complaint that may
have resulted from “willful neglect” by a Covered Entity/Business Associate
Victims can now receive share of penalties collected
• After compensation methodology is completed – February 17, 2012
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The Act establishes civil monetary penalties between $100-$50,000 per
violation, depending on nature of violation
Audits
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Secretary of HHS must conduct periodic audits to confirm that
Covered Entities/Business Associates are in compliance
Incentives Under Medicare
Under Medicare:
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Eligible professionals can receive incentive payments of up to
$48,400 over a 5 year period to adopt EHR technology
Eligible Hospitals that begin implementing EHR are eligible to
receive incentive payments between 2011-2015
If eligible professionals fail to adopt EHR by 2015, Medicare can
penalize by reducing Medicare payments
Medicare – “Eligible Professionals”
What is a Medicare “Eligible Professional”?
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A doctor of medicine or osteopathy
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A doctor of dental surgery or of dental medicine,
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A doctor of podiatric medicine
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A doctor of optometry
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A chiropractor
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A “Meaningful EHR use” shall be paid an amount equal to seventy-five (75%) of the Secretary’s
estimate of the allowed charges for all covered professional services furnished by the eligible
professional during such year.
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The amounts available to the eligible professional varies depending upon the year the EHR
technology is adopted by such eligible professional.
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If an eligible professional predominantly furnishes services in an area that is designated as a
health professional shortage area (HPSA), then the amount that would otherwise be available to
the eligible professional shall be increased by ten percent (10%).
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If not a “Meaningful EHR user” by 2015, then the eligible professional’s fee schedule amount will be
reduced by an applicable percentage
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If the proportion of eligible professionals who are meaningful EHR users is less than seventy-five
percent (75%), the Act authorizes the Secretary to decrease the applicable percent by 1
percentage point from the applicable percent in the preceding year, but in no case shall the
applicable percent be less than ninety-five percent (95%).
Medicare Incentives - Hospitals
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What is an “Eligible Hospital”?
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A critical access hospital or a subsection (d) hospital.
A Subsection (d) hospital does not include:
• Rehabilitation hospitals
• Hospitals where the patients are predominantly under age 18 Hospitals having average
inpatient stays of greater than 25 days
• Hospitals involved extensively in the treatment of or research on cance
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To qualify, Hospital must be a “Meaningful EHR User”
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Incentive payment is called “Hospital Medicare Incentive Payment Calculation”
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= Initial Amount x Medicare Share x Transaction Share
Medicaid Incentives
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Certain Medicaid providers may receive incentive Medicaid payments for the
adoption of certified EHR technology
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Only the following eligible professionals are eligible for incentive payments:
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Eligible professionals:
• Is Not hospital-based, and
• At least 30% of patient volume is attributable to individuals receiving Medicaid assistance
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Pediatricians:
• Not hospital-based, and
• At least 20% of patient volume is attributable to individuals receiving Medicaid assistance
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Eligible professionals:
• Practice primarily in a rural health clinic or a federally qualified health center, and
• At least 30% of patient volume is attributable to individuals receiving Medicaid assistance
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A Medicaid provider also includes:
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A children’s hospital of patient volume is attributable to individuals receiving Medicaid
assistance
An acute care hospital that has at least 10% of patient volume is attributable to
individuals receiving Medicaid assistance
2008-2009 Amendments to the
Family and Medical Leave Act
FMLA Basics
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Enacted in 1993
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Applies to Employers with ≥ 50 Employees
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Employer is required to give each Employee 12 weeks of unpaid, job-protected
leave during a 12 month period
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For Employee’s own “serious health conditions”; or
Because Employee must care for:
• Newly born/adopted child; or
• Spouse, child, or parent with “serious health condition”
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Employee “required” provide Employer with 30 days advance notice of needed
FMLA leave when possible
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If 30 days is not possible, Employee must provide notice “as soon as practicable”
Employee should comply with normal “call-in” procedures
Employers may require use of accrued, paid leave during FMLA leave
2008-2009 Changes to FMLA
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January 28, 2008: President Bush signed National Defense Authorization
Act for FY 2008 into law

The NDAA contained new FMLA leave entitlements for military families
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November 17, 2008: Dept. of Labor published its Final Rule implementing
the amendments set forth in the NDAA, as well as additional enhancements
to FMLA
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January 16, 2009: Final Regulations became effective
Highlights of FMLA Regulatory Changes
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Military Caregiver Leave
Qualifying Exigency Leave
Ragsdale Decision/Penalties
Light Duty
Waiver of Rights
“Serious Health Conditions”
Substitution of Paid Leave
Perfect Attendance Awards
Employer Notice Obligations
Employee Notices
Medical Certification Process
Fitness-For-Duty Certifications
Military Caregiver Leave
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Who is Covered: Employees who are family members of covered service
members
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Extends FMLA protection to additional family members (i.e., next of kin)
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What is Provided: 26 workweeks of job-protected leave in a single 12month period to care for a covered service member with a serious illness or
injury that occurred in the line of duty on active duty
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Employee must still meet normal FMLA eligibility requirements
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Have worked for covered employer for total of 12 months;
Have worked for at least 1,250 hours over previous 12 months; and
Worked at a location where at least 50 employees are employed by company
within 75 miles
Qualifying Exigency Leave
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Who is Covered: Employees with a covered military family member serving in the
National Guard or Reserves
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What is Provided: 12 workweeks of protected leave for eligible employees to use for
“any qualifying exigency” arising out of the fact that military member is on active duty
or called to active duty status in support of a contingency operation
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What are “Qualifying Exigencies”:
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Short-notice Deployment
Military events & related activities
Childcare and school activities
Financial & legal arrangement
Counseling
Rest & recuperation
Post-deployment activities
Additional activities agreed to by employer & employee
“Serious Health Condition”
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Per the Final Rule
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Six individual definitions of “serious health condition” are retained
Guidance on three miscellaneous regulatory matters:
• One definition of a serious health condition defined as: more than 3
consecutive, full calendar days of incapacity PLUS two visits to a health
care provider
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Per the Final Rule – The 2 visits must occur within 30 days of the beginning of the
period of incapacity & the first visit must occur within 7 days of the first day of
incapacity
• A second definition of serious health condition defined as: more than 3
consecutive days, full calendar days of incapacity PLUS a regimen of
continuing treatment

Per the Final Rule – The first visit to the provider must take place within 7 days of
the incapacity
• Also, Final Rule defines “Periodic Visits” for chronic serious health conditions
as at least 2 visits to a provider per year
Miscellaneous Changes
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Ragsdale Decision/Penalties
Light Duty
Waiver of Rights
Substitution of Paid Leave
Perfect Attendance Awards
Employer Notice Obligations
Employee Notices
Medical Certification Process
Fitness-For-Duty Certifications
Children’s Health Insurance
Program Reauthorization Act
of 2009
Highlights of CHIPS Reauthorization
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Signed in to law on February 4, 2009
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Goes into effect on April 1, 2009
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Reauthorizes and expands state children’s health care program
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State Children’s Healthcare Program gives matching funds to states
in order to provide health insurance to families with children
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Created under Title XXI of the Social Security Act
States given flexibility in designing SCHIP eligibility requirements and
policies with federal guidelines
Effective April 1, 2009
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All group health plans are required to allow any eligible employee or
eligible dependent to enroll under the plan if:
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They lose coverage under a Medicaid plan or a State CHIP (SCHIP)
and request to be enrolled under the group plan within 60 days of loss
of coverage of under Medicaid or SCHIP; or
They become eligible for assistance, with respect to coverage under the
group health plan, under such Medicaid plan or State child health plan
(including under any waiver or demonstration project conducted under
or in relation to such a plan) and if the employee/dependent requests
coverage under the group health plan not later than 60 days after the
date he/she is determined to be eligible for such assistance.
Employer Requirements
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Health plan documents need to be amended immediately
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CHIP creates a “special enrollment” period for Medicaid/CHIP impacted
employees/dependents
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At the very least, notices need to go out to all persons covered under the group
health plan to inform them of these rights
$100 “excise tax” on group health plans that fail to follow enrollment provisions
Required to provide information to the State concerning its group health
plan so the State & Federal governments can determine:
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What type of coverage is available for “creditable coverage”
Cost analysis related to premium assistance
Study whether the State needs to provide supplemental benefits
Impact on the State of Mississippi
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The State of Mississippi does not offer Premium Assistance under
CHIP, so the assistance condition in not applicable at this time.
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However, to the extent the plan may cover employees/dependents in
other states whose CHIP programs offer premium assistance, the
employer will need to amend its group plan to provide assistance
eligibility to provide this assistance
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Also, to provide Notice of this assistance to employees
• Failure to provide required Notices can result in:
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$100/day fine to employer beginning on date notice was required (per participant)
$100/day fine to plan administrator for failing to provide State with required info.
(per participant)