Transcript Document

When Health
Coverage Ends
PASBO 48th Annual Conference
March 20, 2003
NCAS Pennsylvania
P.O. Box 778974
Harrisburg, PA 17177-8974
(717) 541-3800
www.ncaspa.com
Presented by: Linda M. Zeigler
Executive Director
AGENDA
Continuation of Group Health Care Coverage
– the Legislative Arena
COBRA Considerations for the School Employer
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Definitions
Responsibilities of the Employer/Employee/Plan Administrator
COBRA & FMLA
COBRA & Medicare
COBRA & Cafeteria Plans
COBRA & Disability Extensions
COBRA & Reduction or Elimination of Coverage
Continuation Coverage Mandated Under Public School Code 5-513
 Requirements
 School Employer Responsibilities
HIPAA Certificates of Credible Coverage
 HIPAA Certificate Requirements
 Responsibilities of Employer and Plan Administrator
When Coverage Ends – Compliance Issues
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Continuation of Group Health Care Coverage
– The Legislative Arena
 The escalating national problem of uninsured citizens continues and
intensifies.
 Legislative response to guarantee workers under group plans equal
access to health care coverage, protection from stringent pre-existing
condition exclusions, portability of benefits between employers,
access to purchase coverage beyond termination dates, and rights for
dependents losing coverage.
 Recent legislative proposals continue in the direction of individual
protections: for example, Federal act granting premium tax relief
to workers losing coverage in corporate bankruptcies; proposals to
extend COBRA continuation periods.
 Employers are being required to assume additional liability while
premiums are increasing 15%+ annually.
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COBRA Considerations for the
School Employer
COBRA Definitions
– What is a Qualified Beneficiary?
• Any individual who, on the day before a qualifying event, is
covered under a group health plan as an employee or as a
spouse or dependent child of the employee
• Any child born or placed for adoption with a covered employee
during a period of COBRA continuation coverage
• In the event of a qualifying event that is an employer
bankruptcy, an employee who had retired on or before the loss
of coverage and the spouse or dependent child of that employee
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COBRA Considerations for the
School Employer
(Continued)
COBRA Definitions
– What is a Qualifying Event?
• A qualifying event is an event that causes the covered
employee, or the spouse or dependent child of the covered
employee to lose coverage under the plan.
THE EVENT IS ANY OF THE FOLLOWING:
• The death of a covered employee
• The termination, or reduction of hours, of a covered employee
resulting in loss of coverage
• The divorce or legal separation from the employee’s spouse
• A covered employee’s becoming eligible for Medicare Benefits
• A dependent child’s ceasing to be a dependent child of a
covered employee
• A bankruptcy of the employer from whom a covered employee
retired at any time
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COBRA Considerations for the
School Employer
(Continued)
– Initial Notice of COBRA Rights
Required at the time of the employee’s initial employment
Written notice and/or inclusion of COBRA rights in the plan
booklet given to the employee
– Employer/Employee Responsibilities
When a Qualifying Event Occurs
Employer must notify the plan administrator within 30 days
of termination; loss of coverage due to reduction in work
hours; death of employee; employee entitlement to Medicare.
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COBRA Considerations for the
School Employer
(Continued)
COBRA Definitions
– What is the Continuation Period Per Event?
Event
• Termination or reduction of hours of
covered employee
Period
18 months
 If second qualifying event occurs within
the 18 month period, period will be
extended to 36 months for qualified
beneficiaries other than employee
 If employee is disabled on the date of
the qualifying event, or within 60 days,
continuation period is 29 months for
qualified beneficiary and all family
members
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COBRA Considerations for the
School Employer
(Continued)
COBRA Definitions
Event
• Divorce or legal separation from employee
Period
36 months
• Death of covered employee
36 months
• Dependent child losing dependent child
status
36 months
• Bankruptcy of employer under Title 11
 COBRA applicable to retirees who retired
on or before the substantial elimination of
coverage and their spouses and dependents
 for covered employees (and their covered
widows) who retired on or before the date
of elimination of coverage – lifetime coverage
 for covered spouses/dependents of a
retiree – 36 months after the retiree
date of death
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COBRA Considerations for the
School Employer
(Continued)
Responsibilities of the
Employer/Employee/Plan Administrator
- Employer/Employee Responsibilities
When a Qualifying Event Occurs
Employee/Qualified Beneficiary must notify plan administrator or employer
within 60 days of divorce or legal separation; dependent child ceasing to
qualify as dependent.
In the case of a request for disability extension, the Qualified Beneficiary
must provide notice of Social Security determination to the plan
administrator or the employer within 60 days of the date of the
determination.
- Plan Administrator Responsibilities
When Notice of Qualifying Event is Received
Plan administrator has 14 days from the date of receiving the Qualifying
Event information to issue the COBRA rights notice to the Qualified
Beneficiary.
The plan administrator monitors the timelines for receipt of initial and
subsequent premiums, and issues termination information as appropriate.
Premium Payment Requirements
Initial premium must be paid within 45 days of the COBRA election.
Subsequent premiums must be made within 30 days of the first day of the
coverage period.
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COBRA Considerations for the
School Employer
(Continued)
COBRA
&
The Family Medical Leave Act of 1993
(FMLA)
• The topic is addressed in Section 54-4980B-10 of the
proposed COBRA regulations with five questions and answers.
• An employee covered under the health plan immediately prior
to or during FMLA would have a qualifying event on:
- Date of notification to the employer
of the intent not to return
- Date when the employee does not return
at the end of the leave period
• The employer cannot condition the employee right to COBRA on
payment of premiums required while on FMLA.
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COBRA Considerations for the
School Employer
(Continued)
COBRA
&
Medicare
• COBRA Law – COBRA coverage ceases when an individual
becomes “entitled” to (actually covered by) Medicare.
• In instances where the covered employee becomes entitled to
Medicare, the period of COBRA available to the spouse or
dependent child can be as long as 36 months from the date of
Medicare coverage, but in any event will not be less than 18
months.
• COBRA administrators can notify a beneficiary that COBRA will
cease when they are eligible for Medicare. The beneficiary has
the right to continue COBRA if Medicare is not in effect.
• Entitlement to Medicare must first arise after a COBRA qualifying
event to constitute a reason for termination of COBRA.
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COBRA Considerations for the
School Employer
(Continued)
COBRA
&
Cafeteria Plans
• Medical plans under a flexible benefit plan are subject to COBRA
• Qualified beneficiaries are those covered under one of the health
plans on the day prior to the qualifying event.
• Employees who opt out of all health plans are not eligible for COBRA
• The qualified beneficiary who has elected COBRA has the same
rights as active employees for elections of health options available
during the open enrollment process.
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COBRA Considerations for the
School Employer
(Continued)
COBRA
&
Disability Extensions
• The 1989 Omnibus Budget Reconciliation Act allows qualified
beneficiaries to an extension of 11 additional months if they meet
the requirements and are determined to be eligible for Social
Security disability.
• The disability extension for COBRA applies to all qualified
beneficiaries covered with the disabled beneficiary through the
same initial qualifying event. Each qualified beneficiary may elect
the extension independently.
• Conditions allowing the COBRA extension are:
- A covered family member is determined to have been
disabled during the first 60 days of COBRA coverage.
- The disabled individual, or other covered family member,
gives the plan administrator notice of the disability
determination within 60 days of the determination.
The determination that a qualified beneficiary no longer is disabled,
results in the termination of COBRA for all qualified beneficiaries who
were entitled to the extension, but not before the end of the maximum
initial COBRA period.
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COBRA Considerations for the
School Employer
(Continued)
COBRA
&
Reduction or Elimination of Coverage
• The 1999 final IRS COBRA regulations specify that a
reduction or elimination of coverage is disregarded if in
anticipation of a qualifying event.
• If coverage for a spouse is cancelled pending a divorce or legal
separation, COBRA must still be offered.
• Upon notice of divorce or legal separation, the Employer must
make coverage available effective the date of the divorce or legal
separation.
• Timely notification (60 days) to the Employer applies in
determining the Employer’s responsibility to extend COBRA
notification.
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Continuation of Coverage
Mandated Under Public School Code 5-513
Public School Code 5-513 Requirements
• Annuitants of the Public School Employees’ Retirement System may
continue to purchase coverage under the group health plan until age
sixty-five, or until they are covered by another plan.
• Annuitants are eligible for reinstatement in the employer’s health plan
if alternative coverage ceases.
• An annuitant is a member of the Public School Employees’ Retirement
System who has taken a super annuation retirement, has retired with
thirty (30) or more years of credited service or has taken disability
retirement.
• The cost for purchase of annuitant coverage shall equal the cost of the
program for active employees and dependents plus an additional two
percent.
• The school employer must notify annuitants within 60 days of their
retirement of their entitlement to purchase continuing healthcare
coverage.
• Annuitants have 45 days to elect continuing coverage in the health
plan. School employers are responsible to notify annuitants of
deadlines for premium payment. Failure to pay premiums within 60
days of the notice will automatically terminate coverage.
• The Code does not prohibit reinstatement of persons into the plan in
accordance with procedures established by the school employer, and
consistent with policies of the provider of the health plan.
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HIPAA Certificates of Credible Coverage
HIPAA Certificate Requirements
• HIPAA group plan portability provisions were effective June 30, 1997.
• Portability rules require plans or health insurers to issue Certificates
of Credible Coverage to members losing coverage.
• Primary goal of the rule is to prevent the imposition of pre-existing
condition exclusion clauses in cases where there has been no significant
break in coverage.
• Ruling also limited pre-existing condition exclusion plan provisions:
- limit of six month “look-back” period prior to enrollment date to
determine pre-existing.
- pregnancy and newborn cannot apply to pre-existing
- limit of exclusion period to 12 months post enrollment date (18
months for late enrollments)
- days of credible coverage must be applied to reduce a group health
plan pre-existing condition exclusion period. All forms of health
insurance coverage are included in credible coverage.
- days of credible coverage are those which occurred without a
significant break in coverage (a period of 63 consecutive days
during which the individual did not have any credible coverage)
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HIPAA Certificates of Credible Coverage
(Continued)
Responsibilities of Employers
and
Plan Administrators
• Certificate must be provided within timeframe requirement of
COBRA regulations, in writing, by first class mail.
• Administrator only required to provide coverage information
for coverage periods for which it was responsible.
• Certificates must give date a waiting period began, date
coverage began and date coverage ended.
• Dependents are also entitled to a written Certificate of Credible
Coverage at the end of COBRA continuation period or when
coverage ends.
• Upon hire, employees must be advised of their right to receive a
Certificate of Credible Coverage upon termination from group
coverage.
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When Coverage Ends - Compliance Issues
When Coverage Ends – Compliance Issues
• Employers are required to comply with COBRA and plan coverage
provisions
- Monetary penalties for noncompliance
- Claim liabilities if COBRA rights not extended and legal action
sought by participants
• COBRA and Retiree Continuation of Coverage premium rates must
equal fair value of the cost of the plan to active employees (plus 2%
administration fee)
• Employer health plan coverage policies for active employees and
retirees should be in compliance with law, fully documented, and
consistently applied.
• If COBRA and/or Retiree Continuation Coverage is self-administered
by the employer, deadlines for notification, premium receipt,
and coverage termination must be followed consistently to protect
against claim liability or employee discrimination complaints.
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