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Health Care Reform Bulletin - Disclosure Notices - Sample Language – Part 1

What You Need to Know Now About:  Health Care Reform (HCR) Disclosure Notices - Sample Language – Part 1

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Over the past few weeks, the Department of Labor (DOL) has provided sample language for plan sponsors to use in disclosing Health Care Reform changes to plan participants.  This HCR Update focuses on the model notices provided by the DOL on 4 health care reform items:

1. The Grandfather Clause
2. Dependent Coverage to Age 26
3. Lifetime Limits
4. Patient Protection (Primary Care Physician (PCP) and OB/Gyn selection)

If you have a grandfathered plan and plan on maintaining the Grandfather Status, the Grandfather Clause sample language, if applicable, should be used immediately. 

The other reforms require minimum disclosure by “the first day of the first plan year beginning on or after September 23, 2010”.  Dependent Coverage to Age 26 (grandfathered plans have the ability to exclude those dependents that have access to other employer provided coverage until 2014) and the Lifetime Limits reforms apply to all plans including grandfathered plans.  The Patient Protection reform does not apply to grandfathered plans.

1. The Grandfather Clause Disclosure DOL Sample Language

If your health plan meets the definition of a grandfathered plan as described in our 6/23/2010 HCR Bulletin - The Grandfather Clause, then in order to maintain status as a grandfathered health plan, you MUST include a statement, in any plan materials provided to a participant or beneficiary describing the benefits provided under the plan or health insurance coverage, that the plan or coverage believes it is a grandfathered health plan within the meaning of section 1251 of the Patient Protection and Affordable Care Act and must provide contact information for questions and complaints. 

Unlike the other reforms in which you can disclose the sample language in your open enrollment or new enrollment materials provided the sample language is “prominently” displayed, to maintain the grandfathered plan status, you will have to disclose the sample language in any plan materials such as:

• Plan Document
• Summary Plan Description
• Benefit Plan Design Grids
• Open and New Enrollment Materials
• Confirmation Statements

In order to satisfy the disclosure requirement, the DOL has issued the following sample language for plan sponsor use:

This [group health plan or health insurance issuer] believes this [plan or coverage] is a “grandfathered health plan” under the Patient Protection and Affordable Care Act (the Affordable Care Act).  As permitted by the Affordable Care Act, a grandfathered health plan can preserve certain basic health coverage that was already in effect when that law was enacted.  Being a grandfathered health plan means that your [plan or policy] may not include certain consumer protections of the Affordable Care Act that apply to other plans, for example, the requirement for the provision of preventive health services without any cost sharing.  However, grandfathered health plans must comply with certain other consumer protections in the Affordable Care Act, for example, the elimination of lifetime limits on benefits. 

Questions regarding which protections apply and which protections do not apply to a grandfathered health plan and what might cause a plan to change from grandfathered health plan status can be directed to the plan administrator at [insert contact information].  [For ERISA plans, insert: You may also contact the Employee Benefits Security Administration, U.S. Department of Labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform.  This website has a table summarizing which protections do and do not apply to grandfathered health plans.] [For individual market policies and nonfederal governmental plans, insert: You may also contact the U.S. Department of Health and Human Services at www.healthreform.gov.] 

2. Dependent Coverage to Age 26

As discussed in our previous HCR Bulletin - Dependent Children on 5/13/2010, some plan sponsors had the option of implementing this reform early (depending upon the insurance carrier or funding method) or waiting until the mandatory implementation date of the first day of the first plan year beginning on or after September 23, 2010.

For plan sponsors who chose to wait until the mandatory implementation date, then all that is necessary to meet the disclosure requirement is to include the sample language in any open or new enrollment materials provided the language is “prominently” displayed.

The DOL issued sample language for plan sponsor use is:

Individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage), because the availability of dependent coverage of children ended before attainment of age 26 are eligible to enroll in [Insert name of group health plan or health insurance coverage].  Individuals may request enrollment for such children for 30 days from the date of notice.  Enrollment will be effective retroactively to [insert date that is the first day of the first plan year beginning on or after September 23, 2010.]  For more information contact the [insert plan administrator or issuer] at [insert contact information]. 

Of course, a plan sponsor should also update the Plan Document, Summary Plan Description and any other plan materials in which dependent eligibility is discussed.

For those plan sponsors who chose to implement the reform early, you need to determine whether you chose a “partial” implementation or a “full” implementation.  If you chose a “partial” implementation, then you should follow the same procedure as a plan sponsor who is waiting until the mandatory implementation date.  If you chose “full” implementation, then you will need to review and revise the model language for your use and send to the affected former plan participants.

Again, regardless of when or how a plan sponsor decided to implement this reform, the plan sponsor should also update the Plan Document, Summary Plan Description and any other plan materials in which dependent eligibility is discussed.

3. Lifetime Limits

This reform, applicable to all plans including grandfathered plans, eliminates lifetime limits on the amount of dollars a plan will pay for a participant.  For example, many plans may have a set lifetime maximum amount such as $2,000,000 in plan benefits for in-network care per participant.   Beginning with the first day of the first plan year beginning on or after September 23, 2010, this is no longer allowed.

In order to comply with the disclosure requirement, a plan sponsor can include the DOL sample language in any open or new enrollment materials provided it is “prominently” displayed.  The DOL issued sample language for plan sponsor use is:

The lifetime limit on the dollar value of benefits under [Insert name of group health plan or health insurance issuer] no longer applies.  Individuals whose coverage ended by reason of reaching a lifetime limit under the plan are eligible to enroll in the plan.  Individuals have 30 days from the date of this notice to request enrollment.  For more information contact the [insert plan administrator or issuer] at [insert contact information]. 

A plan sponsor should also review all materials such as the Summary Plan Description, Plan Design Benefit Grids, etc., where Lifetime Limits are discussed.
 
4. Patient Protection (Primary Care Physician (PCP) and OB/Gyn selection)

This reform only applies to non-grandfathered plans and only applies to plans that:

1. Require or allow for the designation of primary care providers by participants or beneficiaries, and/or
2. Require prior authorization for any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from an in-network health care professional who specializes in obstetrics or gynecology.

Typically, for employers located in Pennsylvania, state law already governs these two provisions and, most likely, your health insurance plan is already following these provisions.  However, if either of these provisions is applicable to your plan, then just like with the Dependent Care to Age 26 and Lifetime Limits reforms, you will have to disclose the DOL sample language in your open and new enrollment matierials.

The DOL issued sample language for plan sponsor use is:

For plans and issuers that require or allow for the designation of primary care providers by participants or beneficiaries, insert:

[Name of group health plan or health insurance issuer] generally [requires/allows] the designation of a primary care provider.  You have the right to designate any primary care provider who participates in our network and who is available to accept you or your family members.  [If the plan or health insurance coverage designates a primary care provider automatically, insert: Until you make this designation, [name of group health plan or health insurance issuer] designates one for you.]  For information on how to select a primary care provider, and for a list of the participating primary care providers, contact the [plan administrator or issuer] at [insert contact information]. 

For plans and issuers that require or allow for the designation of a primary care provider for a child, add:

For children, you may designate a pediatrician as the primary care provider. 

For plans and issuers that provide coverage for obstetric or gynecological care and require the designation by a participant or beneficiary of a primary care provider, add:

You do not need prior authorization from [name of group health plan or issuer] or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a health care professional in our network who specializes in obstetrics or gynecology.  The health care professional, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre-approved treatment plan, or procedures for making referrals.  For a list of participating health care professionals who specialize in obstetrics or gynecology, contact the [plan administrator or issuer] at [insert contact information].

Again, a plan sponsor should review and revise any Summary Plan Description, Plan Design Benefit Grids or any other materials in which PCP selection or OB/Gyn referrals are discussed.

Health Care Reform Disclosure - Sample Language – Part 2

There are more health care reforms that will be going into effect on the first day of the first plan year beginning on or after September 23, 2010.  The DOL has not yet issued sample language on the following reforms:

• Claims Appeal Process
     o Plans are required to have an internal & external appeal process.
     o Currently, ERISA plans already have an internal appeal process.
     o Does not apply to grandfathered plans.
• Emergency Services
     o Requires in-network benefit level regardless of provider utilized.
     o Does not apply to grandfathered plans.
• Pre-existing Conditions
     o Prohibits pre-existing condition exclusions for children under age 19.  In 2014, applies to all plan participants.
     o Applies to all plans.
• Preventive Services
     o Prohibits employee cost-sharing for routine, preventive services.
     o Does not apply to grandfathered plans.
• Non-discrimination Rules
     o Applies only to non-grandfathered, fully-insured plans.
     o Prohibits group health plans from discriminating in favor of highly compensated employees.
• Rescission of Coverage
     o Prohibits rescinding coverage to a participant once covered.
     o Applies to all plans.

Once the DOL issues sample language on these reforms, we will issue HCR Update – Part 2.

If you have any questions regarding anything covered in this HCR Update, please contact your Banyan Consulting representative for assistance.