Ten Things Everyone Should Know about ERISA

1
Ten Things Everyone Should Know about ERISA

• Chris Buley, Assistant General Counsel
• Blue Cross and Blue Shield of Texas

2
Things You Need to Know

• 1. Statutory and regulatory framework
• 2. ERISA applicability
• 3. Disclosure requirements
• 4. Benefit claims determination and appeals
• 5. Nondiscrimination requirements

3
Things You Need to Know (Cont.)

• 6. Pre-existing condition exclusions
• 7. Creditable coverage
• 8. Special enrollment provisions
• 9. Womens Health and Cancer Rights Act of 1998
• 10. Newborns and Mothers Health Protection Act
  of 1996

4
Statutory and Regulatory Framework

• The Breadth of ERISA
• 4 Titles 12 Subtitles 12 Parts
• Title I The Labor Title
• Title II The Tax Title
• Title III Jurisdiction, Administration,
  Enforcement
• Title IV Plan Termination Insurance

5
Statutory and Regulatory Framework

• The Labor Title
• 29 USC 1001 et seq. (29 CFR 2509 2590)
• Subtitle A General Provisions
• Subtitle B Regulatory Provisions
• Employee Benefits Security Administration (EBSA)
  rules governing employee welfare benefit plans.

6
Statutory and Regulatory Framework

• Department of Labor has jurisdiction over
  employer-sponsored Group Health Plans
• Health insurance issuers are governed by the
  State
• Treasury/IRS has jurisdiction with respect to
  employers.

7
Who Must Comply with ERISA

• Most private sector employee welfare benefit
  plans, including Group Health Plans.
• ERISA does not cover plans established by
  churches, but those plans are generally subject
  to parallel provisions of the Internal Revenue
  Code.
• ERISA does not cover federal, state, or local
  government employers such as a state, county,
  municipality, school district or hospital
  district, but state and local plans may be
  subject to parallel provisions in the Public
  Health Service Act.

8
Who Must Comply with ERISA

• ERISA does not cover very small Group Health
  Plans.
• ERISA does not cover Excepted Benefits, such as
  accident-only, workers compensation.
• ERISA applicability not determined by funding
  source, i.e. applies to both self-funded and
  fully insured Group Health Plans, or plans
  established by a separate trust.

9
Establishment of ERISA Plan

• All plans subject to ERISA must be
• Established in writing
• Describe the benefits provided under the Plan
• Name the person(s) responsible for the operation
  of the Plan
• Spell out arrangements for funding and amending
  the Plan.

10
Disclosure Requirements

• Basic Disclosure Requirements for ERISA plans
  include
• summary plan description
• summary of material modification
• notification of benefit determination
• Summary annual report
• Summary of material reduction in covered services
  or benefits
• Initial COBRA notice
• COBRA election notice
• Notice of unavailability of COBRA
• Notice of early termination of COBRA coverage
• Certificate of creditable coverage
• General notice of preexisting condition exclusion

11
Disclosure Requirements

• Basic Disclosure Requirements (Cont)
• Individual notice of period of preexisting
  condition exclusion
• Notice of special enrollment rights
• Womens Health and Cancer Rights Act (WHCRA)
  notices
• Medical Child Support Order (MCSO) notice
• National Medical Support (NMS) notice
• Plan also has reporting requirements under ERISA
• New regulations for Form 5500

12
Benefit Claims Determination and Appeals

• DOL Regulation 29 CFR 2560.503-1
• Claim A request by participant, beneficiary or
  authorized representative of same for a plan
  benefit made in accordance with plans reasonable
  filing procedures.
• Claims procedures should be set forth in Summary
  Plan Description or Benefit Booklet.

13
Benefit Claims Determination and Appeals

• Four claims categories under ERISA regulations
• Urgent Care
• Concurrent
• Pre-Service
• Post-Service
• Timing for notification of Plans claim
  determination varies depending on claims
  category.

14
Benefit Claims Determination and Appeals

• Timing for notification of claims
  determination/appeals
• Urgent care 72 hours/72 hours
• Pre-Service claim 15 days/30 days
• 15 day extension available (Time Tolled)
• Post-service care 30 days/60 days
• 15 day extension available (Time Tolled)
• Concurrent Care (Special rules 24 hours)

15
Benefit Claims Determination and Appeals

• Claims Denial Determination Notice Requirements
• In writing or sent electronically, unless urgent
  care involved (verbal with written follow-up
  within 3 days). Include the following
• Reason for denial
• Refer to plan provisions relied upon
• Any information needed by Plan to process claim
  and why required
• Internal rule, guideline or similar procedure
  relied upon must be identified, if applicable
• For medical necessity or experimental/investigatio
  nal, notice of the scientific or clinical
  judgment (or notice of availability of
  information)
• Description of appeal procedures and time limits
• Statement that claimant may bring suit in federal
  court after exhausting internal process.

16
Benefit Claims Determination and Appeals

• Appeals
• Right to a full and fair review of adverse
  benefit determination
• 180 days to file appeal
• Claimant has opportunity to submit comments,
  documents and other information
• Claimant must be given reasonable access to
  information relevant to claim (upon request and
  free of charge)
• De Novo review
• New reviewer with no deference to prior review
  not same or subordinate
• Consult with expert if with appropriate training
  on medical judgment denials
• No more than 2 mandatory appeals before claimant
  can file federal action
• If more than one appeal, then half the time per
  appeal.
• Can require arbitration, but cannot be binding
• Voluntary appeal notice, if applicable.

17
Benefit Claims Determination and Appeals - ISSUES

• Ensure determinations are consistent with Plan
  documents
• What constitutes an appeal?
• Exceptions process.
• Other Considerations

18
HIPAA and ERISA

• HIPAA Portability provisions are part of ERISA
• ERISA Title 1, Part 7
• ERISA Sections 701, 702, 711, 713
• Regulations at 29 CFR 2590
• Nondiscrimination
• Preexisting Conditions
• Creditable Coverage
• Special Enrollment
• Womens Health and Cancer Rights Act of 1998
• Newborns and Mothers Health Protection Act of
  1996

19
Why do we care?

• Department of Labor is watching.
• Increased audits of group health plans, including
  medium-sized health plans.
• Audits include requests for documentation to
  affirmatively show compliance with
  HIPAAs/ERISAs portability provisions.
• Failure to meet DOL regulatory compliance can
  result in action by the Department.

20
Nondiscrimination Requirement

• ERISA section 702 29 CFR 2590.702
• Individuals may not be denied eligibility or
  continued eligibility to enroll in a group health
  plan based on any health factors they may have.
• Individuals may not be charged more for coverage
  that any similarly situated individual is being
  charged based on any health factor.

21
Nondiscrimination Requirement

• List billing
• Charging different premium for individual in
  group based on health factor. Both Plan and
  issuer violate if issuer is list billing and Plan
  is passing higher rate to individual.
• Nonconfinement clauses
• Denies or delays eligibility for some or all
  benefits if individual is confined in hospital or
  other health care facility, or individual cannot
  perform ordinary life activities.
• Actively-at-work clauses

22
Nondiscrimination Requirement

• Health factors include
• Health status
• Medical condition (physical or mental)
• Claims experience
• Receipt of health care
• Medical history
• Genetic information
• Evidence of insurability
• Includes conditions arising from domestic
  violence acts as well as participation in
  high-risk activities, i.e. motorcycle riding,
  skiing, etc.
• disability

23
Nondiscrimination Requirement

• Plans may treat distinct groups of individuals
  differently if classification of group is not
  based on a health factor
• Employment-based classifications allowed
• Full-time versus part-time
• Geographical location
• Date of hire or length of service
• Whether employment-based classification is bona
  fide is dependent on facts and circumstances such
  as whether classifications are used by employer
  independent of qualification for health coverage.
• Participants and beneficiaries can be distinct
  classifications

24
Nondiscrimination Requirement

• Examples of plan provisions that would violate
  ERISAs nondiscrimination requirements
• Evidence of insurability
• passing a physical exam
• Requiring certificate of good health
• Health questionnaire (but these might be allowed
  for purposes other than for determining
  eligibility)

25
Nondiscrimination Requirement

• Plans must provide uniform benefits to all
  similarly situated individuals and cannot be
  directed at individuals based on health factor
• Permissible plan provisions (if directed at all
  similarly situated individuals and not directed
  based on health factor)
• Lifetime or annual benefits
• Lifetime or annual limit on treatment of
  particular condition
• Limits or exclusions for certain drugs
• Cost-sharing
• Source-of-injury restrictions

26
Nondiscrimination Requirement Application to
Wellness Programs

• December 13, 2006, DOL, HHS and IRS joint
  regulations on the nondiscrimination provisions
  of HIPAA (ERISA Title 1, Part 7), including
  implementation of wellness programs. (29 CFR
  2590.702)
• Wellness program final rules applicable for plan
  years beginning on or after January 1, 2007.
• DOL field assistance bulletin issued February 14,
  2008 providing analysis of wellness program
  implementation regulations.
• Wellness program only subject to Part 7 of ERISA
  if it is part of a group health plan.
• Note New State Regulation

27
Nondiscrimination Requirement Application to
Wellness Programs

• Wellness programs will not violate HIPAAs
  nondiscrimination provisions if the program
  satisfies the following conditions
• A reward under the wellness program is not based
  on an individual satisfying a standard related to
  a health factor, or,
• There is no reward offered, and,
• Participation in the program is available to all
  similarly situated individuals.
• Benign discrimination allowed

28
Nondiscrimination Requirement Wellness Programs

• Wellness programs conditioning reward on
  satisfying a standard related to a health factor
  must meet 5 requirements
• Reward must not exceed 20 of cost of
  employee-only coverage or, if dependants can
  participate, 20 of cost of employee and
  dependent coverage.
• Reasonably designed to promote health and prevent
  disease.
• Individuals must be given chance to qualify for
  the reward at least once per year.
• Reward available to all similarly situated
  individuals
• Alternative standard for reward (or waiver of
  standard) for those for whom it is unreasonably
  difficult due to medical condition, or medically
  inadvisable, to satisfy the standard.
• Availability of reasonable alternative standard
  must be disclosed in materials describing the
  terms of the program.

29
Nondiscrimination Requirement Wellness Programs

• Examples of wellness programs
• Program reimburses all or portion of cost of
  membership in fitness center.
• Diagnostic program that rewards participation and
  not results.
• Program encouraging preventive care through
  waiver of copayment or deductibles.
• Reimbursement for cessation of smoking programs.
• Reward attending health education seminar.
• Considerations

30
HIPAA Portability Preexisting Condition
Exclusions

• ERISA Section 701 29 CFR 2590.701
• Preexisting Condition Exclusions Limited
• Types of conditions and enrollees not subject to
  a preexisting condition exclusion
• Sets maximum preexisting condition exclusion
  period
• Individuals receive credit for recent prior
  health coverage

31
HIPAA Portability Preexisting Condition
Exclusions

• Types of conditions/enrollees not subject to
  preexisting condition exclusion
• Genetic information without diagnosis of related
  condition.
• Newborns who are enrolled in creditable coverage
  within 30 days of birth.
• Children enrolled in creditable coverage with 30
  days of adoption or placement for adoption.
• Pregnancy
• Ex. Provision that denies benefits for pregnancy
  until after 12 months from eligibility date is a
  prohibited preexisting condition exclusion.

32
HIPAA Portability Preexisting Condition
Exclusions

• 6-month look-back rule
• Exclusions must relate to condition for which
  medical advice, diagnosis, care or treatment was
  recommended or received during 6 month period
  prior to individuals enrollment date
• Individuals enrollment date is earlier of the
  first day of coverage or the first day of any
  waiting period for coverage
• Waiting period is the period, if any, that must
  pass before an employee or dependent is eligible
  to enroll under terms of the Plan.

33
HIPAA Portability Preexisting Condition
Exclusions

• Waiting period does not include period before
  late enrollee or special enrollee enrolls
• If waiting period is required, measure 6-month
  look-back from first day of the waiting period,
  not first day of coverage.

34
HIPAA Portability Preexisting Condition
Exclusions

• 12/18 month look-forward rule
• Limits maximum period an exclusion can be applied
  to 12 months (18 months for late enrollee) from
  date of enrollment into plan.
• If waiting period is required, look-forward
  period begins on the first day of the waiting
  period, not the first day of coverage.
• Exclusion period runs concurrently with the
  waiting period.

35
HIPAA Portability Preexisting Condition
Exclusions

• Length of Plans preexisting condition exclusion
  period must be offset by number of days of an
  individuals creditable coverage.
• Significant break in coverage occurs if 63 days
  without creditable coverage.
• Days preceding a significant break in coverage
  are not considered creditable coverage and do not
  serve to offset preexisting condition exclusion
  period.
• State laws may impact significant break in
  coverage.

36
HIPAA Portability Preexisting Condition
Exclusions

• Department of Labor audits for hidden
  preexisting condition exclusions.
• Example Plan that excludes coverage for
  cosmetic surgery unless the surgery is required
  by reason of an accidental injury occurring after
  the effective date of coverage.

37
HIPAA Portability Preexisting Condition
Exclusions

• Individuals prior coverage can reduce the
  applicable exclusion period (creditable
  coverage)
• Notices required general disclosure about
  plans preexisting condition exclusion, and
  individual notice about specific exclusion
  applicable to the individual. (Model notice
  available)
• Must be in writing and include the length of
  plans look-back period, maximum preexisting
  exclusion period, how creditable coverage affects
  exclusion period, and contact person for more
  information.
• Must describe individuals right to demonstrate
  creditable coverage
• Description of right to request certificate of
  creditable coverage from prior plan or issuer
• Statement that current plan or issuer will assist
  with obtaining certificate
• Part of application materials or upon enrollment
  request.

38
HIPAA Portability Preexisting Condition
Exclusions

• Plan must make determination of creditable
  coverage within a reasonable time after receipt
  of creditable coverage information.
• Reconsideration allowed if Plan determines
  individual does not have creditable coverage
  claimed.
• Notice of new determination
• Act consistent with original determination until
  new notice is provided

39
HIPAA Portability Creditable Coverage

• 29 CFR 2590.701
• Certificates of creditable coverage must be
  issued regardless of whether plan imposes a
  preexisting condition exclusion.
• Specific information must be provided in
  certificate of creditable coverage, as set forth
  in the regulation (model notice available).
• If waiting period, certificate must disclose when
  it began.
• Dependents creditable coverage required on
  certificate as well, unless living separate,
  which would require separate certificate.
• Plan must have written procedure for individuals
  to request and receive certificates of creditable
  coverage (contact information).

40
HIPAA Portability Creditable Coverage

• Creditable coverage can include
• Group health plan
• Individual health plan
• Medicare
• Medicaid
• CHIP
• Tricare
• FEHBP
• State health risk benefit pool
• Public health plan

41
HIPAA Portability Creditable Coverage

• Who is responsible for issuance of certificates?
• If health insurance issuer has agreed to be
  responsible for issuance of creditable coverage
  certificates, then issuer will be held
  responsible for any violations under a special
  accountability rule in 2590.701-5(a)(10(iii)
• If TPA does not insure the benefits, then Plan
  retains responsibility for issuance.
• Timing of notice
• Automatic upon loss of coverage.
• Upon request by individual while covered under
  the plan and up to 24 months after coverage ends.
• Issuer must be reasonable and prompt in providing
  certificates.
• Plan may not impose limit on amount of time
  individual has to present certificate or other
  evidence of creditable coverage.
• Considerations

42
Special Enrollment

• 29 CFR 701
• Group health plans must allow individuals to
  enroll upon certain specified events, regardless
  of any late enrollment provisions, if enrollment
  occurs within 30 days of specified event.
• Special enrollment periods are for individuals
  who previously declined health coverage for
  themselves or their dependents.
• Special enrollment rights arise when coverage is
  lost or its cost is significantly increased
  through loss of employer contributions, or when
  certain life events occur.
• Notice of special enrollment rights must be
  provided on or before date individual can first
  enroll in Plan.

43
Special Enrollment Loss of Coverage

• Special enrollment for loss of coverage scenario
  requires that the individual have had health
  coverage at the time enrollment was declined.
• If the other coverage was COBRA, a special
  enrollment period would not arise until COBRA
  coverage is exhausted.
• Examples
• employees spouse declined coverage because
  spouse already had coverage under own employers
  plan. If spouse loses coverage under own
  employers plan, then a special enrollment period
  would arise.
• Employer offers two options and the option
  employee chooses is eliminated. Special
  enrollment period would arise.
• Termination or reduction in number of hours of
  employment (voluntary or involuntary)
• Does not include loss due to failure to pay
  premiums or termination for cause

44
Special Enrollment Life Event

• Examples of life events that could give rise to
  special enrollment period
• Divorce or legal separation
• Death of employee covered under Plan
• Marriage
• Birth
• Adoption

45
Special Enrollment Mechanics

• Plan must provide at least 30 days for the
  employee or dependent to request coverage after
  the loss of other coverage or termination of
  employer contributions, or after a life event
  that gives rise to a special enrollment period.
• Timely requests for coverage are effective on the
  first day of the month following request for
  enrollment if special enrollment is due to
  marriage or loss of coverage.
• Timely requests for coverage are effective as of
  the date of the event in the case of birth,
  adoption or placement for adoption.

46
Special Enrollment Mechanics

• Special enrollees must be offered the same
  benefit packages available to similarly situated
  individuals who enroll when first eligible.
• Cost to initial enrollee and special enrollee
  must be same.
• Length of preexisting condition exclusion period
  cannot exceed that applied to similarly situated
  initial enrollees.
• Considerations.

47
Womens Health and Cancer Rights Act of 1998

• ERISA Section 713
• Act only applies to plans that offer benefits
  with respect to a mastectomy.
• Plans do not have to offer mastectomy benefits.

48
Womens Health and Cancer Rights Act of 1998

• Four required coverages
• All stages of reconstruction of breast on which
  mastectomy performed
• Surgery and reconstruction of other breast for
  symmetrical appearance
• Prostheses
• Treatment of physical complications, including
  lymphedema, per attending providers judgment.
• Copayments and deductibles allowed if consistent
  with those established for other medical and
  surgical benefits
• Plan may not offer incentives to physicians to
  provide care in a manner inconsistent with WHCRA
• Plan my not deny patient eligibility to enroll or
  renew to avoid WHCRA

49
Womens Health and Cancer Rights Act of 1998

• Notice Required upon enrollment to include
• Benefits of WHCRA, including four coverages
  offered
• Any deductibles and coinsurance limitations
  applicable
• Model notice available.
• Annual notice required after initial enrollment
• Include in SPD if SPD is redistributed annually
• Can provide independent of SPD.
• Considerations

50
Newborns and Mothers Health Protection Act of
1996

• ERISA Section 711 29 CFR 2590.711
• If plan is self-insured and provides benefits in
  connection with hospital stays for childbirth,
  the Newborns Act applies. If plan is insured,
  then state law applies
• Plans may not restrict benefits for hospital
  length of stay in connection with childbirth to
  less than 48 hours (vaginal) or 96 hours
  (cesarean)
• Plan may require participant to notify plan of
  pregnancy in order to obtain more favorable
  cost-sharing for the hospital stay, which
  cost-sharing must be consistent throughout the
  stay.
• Attending physician may decide to discharge
  earlier.

51
Newborns and Mothers Health Protection Act of
1996

• Plans may not require authorization request from
  provider for the 48/96 hour stays.
• Plans may require authorization request for stays
  that are longer than the 48/96 hour allowance.
• Plans should carefully review preauthorization
  provisions to ensure they are not too broad to
  confuse or override NMHPA.
• DOL will audit provider contracts to ensure that
  there are no impermissible incentives or
  penalties imposed to violate the length of stay
  requirements of the NMHPA. Mothers also cannot
  be offered incentives or penalized to encourage
  early discharges.

52
Newborns and Mothers Health Protection Act of
1996

• Disclosures Required
• Group health plan SPD must include statement
  describing any requirements under state or
  federal law relating to hospital length of stay
  in connection with childbirth for the mother or
  newborn child.
• Model notice available.
• Considerations