Portability, nondiscrimination, coverage guarantee, and renewability requirements. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) limits the duration of preexisting condition exclusions in group health plans and gives new enrollees credit for prior coverage. In addition to these "portability" requirements, the law also makes it illegal to use health status as a reason for denying coverage, guarantees group coverage for employers with 50 or fewer employees, and guarantees renewability of group health plans.

     Pregnancy benefits. The Pregnancy Discrimination Act (PDA) requires that whatever health insurance is provided must treat pregnancy and related conditions on an equal basis with other disabilities.

     Prescription contraceptive drugs and devices. The Equal Employment Opportunity Commission (EEOC) has ruled that the PDA requires health benefit plans to provide the same coverage for prescription contraceptives that they provide for other drugs, devices, or services that are used to prevent medical conditions other than pregnancy.

      Reconstructive breast surgery. The Women's Health and Cancer Rights Act of 1998 (WHCRA) requires group health plans to cover reconstructive surgery following a covered mastectomy.

     Minimum maternity stays. The Newborns' and Mothers' Health Protection Act (NMHPA) requires health plans to provide minimum postdelivery hospital stays of 48 hours for normal deliveries and 96 hours for cesarean deliveries. The minimum standards for these benefits apply only when postdelivery hospitalization is offered; there is no requirement that health plans provide the benefit.

     Mental health parity. The federal Mental Health Parity Act (MHPA) and the Mental Health Parity and Addiction Equity Act (MHPAEA) require equal or combined annual and lifetime coverage for mental illness--if those benefits are provided in the first place. Effective for plan years beginning after October 3, 2009, these provisions include substance abuse disorder benefits in addition to mental health benefits. Also effective for plan years beginning after October 3, 2009, the financial requirements that apply to mental health or substance use disorder benefits may not be more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan; there must be no separate cost-sharing requirements that apply only to mental health or substance use disorder benefits; the treatment limitations that apply to mental health or substance use disorder benefits may not be more restrictive than the predominant treatment limitations that apply to substantially all medical and surgical benefits covered by the plan; and there must be no separate treatment limitations that apply only to mental health or substance use disorder benefits. These provisions do not apply to employers with fewer than 50 employees.

     Coverage of adoptees. Federal law also requires group health plans to treat adopted children in the same way that they treat children born to the plan participant beginning when the child is placed in the employee's home, even if the adoption is not yet final. Coverage of adoptees may not be restricted solely because of preexisting conditions.

     Pediatric vaccines. Group health plans are barred from reducing their coverage for the costs of pediatric vaccines below the level of coverage provided as of May 1, 1993.

     Students on medical leave. Effective for plan years beginning on or after October 9, 2009, Michelle's Law requires group health plans that cover full-time students at postsecondary educational institutions to a greater age than other dependents may not terminate coverage of a dependent child who ceases to be a full-time student at postsecondary educational institution due to a medically necessary leave of absence until the earlier of 1 year after the first day of the medically necessary leave of absence or the date on which such coverage would otherwise terminate under the terms of the plan.

      State-mandated benefits. Most states require group health insurance policies to cover specific services.

      Information on benefits (ERISA). Health insurance plans are welfare benefit plans subject to the requirements of ERISA. Plans must be in writing and must meet the reporting and disclosure requirements of ERISA.

     Claims procedures. A healthcare insurance plan must include a claims procedure that is explained in the plan's summary plan description (SPD). An employee whose claim is denied must be given a clearly written explanation for the denial. The claims procedure must provide for a full review of the denial by a designated plan official. Health benefit plan claims must be processed within strict time limits that depend on the type of claim.

     Coverage during leaves. The federal Family and Medical Leave Act (FMLA) requires that employers maintain group health insurance coverage for employees during FMLA leave. The coverage must be at the same level and with the same conditions that would have existed if the employee had not taken the leave. During the leave period, the employer and employee continue to pay their usual portions of the premium. Employees must also be allowed to continue coverage under medical reimbursement plans during an FMLA leave. FMLA applies to employers with 50 or more employees.

      Medical child support orders. Employers must comply with "qualified medical child support orders" (QMCSO) issued by state domestic relations courts and certain state agencies. QMCSOs can require deductions from an employee's wages to pay for a child's health insurance premiums or that coverage under the employer's plan be extended to a child, even if the child does not live with the employee.

     Age bias. The Age Discrimination in Employment Act (ADEA) requires employers with 20 or more employees to provide the same health insurance benefits to employees and their spouses aged 40 years and older as are provided to younger employees and their spouses.

      Disability discrimination. The Americans with Disabilities Act (ADA) makes it illegal for employers to discriminate in the provision of health benefits based on a disability covered by the ADA. Employees with disabilities must have equal access to insurance coverage. Limitations in coverage, such as lifetime coverage caps, are acceptable if they are applied equally to all employees even though they are more likely to adversely affect disabled employees. Health benefit plans may also have disability-based provisions, such as coverage exclusions for certain diseases, if the employer can prove that the provision was not adopted as a subterfuge to avoid the requirements of the ADA. The ADA covers employers with 15 or more employees.

     HIPAA administrative simplification and privacy. HIPAA mandates the adoption of a series of provisions to simplify and ensure the privacy and security of healthcare information. These provisions have both direct and indirect impact on employer-sponsored group health insurance plans. The Department of Health and Human Services (HHS) has issued final rules on electronic transactions, health information privacy, health information security, and unique identifiers for providers, health plans, and employees.

     Coverage after termination. Both the Consolidated Omnibus Budget Reconciliation Act (COBRA) and many state laws give employees the right to continue coverage and/or convert to individual policies after leaving the group.

     Consumer-directed health plans—HSAs, HRAs, and medical savings accounts (MSAs). The latest trend in health plan designs is consumer-driven health care including defined-contribution health plans intended to make employees more conscious and responsible for the cost of their health care. For more information on consumer directed plans.

     The Genetic Information Nondiscrimination Act (GINA) bars discrimination based on genetic information and restricts the use of genetic information by group health plans and health insurers. Group health plans and health insurance companies offering group health insurance coverage in connection with a group health plan may not adjust premium or contribution amounts for a group covered under such a plan on the basis of genetic information.

     The enactment of HIPAA was and is the most far-reaching effort by the federal government to regulate the provision of health insurance including availability, renewability, and portability requirements. HIPAA applies to group health plans established or maintained by employers or employee organizations, or both.

     HIPAA does not apply to coverage for accident or disability insurance, liability insurance, coverage supplemental to liability insurance, workers' compensation or similar insurance, automobile medical payment insurance, credit-only insurance, coverage for on-site medical clinics, and other similar insurance in which medical care benefits are secondary or incidental to other insurance benefits.

     The following benefits are not covered if they are provided under a separate policy or are not an integral part of the plan: limited scope dental or vision benefits, long-term care benefits, nursing-home care, home health care, community-based care, or any combination thereof or similar limited benefits as specified in the regulations. Also exempted is coverage for specified disease or hospital indemnity or other fixed indemnity insurance if provided under a separate policy that is not coordinated with the benefits and exclusions under a group health plan maintained by the same sponsor. In addition, the requirements do not apply to Medicare supplemental insurance, military supplemental health insurance, and similar supplemental coverage provided to coverage under a group health plan.

     HIPAA exception for supplemental benefits. The Department of Labor (DOL) has issued guidance on when supplemental health insurance is or is not covered by HIPAA (U.S. DOL Field Assistance Bulletin No. 2007-04). The phrase "similar supplemental coverage provided to coverage under a group health plan" is not defined in the statute or regulations. The regulations, however, do provide that one requirement for being similar supplemental coverage is that the coverage be specifically designed to fill gaps in primary coverage, such as coinsurance or deductibles, but does not include coverage that becomes secondary or supplemental only under a coordination-of-benefits provision. DOL has stated that it will consider supplemental insurance coverage that meets specified standards will qualify for an enforcement safe harbor.

     Coverage will be considered to be within the enforcement safe harbor if it is a separate policy, certificate, or contract of insurance, and if it is:

     Cost is determined in the same manner as the applicable premium is calculated under a COBRA continuation provision.

      Maximum preexisting condition exclusion. Group health plans that cover 2 or more employees may exclude preexisting conditions from coverage for no more than 12 months (18 months for late enrollees) from the plan's enrollment date, including any waiting period before enrollment. A late enrollee is an individual who does not enroll when first eligible to do so. The exclusion applies only to conditions for which medical advice, diagnosis, care, or treatment was recommended or received during the 6-month period ending on the enrollment date. If a doctor recommended treatment before this 6-month look-back period, an individual can be subject to a preexisting condition exclusion only if he or she receives the recommended treatment within the 6-month look-back period.

     Pregnancy may not be treated as a preexisting condition, nor does the exclusion apply to newborns and adoptees under the age of 18 who are covered within 30 days after birth, adoption, or placement for adoption. In addition. a group health plan may not impose a preexisting condition exclusion for a condition based solely on genetic information. However, if an individual is diagnosed with a condition, even if the condition relates to genetic information, the plan may impose a preexisting condition exclusion with respect to the condition.

     State law provisions on preexisting condition exclusions apply if they are more restrictive than the federal law.

     Note: An individual does not get a new enrollment date because a health plan changes benefit package options, or if the plan changes its insurance company.

     Preexisting condition exclusion defined. A preexisting condition exclusion is a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the effective date of coverage under a group health plan or group health insurance coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day. It includes exclusions applied as a result of health status information obtained before the individual's effective date of coverage under a group health plan or group health insurance coverage, such as a condition identified as a result of a preenrollment questionnaire or physical examination given to the individual, or a review of medical records relating to the preenrollment period.

     A plan exclusion that satisfies this definition is a preexisting condition exclusion even if it is called something else. Examples of such provisions include:

     Congenital conditions. A plan that generally provides benefits for a condition cannot exclude benefits for the condition in instances where it arises congenitally without complying with the limits on preexisting condition exclusions. However, these limitations will not apply if a plan excludes benefits for all instances of a condition, even if all instances are likely to be congenital.

     Credit for prior coverage. Group health plans and issuers must reduce any preexisting condition exclusion period by the length of the aggregate period of prior creditable coverage. For example, if an employee was covered under one employer’s plan for 8 months and moves to a second employer, the 12-month preexisting condition exclusion under the second plan could apply for 4 months. Creditable coverage includes most types of public and private healthcare coverage, even short-term limited coverage. Prior coverage does not qualify if there is a significant break in coverage which is defined as a break in healthcare coverage that is longer than 63 days.

     Determining if there has been a 63-day break in coverage. The determination of whether an individual has had a 63-day break in coverage does not include the days of waiting periods and affiliation periods. In addition, proposed HIPAA Portability regulations provide that the 63-day period is tolled for an individual if a certificate of creditable coverage is not provided on or before the day coverage ceases. In those cases, the significant-break-in-coverage period is tolled until a certificate is provided or, if earlier, until 44 days after the coverage ceases.

     The Trade Act of 2002 provides for "second chance" COBRA elections for individuals who become eligible for "trade adjustment assistance" (TAA) but who did not elect COBRA during his or her initial COBRA election period. HIPAA, the Trade Act specifies that the period beginning with the loss of coverage, and ending on the first day of the second election period, for individuals who elect COBRA during this second election period, should be disregarded for purposes of the HIPAA preexisting condition provisions and are not counted when determining if there has been a 63-day break in coverage. Any continuation coverage elected during a second-chance election period begins at the beginning of the 60-day second-chance election period and not on the date of the original qualifying event. In addition, the time between the original loss of coverage and the beginning of the second-chance election period does not count when determining if there has been a 63-day break in coverage for that would allow the imposition of a preexisting condition coverage restriction. A TAA eligible individual may also claim the 65 percent health care tax credit (HCTC) for amounts he or she pays for COBRA premiums.

     Temporary enhancements to Trade Act health benefits. Effective February 17, 2009, the ARRA installs a temporary addition to the HIPAA portability requirements. The amendment provides that in the case of plan years beginning before January 1, 2011, that the period beginning on the date the individual has a TAA-related loss of coverage and ending on the date that is 7 days after the date of the issuance of an HCTC eligibility certificate for such individual is not taken into account in determining the continuous period of coverage. In addition, the HCTC is increased to 80 percent of the COBRA premium for coverage months beginning before January 1, 2011.

     Note. An individual receiving the 65 percent COBRA subsidy is not eligible for the HCTC during the same month.

      Determining prior coverage. A plan or issuer may determine creditable coverage periods in one of two ways: (1) without regard to the specific benefits covered under an individual's prior health plan; or (2) based on several classes or categories of benefits. A plan or issuer using the second "alternate" method will count a period of creditable coverage with respect to a particular class or category of benefits if any level of those benefits was provided. This method is intended to account for significant differences in benefits.

     Under DOL regulations, the categories of benefits eligible for the alternate method are coverage for mental health, substance abuse treatment, prescription drugs, dental care, and vision care. The plan or insurer may use the alternate method for any or all of the categories and may apply a different preexisting condition exclusion period with respect to each category. The plan's disclosure statements must indicate that the alternate method is being used, and this disclosure must be given to each enrollee at the time of enrollment. These statements must include a description of the effect of using the alternate method.

     An individual establishes a creditable coverage period by presenting written certification from prior group health plans. Plans must provide such certificates, documenting previous coverage under the group plan, COBRA continuation coverage, and any waiting or affiliation periods. Starting date and waiting period information need not be included where a certificate shows 18 or more months of creditable coverage. Certification must be provided when an individual ceases to be covered under the plan, becomes covered under COBRA, after the end of COBRA, and on request up to 24 months after coverage ceases. A requested certification must be provided even while an individual still has coverage. If possible, the certification for an individual leaving group coverage should be provided at the same time as COBRA notice. Plans and insurers must have a written procedure for individuals to request and receive certificates of creditable coverage.

     If the "alternate" method (discussed in the following paragraphs) is used to credit prior coverage, the new plan or issuer may request information on coverage of specific benefits under the prior plan or coverage. A reasonable charge may be made for this information.

      Who provides the certificate? HIPAA requires both plans and insurers to furnish a written certificate of information regarding creditable coverage. To eliminate duplication, DOL regulations provide that an entity required to provide a certificate satisfies this requirement if any other party provides the certificate and the certificate discloses the creditable coverage (including the waiting period information) that was to be provided. A plan is deemed to have satisfied its obligation if there is an agreement between an insurer and the plan under which the insurer agrees to provide certificates for individuals covered under the plan.

      Dependent coverage information. Dependents are entitled to a written certificate of creditable coverage, but plans and insurers often do not know the existence of dependents or their coverage periods until claims are filed. DOL regulations address this problem with a special rule on dependent coverage that provides that a plan or insurer must make a reasonable effort to collect the necessary information for dependents and include it on the certificate. However, under this special rule, an automatic certificate is not required to be issued to an individual dependent until the plan or insurer knows (or, making reasonable efforts, should know) of the dependent’s cessation of coverage. This information can be collected annually (during open enrollment).

      Alternate means for proving prior coverage. DOL regulations set out instances when an individual may use evidence other than a certificate to prove prior coverage. These include when:

     In these instances, a plan is required to take into account all information that it obtains or that is presented on behalf of an individual to make a determination whether an individual has creditable coverage. A plan must treat the individual as having furnished a certificate if the individual attests to the period of creditable coverage, the individual presents relevant corroborating evidence of some creditable coverage during the period, and the individual cooperates with the plan's efforts to verify the individual's coverage. Cooperation includes providing a written authorization for the plan to request a certificate on behalf of the individual and cooperating in efforts to determine the validity of the corroborating evidence and the dates of creditable coverage.

     Documents that may establish creditable coverage include explanations of benefit claims or other correspondence from a plan or issuer indicating coverage, pay stubs showing a payroll deduction for health coverage, a health insurance identification card, a certificate of coverage under a group health policy, records from medical care providers indicating health coverage, third-party statements verifying periods of coverage, and any other relevant documents that evidence periods of health coverage. Creditable coverage (and waiting period or affiliation period information) may also be established through means other than documentation, such as by a telephone call from the plan or provider to a third party verifying creditable coverage.

     No time limit for proving prior coverage. A plan or insurer may not impose any limit on the amount of time that an individual has to present a certificate or other evidence of creditable coverage. However, after a claim has been denied under a preexisting condition exclusion, other laws may set forth time limits to appeal a denied claim.

      Model notices and forms. DOL has issued a Model Certificate of Group Health Plan Coverage and a model form for providing Information on Categories of Benefits upon request. The certificate must also contain an educational statement regarding certain HIPAA protections. Model educational language is provided in the model certificate. These models are reproduced in the Forms section.

     Plans that contain preexisting condition exclusion provisions must provide a notice to all participants stating the terms of the plan’s preexisting condition provisions, the participant’s right to demonstrate creditable coverage, and that the plan or issuer will assist in securing a certificate if necessary. This notice should be provided as part of any written enrollment application materials distributed by the plan or the insurer. If the plan or insurer does not distribute such materials, the notice must be provided by the earliest date following a request for enrollment that the plan or insurer, acting in a reasonable and prompt fashion, can provide the notice. The information should also be included in the plan’s summary plan description.

     The notice must contain the following information:

     Sample language. The HIPAA Portability regulations provide sample language that satisfies the notice content requirements based on the following scenario: A group health plan makes coverage effective on the first day of the first calendar month after hire and on each January 1 following an open season. The plan imposes a 12-month maximum preexisting condition exclusion (18 months for late enrollees) and uses a 6-month look-back period. The sample notice to be included with enrollment material is as follows:

     After an individual has presented evidence of creditable coverage and after the plan has made a determination of creditable coverage, a plan or insurer must provide an individual to whom a preexisting condition exclusion actually applies with a written notice of the length of preexisting condition exclusion that remains after offsetting for prior creditable coverage. This individual notice is not required to identify any medical conditions specific to the individual that could be subject to the exclusion. A plan or issuer is not required to provide this notice if the plan or issuer does not impose any preexisting condition exclusion on the individual or if the plan's preexisting condition exclusion is completely offset by the individual's prior creditable coverage.

     The individual notice must be provided as soon as the plan, acting in a reasonable and prompt fashion, can do so.

     The notice must disclose:

     A plan or insurer may modify its initial determination if a notice of the new determination (that meets the requirements described above) is provided and, until the notice of the new determination is provided, the plan or insurer acts in a manner consistent with the initial determination for purposes of approving access to medical services (such as pre-surgery authorization).

     Statutory provision. HIPAA makes it illegal for group health plans to have eligibility rules that discriminate on the basis of the following health-related factors: health status, medical condition (including physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), or disability. Rules for eligibility to enroll under a plan include rules defining any applicable waiting periods for such enrollment. A group health plan does not have to provide particular benefits and may place limits or restrictions on the amount, level, extent, or nature of the benefits or coverage under the plan as long as the limits or restrictions apply in the same way to all similarly situated individuals (SSIs) enrolled in the plan. HIPAA also provides that a group health plan may not require any individual (as a condition of enrollment or continued enrollment under the plan) to pay a premium or contribution that is greater than the premium or contribution for an SSI enrolled in the plan on the basis of the health status of the individual or of the individual's dependent. A group health plan may establish premium discounts or rebates or modify otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention.

     Nondiscrimination regulations. Regulations that provide details and examples on the application of the HIPAA nondiscrimination requirements have been issued.

     Definition of a health factor. The final regulations provide the same list of health factors as the statute with the addition that evidence of insurability specifically includes participation in activities such as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding, skiing, and other similar activities, as well as being a domestic violence victim. The decision whether or when to elect health coverage (including when to enroll, such as under special enrollment or late enrollment) is not, itself, a health factor; however, a plan must treat special enrollees the same as SSIs who are enrolled when first eligible.

     Eligibility rule prohibitions. A group health plan may not establish any rule for eligibility (or continued eligibility) to enroll for benefits that discriminates on the basis of any health factor that relates to that individual or a dependent of that individual. Eligibility rules include rules relating to:

     Benefit provisions. The nondiscrimination provisions do not require a group health plan to provide coverage for any particular benefit to any group of SSIs. However, benefits provided under a plan must be uniformly available to all SSIs, and any restriction on a benefit or benefits must apply uniformly to all SSIs and must not be directed at individual participants or beneficiaries on the basis of any health factor. Thus, for example, a plan may limit or exclude benefits in relation to a specific disease or condition, limit or exclude benefits for certain types of treatments or drugs, or limit or exclude benefits on the basis of a determination of whether the benefits are experimental or not medically necessary, but only if the benefit limitation or exclusion applies uniformly to all SSIs and is not directed at individual participants or beneficiaries on the basis of any health factor of the participants or beneficiaries.

     In addition, a plan may impose annual, lifetime, or other limits on benefits and may require the satisfaction of a deductible, copayment, coinsurance, or other cost-sharing requirement in order to obtain a benefit if the limit or cost-sharing requirement applies uniformly to all SSIs and is not directed at individual participants or beneficiaries on the basis of any health factor of the participants or beneficiaries.

     Note: The regulations provide that a plan amendment that applies to all individuals in one or more groups of SSIs and made effective no earlier than the first day of the first plan year after the amendment is adopted is not considered to be directed at any individual participants or beneficiaries.

     SSIs. The HIPAA nondiscrimination requirements apply only within a group of individuals who are treated as SSIs. Participants and beneficiaries may be treated as belonging to separate groups of SSIs. If individuals have a choice of two or more benefit packages, individuals choosing one benefit package may be treated as a group of SSIs distinct from individuals choosing another package.

     Participants. Plans may treat participants as two or more distinct groups of SSIs if the distinction is based on a bona fide employment-based classification. Whether a classification is bona fide and employment-based depends on all the relevant facts and circumstances including whether the employer uses the classification for purposes independent of qualification for health coverage (for example, determining eligibility for other employee benefits or determining other terms of employment). Examples of classifications of participants that may be bona fide include full-time versus part-time status, different geographic location, membership in a collective bargaining unit, date of hire, length of service, current employee versus former employee status, and different occupations. However, a classification based on any health factor is not a bona fide employment-based classification unless it results in favorable treatment of individuals with adverse health factors.

     Beneficiaries. A plan may treat beneficiaries as two or more distinct groups of SSIs if the distinction is based on any of the following factors:

     If the creation or modification of an employment or coverage classification is directed at individual participants or beneficiaries on the basis of any health factor, the classification is not permitted unless it is permitted because it results in favorable treatment of individuals with adverse health factors. Thus, an employer may not modify an employment-based classification to single out, on the basis of a health factor, individual participants and beneficiaries and deny them health coverage.

     Exceptions from the eligibility rule prohibition for preexisting conditions exclusions. A preexisting condition exclusion is permitted if it complies with HIPAA's requirements for such exclusions, applies uniformly to all SSIs, and is not directed at individual participants or beneficiaries on the basis of any health factor of the participants or beneficiaries. A plan amendment relating to a preexisting condition exclusion that is applicable to all individuals in one or more groups of SSIs and is effective no earlier than the first day of the first plan year after the amendment is adopted is not considered to be directed at any individual participants or beneficiaries.

     Nonconfinement, actively at work, and continuous service prohibitions. A plan may not establish a rule for eligibility or set any individual’s premium or contribution rate based on the following:

     Interaction with state extension-of-benefit laws. Insurance laws in some states include extension-of-benefit provisions that require that health insurance policies provide benefits to individuals who are hospitalized past the date when coverage would otherwise end. The final regulations note that while state law cannot change the succeeding insurer's obligation to provide coverage despite the hospitalization, a prior insurer may also have an obligation. In such a case, state coordination-of-benefits laws will determine which coverage is primary and which is secondary.

     Exception for the first day of work. A plan may establish a rule for eligibility that requires an individual to begin work for the employer sponsoring the plan (or, in the case of a multiemployer plan, to begin a job in covered employment) before coverage becomes effective, provided that such a rule for eligibility applies regardless of the reason for the absence.

     Source of injury prohibitions. If a group health plan generally provides benefits for a type of injury, the plan may not deny benefits otherwise provided for treatment of the injury if the injury results from an act of domestic violence or a medical condition (including both physical and mental health conditions). This rule applies in the case of an injury resulting from a medical condition even if the condition is not diagnosed before the injury. For example, a suicide exclusion may not apply to injuries resulting from a suicide attempt if the suicide attempt was the result of a medical condition such as depression, even if the depression diagnosis was not made until after the suicide attempt.

     Exceptions to nondiscrimination requirements. While a plan may not knowingly discriminate against individuals on the basis of health status, generally applicable terms of the plan that impact adversely on individual enrollees are allowed. For example, a plan may exclude all coverage for a specific condition as long as the exclusion is not specifically directed at individual sick employees or dependents. Lifetime or annual limits for a particular disease or condition are permitted as long as they are not aimed at a particular individual.

     Warning: It is possible, however, that such exclusions or limits for types of conditions or treatments may violate other laws such as the Americans with Disabilities Act or Title VII of the Civil Rights Act.

     Health reimbursement accounts (HRAs). Because HRAs allow participants to carry forward unused employer-provided reimbursement amounts to later years, the maximum reimbursement available will vary among employees within the same group of SSIs on the basis of prior claims experience. The final regulations provide clarification that an HRA that reimburses medical expenses up to the annual maximum does not violate the HIPAA nondiscrimination requirements because the maximum reimbursement amount of any employee for a year is a uniform amount multiplied by the number of years the employee has participated in the plan, reduced by the total reimbursements for prior years. In other words, if employees who have participated in the plan for the same length of time are eligible for the same total benefit over that length of time, the arrangement does not violate the HIPAA nondiscrimination requirements.

     Rewards such as decreased premiums or credits against deductibles for meeting a health-related standard such as stopping smoking or losing weight violate the HIPAA ban on discrimination based on a health-related factor. The IRS/DOL/HHS regulations, however, provide exceptions to the general prohibitions against discrimination based on a health factor for plan provisions that vary benefits (including cost-sharing mechanisms) or the premium or contribution for SSIs in connection with a wellness program. The regulations define a "wellness program" as any program designed to promote health or prevent disease. If none of the conditions for obtaining such rewards is based on an individual satisfying a standard that is related to a health factor, there is no illegal discrimination if participation in the program is made available to all SSIs. If any of the conditions for obtaining a reward under a wellness program is based on an individual satisfying a standard that is related to a health factor, the wellness program does not violate the discrimination requirements if they meet specific criteria. The final regulations apply to plan years beginning on or after July 1, 2007.

     Changes from the proposed regulations. Most of the changes from the proposed regulations in the final regulations were for clarity and were not substantive. For example, the final regulations do not use the term "bona fide" in connection with wellness programs, added a description of wellness programs that do not have to satisfy additional requirements in order to comply with the nondiscrimination requirements, reorganized the four requirements from the proposed rules into five requirements, provided that the reward for a wellness program--coupled with the reward for other wellness programs with respect to a plan that requires satisfaction of a standard related to a health factor--must not exceed 20 percent of the total cost of coverage under the plan, and added examples and made other changes to more accurately describe how the requirements apply.

     Exemption for rewards for satisfying health-related standards. Under the final regulations, it is permissible for a plan that offers a wellness program that varies the premium or contribution it requires SSIs to pay or the benefits it provides based on whether an individual satisfies a health-related standard if the program meets the requirements of the following five specific criteria:

     The regulations provide that the following language, or substantially similar language, can be used to satisfy this disclosure requirement:

     What is a reasonable design? According to the preamble to the final regulations, the "reasonably designed" requirement is intended to be an easy standard to satisfy. This is why the final regulations has the added language providing that if a program has a reasonable chance of improving the health of participants and it is not overly burdensome, is not a subterfuge for discriminating based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease, it satisfies this standard. The preamble states that "there does not need to be a scientific record that the method promotes wellness to satisfy this standard." Rather, the standard is intended to allow experimentation in devising ways to promote wellness. The requirement of reasonableness in this standard prohibits bizarre, extreme, or illegal requirements in a wellness program.

     Programs that don't condition rewards on health-related factors. If none of the conditions for obtaining a reward require satisfying a health-related standard or if no reward is provided, the program is not subject to these criteria if any rewards are made available to all SSIs. The regulations provide the following examples of such programs:

     Providing rewards through supplemental plans. DOL has closed a plan design loophole that could have let employers provide wellness incentives that did not meet the standards set out in the DOL regulations. Because supplemental plans are not covered by HIPAA, if an incentive was built into a supplemental plan rather than the primary plan, it could in theory discriminate on the basis of health-related factors. HIPAA does not define supplemental coverage that is exempt from the law's requirements, but DOL has issued guidance setting out requirements for such coverage. One of the specified requirements of HIPAA-exempt supplemental coverage is that it does not differentiate among individuals in eligibility, benefits, or premiums based on any health factor of an individual (or any dependent of the individual). Thus, to be exempt from HIPAA's ban on discrimination based on a health-related factor, a plan may not discriminate based on such factors. This Catch-22 eliminates a supplemental plan as a plan design for avoiding the restrictions on wellness incentives.

     In response to questions that it received since the issuance of the wellness program final regulations concerning the types of programs that must comply and how to apply the rules to particular wellness programs, DOL has issued a checklist that provides further guidance (DOL Field Assistance Bulletin No. 2008-02). The Wellness Program Checklist uses a series of questions to help determine whether a plan offers a program of health promotion or disease prevention that is required to comply with the final wellness program regulations and, if so, whether the program is in compliance with the regulations.

     Do the wellness program regulations apply? The first three questions are used to determine if the wellness program regulations apply at all:

     Is there discrimination against an individual based on a health factor? The next two questions focus on whether there is type of discrimination that the law and regulations prohibit:

     Compliance criteria. The last five questions deal with programs that discriminate based on a health factor, but are permitted by the regulations:

     The following sample language can be used to satisfy this requirement:

If it is unreasonably difficult because of a medical condition for you to achieve the standards for the reward under this program, call us at [insert telephone number], and we will work with you to develop another way to qualify for the reward.

     Violations. If the answer to all of the five questions on wellness program compliance criteria is "yes," there are no violations of the HIPAA wellness program rules. If the answer to any of the five questions is "no," the plan has a wellness program compliance issue, specifically:

     The Genetic Information Nondiscrimination Act (GINA) amends HIPAA to specifically bar discrimination based on genetic information and restrict the use of genetic information by group health plans and health insurers. Group health plans and health insurance companies offering group health insurance coverage in connection with a group health plan may not adjust premium or contribution amounts for a group covered under such a plan on the basis of genetic information. A health insurance company may increase the premium for an employer based on the manifestation of a disease or disorder of an individual who is enrolled in the plan. But the manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members (such as family members) and to further increase the premium for the employer. GINA authorizes DOL to impose stiff financial penalties for violations.

     Definitions. The following definitions apply for purposes of GINA:

     Effective date. GINA prohibitions are effective for plan years beginning on or after May 21, 2009.

     GINA enforcement. DOL may impose a penalty against a group health plan sponsor or a group health insurer for any failure by such sponsor or insurer for violation of the genetic nondiscrimination requirements. The penalty is $100 for each day of noncompliance for each participant or beneficiary to whom such failure relates. A "noncompliance period" begins on the date the compliance failure first occurs and ends on the date the failure is corrected. The penalty for compliance failures that were not corrected before the date DOL notified a group plan of the violation and which occurred or continued during the period involved must be at least $2,500. Violations for any year that are more than de minimis have a minimum penalty of $15,000.

     No penalty may be imposed for a failure to comply if DOL is persuaded that the person otherwise liable for such penalty did not know, and exercising reasonable diligence would not have known, that such failure existed. No penalty may be imposed if the failure to comply was due to reasonable cause and not to willful neglect and was corrected within 30 days of when the person otherwise liable knew, or exercising reasonable diligence would have known, that such failure existed. In the case of failures that are due to reasonable cause and not to willful neglect, the penalty imposed may not exceed the amount the lesser of 10 percent of the aggregate amount paid or incurred by the plan sponsor during the preceding taxable year for group health plans of $500,000. DOL may waive the penalty in the case of a failure that is due to reasonable cause and not to willful neglect to the extent that the payment of such penalty would be excessive relative to the failure involved.

     GINA also bars group health plans and health insurance companies offering group health insurance coverage from requesting or requiring an individual or a family member of such individual to undergo a genetic test. This provision is not intended to limit the authority of a healthcare professional who is providing healthcare services to an individual to request that such individual undergo a genetic test. A group health plan or a health insurer may obtain and use the results of a genetic test in making a determination regarding payment for healthcare services. A group health plan or insurer may request only the minimum amount of information necessary to accomplish the intended purpose. A group health plan or a health insurer may use the results of genetic tests for research purposes but may not use such information for underwriting purposes. Genetic information may not be requested, required, or purchased for genetic underwriting purposes. In addition, a group health plan or health insurer may not request, require, or purchase genetic information about any individual before the individual’s enrollment under the plan or coverage in connection with such enrollment.

     Special enrollment periods must be offered for employees and/or dependents who lose other coverage if all the following conditions are met:

     An individual who initially did not enroll for coverage without having other health coverage might later be eligible for special enrollment. This could occur if, after subsequently enrolling in other coverage, the individual had an opportunity for late enrollment or special enrollment under the plan, but again chose not to enroll.

     The HIPAA Portability regulations include a list of situations where an individual is considered to have lost eligibility for other coverage that would make him or her eligible for special enrollment. Such a loss of eligibility for other coverage occurs in the following situations:

     An employee who is already enrolled in a benefit package may enroll in another benefit package under a plan if a dependent of that employee has a special enrollment right in the plan because the dependent lost eligibility for other coverage.

     A loss of eligibility for coverage is still considered to have occurred even if there are subsequent coverage opportunities such as COBRA coverage. An individual does not have to elect COBRA continuation coverage or exercise similar continuation rights in order to preserve the right to special enrollment. Moreover, a special enrollment right exists even if an individual who lost coverage elects COBRA continuation coverage. In that case, if an individual declines special enrollment and instead elects and exhausts COBRA continuation coverage, the individual has a second special enrollment right upon exhausting the COBRA continuation coverage.

     Even if there is no loss of eligibility for coverage, a special enrollment right can result when employer contributions towards other coverage terminate. This is the case even if an individual continues the other coverage by paying the amount previously paid by the employer.

     If dependent coverage is offered, a special enrollment period must be offered for "new" dependents, i.e., persons who become dependents through marriage, birth, adoption, or placement for adoption. The dependent special enrollment period must last for at least 30 days. If the employee is eligible for enrollment and not yet enrolled, the employee may enroll at this time. Upon a birth or adoption, a spouse who had not yet enrolled may also enroll. If an individual seeks enrollment during the first 30 days of a dependent special enrollment period, coverage is effective as of the date of birth, adoption, or placement, or in the case of marriage, not later than the first day of the first month beginning after the date the completed enrollment request was received.

     The HIPAA Portability regulations provide that a dependent is any individual who is or may become eligible for coverage under the terms of a group health plan because of a relationship to a participant. For purposes of HIPAA, the terms of the group health plan determine which individuals are eligible for coverage as a dependent under the plan. Thus, for example, the plan terms control the age (if any) at which a child of a participant ceases to be eligible for coverage as a dependent and whether an individual is eligible for special enrollment as a dependent is determined in part based on the plan's definition of dependent.

     Notice requirement. On or before the time any employee is offered the opportunity to enroll in a group health plan, the plan is required to provide each employee with a description of the plan's special enrollment rules. For this purpose, the plan may use the Department of Labor approved model description of the special enrollment rules, reproduced in the Forms section.

     Applying for special enrollment. A plan or insurer must generally allow an employee at least 30 days after losing other coverage to request enrollment for the employee or the employee's dependent. In the case of a loss of eligibility for coverage due to the operation of a lifetime limit on all benefits, a plan or insurer must allow an employee at least 30 days after a claim is denied due to the operation of the limit. Coverage must begin no later than the first day of the first calendar month after the date the plan or insurer receives the request for special enrollment.

     The Children’s Health Insurance Program Reauthorization Act of 2009 extends and expands the state children’s health insurance program (CHIP), allows states to subsidize premiums for employer-provided group health coverage for Medicaid and CHIP-eligible children and families, provides additional special enrollment rights, and adds notice and disclosure obligations for employers that maintain group health plans. The premium assistance subsidy lets states elect to offer a premium assistance subsidy to eligible low-income children and their families for certain employer-sponsored coverage but not health flexible spending accounts or high-deductible health plans. The subsidy may be provided as a reimbursement to the employee or as a direct payment to the employer. Employers may opt out of the direct payment option.

     Special enrollment rights. Effective April 1, 2009, a group health plan must permit an employee or dependent who is eligible, but not enrolled, for coverage under the plan to enroll for coverage under the terms of the plan if either of the following conditions is met:

     Notice to employees. An employer that maintains a group health plan in a state that provides premium assistance for the purchase of group health plan coverage through a Medicaid plan or CHIP must provide to each employee a written notice informing the employee of potential opportunities currently available in the state in which the employee resides for health coverage premium assistance for the employee or the employee's dependents under Medicaid or CHIP. By February 4, 2010, HHS, in consultation with state Medicaid and CHIP agencies, must develop national and state-specific model notices for this purpose. The model notices are to include information on how an employee may contact the state in which he or she resides for additional information on opportunities for premium assistance, including how to apply for assistance. An employer may provide the model notice at the same time that it provides notice of health plan eligibility, open enrollment materials, or the summary plan description.

     Notice to state Medicaid and CHIP agencies. The plan administrator of a group health plan that has participants or beneficiaries who are covered under a state Medicaid plan or a CHIP must disclose to the relevant agency, upon request, information about the benefits available under the group health plan in sufficient specificity, as determined under regulations that will be issued by HHS that will require use of a model coverage coordination disclosure form. This disclosure is to allow the agency to make a determination concerning the cost-effectiveness to the agency of providing medical or child health assistance by subsidizing premiums for the purchase of coverage under the employer's group health plan or to provide supplemental benefits instead.

     Effective dates. The model notices are to be available to employers by February 4, 2010, and each employer is to provide the initial annual notices beginning with the first plan year that begins after the initial model notices are first issued. The model coverage coordination disclosure form developed will apply to requests made by state agencies beginning with the first plan year that begins after the date the model coverage coordination disclosure form is first issued.

     HIPAA has a guaranteed availability requirement for the small group market only. Small employers are defined as those with 2 to 50 employees. Each issuer that offers health insurance coverage in the small group market must accept every small employer in the state that applies for coverage, and must accept for enrollment every eligible individual who applies for coverage during the period in which the individual first becomes eligible.

     An issuer offering group health insurance coverage in the small or large market is required to renew or continue in force coverage at the option of the plan sponsor. Coverage need not be renewed for one or more of the following reasons: nonpayment of premiums; fraud; violation of participation or contribution rules; termination of coverage in the market in accordance with state law; for network plans, no enrollees in the service area; and for membership associations, when membership ceases.

     Exceptions to guaranteed renewability also apply if the issuer or plan no longer offers a particular type of group coverage in the small or large group market, so long as the issuer, in accordance with state law:

      Another exception applies upon discontinuance of all coverage. The issuer, however, would be barred from offering coverage in the market and state involved for 5 years. Modifications of a product within a market are allowed if the modification was effective on a uniform basis among group health plans that used the product.

     Under federal law, health plans must provide minimum hospital stays following deliveries, equal or combined annual and lifetime coverage for mental illness--if those benefits are provided in the first place, and reconstructive breast surgery if mastectomies are covered. These provisions, unlike state-law benefit mandates, cover both insured and self-insured plans. The minimum standards for these benefits apply only when the benefit is offered; there is no federal requirement that health plans provide postdelivery hospitalization, mental health coverage, or mastectomies. In addition, the mental-health parity provision does not apply to employers with fewer than 50 employees.

     The NMHPA requires postdelivery hospitalization coverage for at least 48 hours following a normal delivery and 96 hours following a cesarean section. Plans are barred from offering incentives or imposing penalties to encourage mothers to stay less time in the hospital. A decision to leave early may be made by the mother or the mother's healthcare provider after consulting with the mother. Copayments, deductibles, or other cost-sharing provisions applied to postdelivery hospitalization may not be greater than those for pre-delivery hospitalization. Plans and insurers may not require a provider to obtain prior authorization for prescribing a length of stay that does not exceed the 48- or 96-hour minimums. Information about this coverage must be included in the plan's summary plan description.

     The MHPA requires equal or combined annual and lifetime coverage for mental illness--if those benefits are provided in the first place. Effective for plan years beginning after October 3, 2009, the MHPAEA requires that substance abuse disorder benefits (if provided) also be subject to equal or combined annual and lifetime coverage limits as other plan benefits. Also effective for plan years beginning after October 3, 2009, the financial requirements that apply to mental health or substance use disorder benefits may not be more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan; there must be no separate cost-sharing requirements that apply only to mental health or substance use disorder benefits; the treatment limitations that apply to mental health or substance use disorder benefits may not be more restrictive than the predominant treatment limitations that apply to substantially all medical and surgical benefits covered by the plan; and there must be no separate treatment limitations that apply only to mental health or substance use disorder benefits. These provisions do not apply to employers with fewer than 50 employees. The MHPAEA also eliminated the annual sunset provision that applied to the MHPA since its original enactment.

     MHPA requirements. Under the MHPA, a group health plan (or health insurance coverage offered under a group health plan) of an employer with 50 or more employees providing both medical/surgical benefits and mental health benefits may comply in any of the following ways:

     The MHPA also provided that benefits for treatment of substance abuse or chemical dependency could not be counted in applying an aggregate lifetime or annual dollar limit that applies separately to mental health benefits. Plans also could restrict mental health coverage in other ways such as different cost-sharing provisions, limits on the number of visits or days of coverage, and provide stricter tests before coverage of a condition would be allowed.

     The MHPA provided an exception for plans that experience more than a 1 percent cost increase due to the law.

     Note: The MHPA "sunset" provision that provided that the parity requirements would originally expire September 30, 2001, was amended every year by Congress until it was eliminated by the MHPAEA.

     Requirements added and eliminated by the MHPAEA. Effective for plan years beginning after October 3, 2009, the MHPAEA added new financial requirement and treatment limitation provisions intended to increase parity between medical and surgical benefits and mental health and substance use disorder benefits if mental health and substance use disorder benefits were provided. The MHPAEA eliminated the provision that allowed plans to provide different cost-sharing limits on visits or days of coverage and medical necessity requirements for mental health benefits as opposed to medical and surgical benefits. The MHPAEA also added the requirement that substance abuse disorder benefits be covered by the same parity provisions that apply to mental health benefits.

     Effective for plan years beginning after October 3, 2009, the MHPAEA provides that:

     Information concerning medical necessity determinations. Effective for plan years beginning after October 3, 2009, the criteria for medical necessity determinations made under the plan for mental health or substance use disorder benefits must be made available by the plan administrator or the health insurer offering the coverage to any current or potential participant, beneficiary, or contracting provider upon request. The reason for any denial under the plan (or coverage) of reimbursement or payment for services for mental health or substance use disorder benefits must be made available by the plan administrator or insurer to the participant or beneficiary. DOL is to issue regulation on this requirement.

     Out-of-network providers. Effective for plan years beginning after October 3, 2009, with a plan that provides both medical and surgical benefits and mental health or substance use disorder benefits, if the plan provides coverage for medical or surgical benefits provided by out-of-network providers, the plan must provide the same coverage for mental health or substance use disorder benefits provided by out-of-network providers

     Definitions. For purposes of the MHPA and the MHPAEA, the following definitions apply:

     Small employer exemption. The parity requirements do not apply to any group health plan for any plan year during which the sponsor is a small employer. For this purpose, the term "small employer" means, for a calendar year and a plan year, an employer that employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and that employs at least 2 employees on the first day of the plan year. Employees of all members of a controlled group are counted, including employees of a foreign member of the controlled group when making this determination. If an employer was not in existence throughout the preceding calendar year, the determination of whether the employer is a small employer is based on the average number of employees that it is reasonably expected the employer will employ on business days in the current calendar year. An employer includes a reference to any predecessor of the employer.

     Cost exemption. For plan years beginning before October 4, 2009, the mental health parity requirements do not apply to a group health plan if their application would result in an increase in the cost under the plan of at least 1 percent. For plan years beginning after October 3, 2009, the mental health and substance abuse parity requirements do not apply during the next plan year to a group health plan if their application would result in an increase for the current plan year of the actual total costs of coverage for medical and surgical benefits and mental health and substance use disorder benefits by an amount that exceeds the "applicable percentage" of the actual total plan costs. The applicable percentage is 2 percent for the first plan year in which the new parity requirements apply and 1 percent in each subsequent plan year. Determinations of the increases in actual costs under a plan must be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries; must be in a written report prepared by the actuary that, along with all underlying documentation; and must be maintained by the plan for a period of 6 years following the notice to DOL, appropriate state agencies, and participants and beneficiaries of the exemption election. The determination that a group health plan qualifies for a cost exemption may not be made until the plan has complied with the parity requirements for the first 6 months of the plan year involved.

     Notice of cost exemption. A group health plan that elects to implement a cost exemption for a plan year beginning after October 3, 2009, must promptly notify DOL, the appropriate state agencies, and participants and beneficiaries in the plan of the election. The notice to DOL must include:

      The WHCRA requires that group health plans that cover mastectomies also cover reconstructive breast surgery following a mastectomy. WHCRA not only requires reconstruction of the breast on which the mastectomy was performed, but also surgery and reconstruction of the other breast to produce a symmetrical appearance. Also mandated are coverage for prostheses and physical complications of mastectomy such as lymphedemas. The law specifically leaves it to the patient and the attending physician to determine how the covered services are to be provided.

     WHCRA's requirements apply only to group health plans and health insurance issuers that provide coverage for a mastectomy. Coverage of mastectomies is not mandated. WHCRA also does not prohibit group health plans and health insurance issuers from imposing deductibles or coinsurance requirements for health benefits relating to reconstructive surgery in connection with a mastectomy as long as such requirements are consistent with those established for other benefits under the plan. State laws that require at least the same level of coverage as WHCRA are not superseded.

     Note: The coverage mandated by WHCRA for reconstructive surgery may apply even if the mastectomy was performed before the effective date of the act. Thus, individuals who had covered mastectomies in plan years beginning before October 21, 1998 (the effective date of WHCRA), may be entitled to be covered for reconstructive surgery. DOL is soliciting comments on whether its regulations should include such a requirement.

     Notice requirements. Both group health plans and group health insurers are required to give participants and beneficiaries notice of the availability this mandate upon enrollment and annually thereafter. The notice must be in writing and be prominently placed in any letter or brochure sent out. An initial notice was supposed to be provided no later than January 1, 1999. These notices must be delivered in accordance with the Department of Labor's disclosure regulations for furnishing summary plan descriptions.

     To avoid duplication, a group health plan or its insurance companies or HMOs can satisfy the notice requirements by contracting with another party that provides the required notice. For example, in the case of a group health plan funded through an insurance policy, the group health plan satisfies the notice requirements if the insurance company or HMO actually provides the notice.

     The PDA requires that employer-provided health benefit plans not discriminate against women "affected by pregnancy, childbirth, or related medical conditions." Pregnancy must be treated in the same way as any other medical condition. The Supreme Court has ruled that the PDA protects women from discrimination because they have the ability to become pregnant, and not just because they are already pregnant. EEOC has ruled that because prescription contraceptives are used to control the ability to become pregnant, health benefit plans must provide the same coverage for prescription contraceptives that they provide for other drugs, devices, or services that are used to prevent medical conditions other than pregnancy.

     EEOC has ruled that plans that cover items such as vaccinations; prescription drugs to prevent the development of medical conditions, such as those used to lower blood pressure or cholesterol levels; weight loss drugs; preventive care for children and adults; or preventive dental care must cover prescription contraceptive drugs, devices, or services. EEOC also took the position that not covering the use of prescription contraceptive drugs for other medical services such as to control menstrual cramps would be sex discrimination because prescription contraceptives are used exclusively by women.

     A group health plan that covers dependent children up to a specified age and dependent children who are full-time students at postsecondary educational institutions up to a greater age may not terminate coverage of a dependent child who ceases to be a full-time student at postsecondary educational institution due to a medically necessary leave of absence until the earlier of 1 year after the first day of the medically necessary leave of absence or the date on which such coverage would otherwise terminate under the terms of the plan. The plan must be provided with a written certification by a treating physician of the dependent child that states that the child is suffering from a serious illness or injury and that the leave of absence (or other change of enrollment) is medically necessary. A dependent child whose benefits are continued during a medically necessary leave of absence must be provided the same benefits as if he or she continued to be a covered student at the institution of higher education and was not on a leave of absence. This requirement is known as "Michelle's Law" and is effective for plan years beginning on or after October 9, 2009, for medically necessary leaves of absence beginning during such plan years.

     Medically necessary leave of absence defined. The term "medically necessary leave of absence" means a leave of absence from a postsecondary educational institution (including an institution of higher education), or any other change in enrollment at such an institution, that:

     Notice requirement. A group health plan must include in any notice regarding a requirement for certification of student status for coverage under the plan a description of the right to continued coverage during medically necessary leaves of absence.

     Coordination with COBRA. The Michelle's Law requirement for students on medically necessary leaves of absence is not continuation coverage that might run concurrently with COBRA. It is rather a bar on a plan terminating coverage. COBRA will kick in if the dependent has not returned to school before the end of the 1-year period or loses coverage due to another COBRA qualifying event. Although not explicitly stated in the statute, such a qualifying event would occur if the dependent continued his or her leave of absence even though it was no longer medically necessary.

     Employers and the plan administrators of group health plans who receive an order from a state domestic relations court or a state agency (such as a Medicaid agency or other welfare department) requiring that the plan enroll a child of a plan participant must obey the order if the administrator determines that the order is a QMCSO. Such an order may require coverage of a child who does not live with the plan participant and may require withholding from the participant's wages to pay for the employee's share of the plan premiums. For an order to be a QMCSO, it must include the following information:

     A QMCSO may generally not require a plan to provide any benefit or option not otherwise provided under the plan. The plan must have a written procedure for determining if an order is a QMCSO. The child must be allowed to designate a representative to receive required notices from the plan.

     When a medical support order is received, the plan administrator must promptly notify the participant and the children of the receipt and of the plan's procedures for determining if the order is a QMCSO. A child who is covered under a plan pursuant to a QMCSO is considered as a plan participant and not a beneficiary for purposes of ERISA's reporting and disclosure requirements. Reimbursements of covered expenses paid by the child or his or her custodial parent or legal guardian must go to the child or the custodial parent or legal guardian and not to the employee. In some cases, the payment may go to a state official whose name and address has been substituted for the child's address in the order.

     National Medical Support Notice. DOL and HHS have adopted a National Medical Child Support Notice for use by state agencies to notify the employer of a noncustodial parent that a state court or administrative agency has issued a child support order requiring the employer's group health plan to provide coverage for the child of the noncustodial parent and to serve as a QMCSO. The two-part notice includes:

     The notice will be sent first to the employer that then has 20 business days to forward Part B to the plan administrator. If the administrator determines that the order is a QMCSO, the employer is obligated to determine whether withholding limitations or prioritizations allow the amount required to obtain the child's coverage from the employee's income and, if appropriate, withhold and send the necessary funds to the health plan. When properly filled out, the Notice is a QMCSO.

     Employees' spouses and dependents are generally covered under all types of group health insurance. Many families, however, include 2 employees whose employers both provide health insurance. To prevent double payment for hospitalization and surgery, most insurance companies pay only the actual costs to the individual where more than one policy is in effect. In practice, hospitals apply the patient's policy first and look to other coverage only when the primary policy is exhausted. Formerly, children were covered first customarily under the father's policy; however, in many states children are now covered first under the policy of the parent whose birthday occurs earlier in the calendar year--the so-called "Birthday Rule."

     Special requirements apply to SPDs and summaries of plan modifications of group health plans. A group health plan's SPD must indicate whether a health insurer is responsible for the financing or administration (including payment of claims) of the plan. If so, the name and address of such issuer must be provided. SPDs of group health plans that provide maternity or newborn infant coverage must include a statement on the postdelivery hospitalization requirements of the Newborns' and Mothers' Health Protection Act (previously discussed).

      Health plan SPD content. The SPD of a group health plan must also include the following items as appropriate:

     Note: The claims procedure may be provided as a separate document if the SPD itself so states.

      Summary of material modifications. Generally, a summary of a material modification in a plan or changes in SPD information must be provided no later than 210 days after the close of the plan year in which the modification or change was adopted.

     Summary of material benefit reduction. Group health plans, however, must provide participants and beneficiaries with a summary of any material reduction in covered services or benefits within 60 days after such a plan modification is adopted. Alternatively, plan sponsors may provide such descriptions at regular intervals of no more than 90 days. The requirement may be satisfied by an insert in a union newspaper or company publication that is regularly furnished to participants at intervals of not more than 90 days. Participants and beneficiaries who do not receive these publications must be notified within 60 days after the date of adoption.

     Special group healthcare plan notice requirements. Several special notice requirements apply to group healthcare plans. These include:

     Practice tip: Because the WHCRA notice has to go out every year in addition to the time of enrollment, plan administrators may want to send all of the notices required upon enrollment every year to guarantee that no participant or beneficiary misses out on any required notice.

     The Medicare Modernization Act (MMA) requires entities that provide prescription drug coverage to Medicare beneficiaries, including employer-sponsored health plans, disclose to all Part D-eligible individuals who are covered under, or who apply for, the plan's prescription drug coverage whether the coverage is "creditable prescription drug coverage" or not. This requirement applies whether the employer-sponsored coverage is primary or secondary to Part D coverage. Thus, the notice must be provided to Medicare-eligible retirees and their Medicare-eligible dependents who are covered under an employer-sponsored plan and Medicare-eligible active employees and Medicare-eligible dependents of active employees who are covered under the plan.

     Notice to CMS. In addition to the disclosure to Part D-eligible individuals, a plan must also provide a disclosure of creditable coverage status to the Centers for Medicare & Medicaid Services (CMS) on an annual basis. CMS regulations require that plans make the disclosure using the disclosure form on the CMS Creditable Coverage Disclosure Web Page at http://www.cms.hhs.gov/creditablecoverage.

     Exemption. Entities that contract with Medicare directly as a Part D plan or that contract with a Part D plan to provide qualified prescription drug coverage are exempt from the disclosure requirement. Thus, for example, an employer or union that provides prescription drug coverage to retirees through a Part D plan is exempt from the disclosure requirement.

     Outsourcing allowed. While the plan that provides the coverage is responsible for providing the notice, nothing in the regulation prevents a plan from arranging to have it provided by a third party.

     Group health benefit plans covered by ERISA must have a reasonable claims procedure that must be set out in the plan's SPD. The description of the claims procedure must include the circumstances that might result in the loss or denial of benefits and the procedure for making a claim for benefits, including the procedures for appealing a claim denial. ERISA requires that claim denials must be in writing and must include a clear explanation of the specific reasons for the denial. The plan document and the SPD must provide a procedure for appealing a denial to an authorized plan official or committee for a full and fair review.