Compliance Assistance for Group Health Plans...
HIPAA and Other Recent Health Care Laws

This material constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

The Employee Benefits Security Administration administers the following health care laws that comprise Part 7 of the Employee Retirement Income Security Act (ERISA).

The Health Insurance Portability and Accountability Act (HIPAA) places limitations on a group health plan's ability to impose pre-existing condition exclusions, provides special enrollment rights for certain individuals, and prohibits discrimination in group health plans based on health status.

The Mental Health Parity Act (MHPA) provides for parity in the application of annual and lifetime dollar limits on mental health benefits with annual and lifetime dollar limits on medical/surgical benefits.

The Newborns' and Mothers' Health Protection Act (Newborns' Act) requires group health plans that offer maternity hospital benefits for mothers and newborns to pay for at least a 48-hour hospital stay for the mother and newborn following childbirth (or, in the case of a cesarean section, a 96-hour hospital stay), unless the attending provider, in consultation with the mother, decides to discharge earlier.

The Women's Health and Cancer Rights Act (WHCRA) provides protections for patients who elect breast reconstruction or certain other follow-up care in connection with a mastectomy.

Below are 10 key compliance considerations for group health plans. Under each is an example of a group health plan provision or practice that would not comply with the above laws and a tip on how to bring the plan into compliance. For more information on compliance with these laws, refer to Q&As: Recent Changes in Health Care Law.

Beware of hidden pre-existing condition exclusions in your plan

Example: A group health plan covers treatment for injuries in connection with an accident only if the accident occurred while the individual was covered under the plan.

Tip: This plan provision operates as a pre-existing condition exclusion and should be removed or modified to comply with HIPAA's limitations on pre-existing condition exclusions.

This plan provision operates as a pre-existing condition exclusion because only people who were injured while covered under the plan receive benefits for treatment. People who were injured while they had no coverage (or while they had other coverage) do not receive benefits for treatment. Accordingly, this plan provision limits benefits relating to a condition because the condition was present before an individual's enrollment date, and it is considered a pre-existing condition exclusion.

To comply with HIPAA, the plan could:

• Delete its requirement that the accident must occur while the individual is covered under the plan; or
• Limit its pre-existing condition exclusion. Among other things, the only conditions that may be subject to a pre-existing condition exclusion are those for which medical advice, care, diagnosis, or treatment was recommended or received within the 6 months ending on an individual's enrollment date in the plan. (Under HIPAA, an individual's enrollment date is the first day of coverage or, if there is a waiting period, the first day of the waiting period.) In addition, the maximum pre-existing condition exclusion period is 12 months (or 18 months for late enrollees) after the individual's enrollment date. The exclusion period must be offset by an individual's prior creditable coverage. Also, newborns and adopted children generally may not be subject to a pre-existing condition exclusion at all.

If the plan has a waiting period for coverage, ensure that any pre-existing condition exclusion period runs concurrently with the waiting period, rather than beginning after the waiting period ends

Example: A group health plan imposes a 30-day waiting period from an individual's date of hire before coverage will become effective. Then, after an individual has satisfied this waiting period, the plan imposes a 12-month pre-existing condition exclusion from the individual's effective date of coverage (offset by creditable coverage).

Tip: The pre-existing condition exclusion period is required to begin on the first day of the waiting period.

HIPAA requires that the maximum pre-existing condition exclusion period begin on an individual's enrollment date. For plans that impose a waiting period, the enrollment date is generally the first day of the waiting period. (Under HIPAA, an individual's enrollment date is the first day of coverage or, if there is a waiting period, the first day of the waiting period.)

In this example, the plan must begin counting the 12-month pre-existing condition exclusion period from the individual's enrollment date, which in this case is the first day of the waiting period.

Ensure that certificates of creditable coverage are complete

Example: A plan issues one certificate of creditable coverage for a participant and the participant's family. However, the certificate does not include information about dependents or waiting periods.

Tip: If a plan imposes a waiting period, the date the waiting period began is required to be reflected on the certificate. In addition, if a certificate applies to more than one person (such as a participant and dependents), the dependents' creditable coverage information is required to be reflected on the certificate (or the plan can issue a separate certificate to each dependent).

If a dependent's last known address is different from the participant's last known address, a separate certificate is required to be provided to the dependent at the dependent's last known address.

Ensure that the plan's special enrollment provisions permit individuals to enroll when a loss of eligibility for other group health plan or health insurance coverage occurs and when employer contributions toward other coverage cease

Example: A group health plan allows individuals to enroll through special enrollment for loss of other coverage only if the loss was due to an involuntary termination of employment.

Tip: The plan is required to permit individuals who declined health coverage under the plan because they had other group health plan or health insurance coverage to enroll in the plan through special enrollment upon any loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.

Under HIPAA, individuals who are otherwise eligible, but had declined health coverage because they had other group health plan or health insurance coverage, must be permitted to enroll in the plan (regardless of any late enrollment provisions) upon loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.

Loss of eligibility includes loss of coverage due to legal separation, divorce, voluntary or involuntary termination of employment, reduction in hours, children's aging out of coverage, or moving out of an HMO service area. It does not include loss of coverage due to a failure of the individual to pay premiums on a timely basis or termination of coverage for cause.

Under HIPAA, special enrollment rights are also triggered when employer contributions toward an individual's other coverage cease, regardless of whether the individual is still eligible for coverage under the other plan.

A plan's special enrollment provisions must also permit employees and dependents (who are otherwise eligible) to enroll upon marriage, birth, adoption or placement for adoption

Example: A group health plan allows employees who are already enrolled for coverage to add dependents upon marriage, birth, adoption and placement for adoption. However, if an employee is not already enrolled, the plan does not permit any enrollment when these events occur.

Tip: HIPAA allows eligible employees and dependents to enroll upon marriage, birth, adoption or placement for adoption.

Group health plans are required to offer special enrollment to otherwise eligible employees, spouses and any new dependents upon marriage, birth, adoption or placement for adoption. Accordingly, an employee who is otherwise eligible, but not enrolled for coverage, can enroll (and can also enroll a spouse and any new dependents, if they are otherwise eligible under the plan) when any of these events occur.

The plan should amend its special enrollment provisions to allow employees and dependents who are otherwise eligible to enroll upon these events.

For individuals who enroll through special enrollment, ensure that the effective date of coverage complies with HIPAA

Example: After an individual enrolls through special enrollment, a group health plan makes coverage effective on the first day of the first calendar month following the date a completed request for enrollment is received.

Tip: HIPAA sets forth specific dates when coverage is required to be made effective for special enrollees. In this case, the plan is not making coverage effective early enough for some individuals.

For special enrollment upon birth, adoption or placement for adoption, group health plans are required to make coverage effective as of the date of the birth, adoption or placement for adoption. For these events, this plan, in this example, is not making coverage effective early enough. Therefore, the plan should change the effective date of coverage provision to comply with HIPAA.

On the other hand, for special enrollment upon loss of eligibility for other coverage, upon loss of employer contributions toward other coverage, or upon marriage, coverage is required to be made effective no later than the first day of the first calendar month following the date a completed request for enrollment is received. Therefore, the plan's effective date of coverage provision is permissible with respect to these special enrollment events.

Eliminate plan provisions that deny individuals eligibility (including continued eligibility) under the plan based on a health factor, even if such provisions apply only to late enrollees

Example: To be eligible for late enrollment, a group health plan requires employees and dependents to present evidence of insurability.

Tip: Plans cannot require individuals (even if they are late enrollees) to present evidence of insurability in order to enroll for coverage.

A group health plan may not deny individuals enrollment in the plan (or delay the effective date of an individual's coverage) based on an individual's health status, medical condition (including both 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. Therefore, the plan must eliminate any evidence of insurability requirement. (Nonetheless, the plan is generally permitted to impose an 18-month pre-existing condition exclusion period on late enrollees, if it is offset by creditable coverage and complies with HIPAA's other limitations on pre-existing condition exclusion periods.)

Eliminate annual or lifetime dollar limits (including constructive dollar limits) on mental health benefits if they are lower than the annual or lifetime dollar limits imposed on medical/surgical benefits

Example: Outpatient benefits for mental health services under a group health plan consist of 50 doctor visits per year with a $50 maximum payment per visit. Outpatient benefits for medical/surgical services are unlimited.

Tip: While the plan does not impose an annual dollar limit on outpatient medical/surgical benefits, the 50 doctor visit per year limitation on mental health services, coupled with the absolute $50 maximum payment per visit, is a constructive annual dollar limit on outpatient mental health benefits of $2,500.

Under MHPA, a plan may not impose annual or lifetime dollar limits on mental health benefits that are lower than those for medical/surgical benefits. Here, the plan is not in compliance with MHPA because, with respect to outpatient services, the plan imposes a $2,500 constructive annual dollar limit on mental health benefits and no annual limit on medical/surgical benefits.

The plan should eliminate any constructive dollar limit on mental health benefits that is lower than that for medical/surgical benefits. The plan can still impose visit limits under MHPA, provided they are not coupled with absolute dollar limitations, which would constitute a constructive dollar limit.

Ensure that the plan does not require providers to obtain preauthorization from the plan in order for the plan to cover a 48-hour hospital stay in connection with childbirth (or a 96-hour hospital stay in the case of a cesarean section)

Example: For hospital stays, including those in connection with childbirth, a group health plan requires preauthorization from its utilization review telephone hotline, based on a determination of medical necessity.

Tip: The plan's preauthorization requirement is too broad in that it applies to hospital stays that are the subject of the Newborns' Act.

Under the Newborns' Act, the plan may not restrict benefits for a hospital stay in connection with childbirth to less than 48 hours (96 hours in the case of a cesarean section), unless the attending provider (in consultation with the mother) decides to discharge earlier.

Plans may not require providers to obtain authorization from the plan for prescribing the stay. In addition, plans may not deny a stay within the 48-hour (or 96-hour) period because the plan's utilization reviewer does not think such a stay is medically necessary.

The plan must eliminate this preauthorization requirement with respect to hospital stays in connection with childbirth for the first 48 hours (or 96 hours in the case of a cesarean section). The plan may impose such an authorization requirement for hospital stays beyond this period. In addition, the plan may impose a requirement on the mother to give notice of a pregnancy in order to obtain a certain level of cost-sharing or to use certain medical facilities. However, the type of preauthorization required by this plan (within the 48/96 hour period and based on medical necessity) must be eliminated.

If the plan provides benefits for mastectomies, ensure that the plan also provides coverage for all stages of reconstructive surgery and for physical complications in connection with a mastectomy (including coverage for lymphedemas)

Example: A group health plan provides benefits for mastectomies. However, the plan excludes benefits for reconstructive surgery after a mastectomy.

Tip: Plans that cover benefits for mastectomies cannot exclude benefits for reconstructive surgery or certain other post-mastectomy services.

Under WHCRA, the plan is required to provide (to an individual who is receiving benefits in connection with a mastectomy and who elects breast reconstruction in connection with the mastectomy) coverage for:

• All stages of reconstruction of the breast on which the mastectomy has been performed
• Surgery and reconstruction of the other breast to produce a symmetrical appearance
• Prostheses and physical complications of mastectomy, including lymphedemas, in a manner determined in consultation with the attending physician and the patient

In addition, the plan is required to notify participants of WHCRA's coverage requirements upon enrollment and annually afterwards.

For a more detailed explanation of WHCRA's disclosure requirements and for sample language that may be used, see Questions and Answers: Recent Changes in Health Care Law and its supplement, The Women's Health and Cancer Rights Act of 1998: Questions and Answers; Annual Notice Requirements Update

Glossary of Terms