Tucker E-Updates, August 2011
News and Industry Insights, Keeping You "Well-Informed"
About Tucker Administrators, Inc.
Tucker Administrators is a full-service TPA in Charlotte, NC. Founded in 1976, we provide a comprehensive portfolio of employee benefit products to serve the employer, broker and consultant community.
Why Tucker Administrators? Tucker Administrators is more than a claims payer. Our focus is on those factors that drive the total health risk management model, not just fixed costs. Large individual claims are the most expensive costs of a health plan. Our firm has the technology to focus on claims cost control. We use cutting-edge tools like predictive modeling, claims surveillance technology, wellness and clinically-based medical management with proven results that may slow or even reverse the rising trend of claims costs.
As an AWAC® Alliance member, we are one of a select number of TPAs in the US to use a system to screen every one of our self-funded clients' claims and prescription data using more than 80,000 clinician-produced algorithms. AWAC® has the capability to identify at-risk claimants before they become catastrophic, resulting in earlier diagnoses that are both life-saving and money-saving. Here is a list of our services:
- Total Self-Funded Health Plan Services
- Health Risk Assessment integrated with the group health plan
- Wellness Programs integrated with the group health plan
- On-Site Physician Programs
- Regulatory Compliance Support
- Group Employee Limited Self-Funded Plans
- Group Employee Fully-Insured Health Plans
- Group Employee Ancillary Plans
- FSAs-Medical, Dependent Care and Transportation
- Consolidated Billings Services
We can show you how to control plan costs while encouraging better health for your employees and their families. Call us at 704-525-9666, and visit our website at http://www.tuckeradministrators.com/
Useful Links
CMS
HHS
EBSA
Federal Register
Health Reform Official Website
HIPAA (Privacy) Office of Civil Rights
IRS
IRS Retirement Plans Navigator
North Carolina Dept. of Insurance
Retiree Drug Subsidy Program, CMS
South Carolina Dept. of Insurance
Tricare; Military Health System
US House of Representatives
US Senate
More PPACA:
Frequently Asked Questions
Question: Once a plan is subject to PPACA and makes a change that triggers loss of grandfather status, when do the non-grandfathered provisions take effect for the plan?
Answer: The non-grandfathered provisions take effect when the changes causing loss of grandfather status go into effect and not when the plan sponsor formally adopts the change.
Question: Will a plan lose grandfather status if the plan eliminates coverage for non-preferred providers?
Answer: No
Question: If a plan covers grandchildren, may the plan limit the coverage based on the age of the grandchildren or their financial dependency?
Answer: Yes
One Expensive Reason to Adhere to Plan Document Eligibility
The recent court case ruling on Clarcor, Inc v. Madison National Life Insurance is a teachable moment for self-funded plans with stop loss coverage. The case involves how the plan document and stop loss contract language impact COBRA coverage and eligibility.
This case demonstrates the consequences of not adhering to group health plan eligibility rules stated in the plan document. Health plan eligibility affects COBRA timelines for plan participants who have lost coverage due to a qualifying event. In addition, this case shows the importance of documenting approved dates of FMLA leave as well as any additional permitted employer leave provisions leaves in the plan document that will allow an employee to remain eligible for the plan if the employee is not actively at work. Other typical examples of employees who are eligible for the plan but not actively at work may be employer-certified disability, leave of absence, or lay-off provisions.
Court Sides with Stop Loss Carrier on Eligibility Issue-Overview
A Clarcor employee incurred a considerable amount of health care costs in late 2007 and 2008. She was last "regularly scheduled" to work on October 20, 2007, then elected FMLA, which took her eligibility through January 12, 2008. At the end of the FMLA period, the employee was not offered COBRA, but was instead placed on "short-term disability". Clarcor continued to make payroll deductions for health plan coverage and continued to submit her name to Madison as one of the beneficiaries of the plan. The employee was terminated on June 23, 2008 and then offered COBRA for the first time. Her health care costs during the relevant time period were in excess of $250,000, and Clarcor subsequently submitted a claim to the stop loss carrier, Madison National. Madison denied expenses incurred after January 12, 2008, the day the employee came off of
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FMLA leave and went onto short-term disability. Madison argued that if Clacor had offered the COBRA coverage as soon as she came off FMLA leave, her “reduction in hours” would have been a sufficient “qualifying event” to spark COBRA eligibility. Further, it is assumed that the Madison National stop loss policy had a ”late COBRA" exclusion, meaning the stop loss carrier would only honor COBRA claims if the notice and election were offered in a timely manner, as stated in COBRA law. In this case, COBRA should have been offered at the end of the FMLA period, not later at the end of short-term disability.
Background
The Clarcor Plan defined eligible employees as those "who are regularly assigned, full-time employees of Clarcor for at least 3 consecutive months and are regularly scheduled to work a minimum of 40 hours per week" in addition to standard FMLA and COBRA provisions. However, Clarcor had a "corporate practice" of continuing benefit deductions for employees placed on short-term disability and that its interpretation of its plan allowed for continuation of health coverage under such circumstances.
Court’s Decision
The court sided with Madison’s primary argument that Clarcor could not establish eligibility of the employee in question based on the language describing eligibility in the plan. Therefore, the claim was not reimbursable under the stop loss policy. The only Clarcor employees “eligible” for coverage under the terms stated in the plan are those who “are regularly assigned, full-time employees of Clarcor for at least 3 consecutive months and are regularly scheduled to work a minimum of 40 hours per week,” those on FMLA leave, or those with optional COBRA continuation coverage. Once the employee’s FMLA leave ended, she did not return to work or get on COBRA but was placed on short-term disability, which, in Madison National’s view, removed her from eligibility under the plan. If Clacor had offered the COBRA coverage as soon as she came off FMLA leave, her “reduction in hours” would have been a sufficient “qualifying event” to spark COBRA eligibility. Madison National’s position was that the plan simply did not allow employees not regularly working to remain eligible under the Plan, unless those employees are covered by the FMLA or COBRA.
| If an employee on the plan is not at work, it is advisable for plan sponsors to first, document dates and type of leaves, and second, consider plan eligibility status carefully, using the plan document as the guide |
The court decided in favor of the stop loss carrier, Madison National.
Summary
This case shows the importance of following the plan document’s definition of eligibility. Although the employer Clarcor had a “corporate practice” of placing employees on short-term disability after exhausting FMLA, that action actually terminated the health plan eligibility according to their plan’s own eligibility definitions.
If an employee on the plan is not at work, it is advisable for plan sponsors to first, document dates and type of leaves, and second, consider plan eligibility status carefully, using the plan document as the guide. Most plan sponsors have categories such as sick days, vacation, FMLA leave, employer-certified disability or leave of absence that are in the plan document. The stop loss policy will go along with the eligibility language in the plan document. Any informal practices the employer may have outside the plan document will not be recognized by the stop loss contract.
A related issue is COBRA in general. All COBRA notice/timelines for qualifying events should be strictly followed. If COBRA is elected by the member after the correct 60-day period has expired due to any kind of late COBRA notice, a stop loss policy with the “late COBRA” exclusion will not consider that member eligible for coverage and deny reimbursement of claims incurred for the period the member is enrolled for COBRA.
If you have any questions about this or any compliance issues, please call us any time at 704-525-9666.
HHS Releases Interim Final Rule on Women’s Preventive Services
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On August 1, 2011, U.S. Department of Health and Human Services (HHS) released an interim final rule adopting additional guidelines for women’s preventive services, including contraception, well-woman visits, support for breastfeeding equipment and domestic violence screening. These items, explained more fully below, must be covered by non-grandfathered plans and insurers without cost-sharing in the first plan year that begins on or after August 1, 2012.
Group health plans sponsored by certain religious employers are exempt from the requirement to cover contraceptive services.
The new guidelines include the following services
• Contraception and contraceptive counseling – All Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity. These recommendations do not include abortifacient (causes abortion) drugs.
• Breastfeeding support, supplies and counseling – Comprehensive lactation support and counseling, by a trained provider during pregnancy and/or in the postpartum period, and costs for renting breastfeeding equipment.
• Screening and counseling for interpersonal and domestic violence – Annual screening and counseling for interpersonal and domestic violence.
• Counseling and screening for human immune-deficiency virus – Annual counseling and screening for human immune-deficiency virus infection for all sexually active women.
• Counseling for sexually transmitted infections – Annual counseling on sexually transmitted infections for all sexually active women.
• HPV DNA testing – Human papillomavirus DNA testing in women with normal cytology results. Screening should begin at 30 years of age and should occur no more frequently than every 3 years.
• Screening for gestational diabetes – In pregnant women between 24 and 28 weeks of gestation and at the first prenatal visit for pregnant women identified to be at high risk for diabetes.
• Well-woman visits – Annual well-woman visit for adult women to obtain the recommended preventive services that are age and developmentally appropriate, including preconception and prenatal care.
To read the new guidelines, go to www.hrsa.gov/womensguidelines/
Please call us if you have any questions about this issue at 704-525-9666.
Important Change to Creditable Coverage Status Notice to Employees
The Patient Protection and Affordable Care Act (PPACA) changed the Medicare Part D annual enrollment period from November 15 through December 31 to October 15 through December 7.
This change is effective for the 2012 Part D enrollment, which will be this fall of 2011. Until this year, the creditable coverage notice to employees deadline was November 15 which was the beginning of the annual enrollment period. However, from this point forward, the Notice deadline is October 15th of each year. Therefore, only the new Notice should be used, since it references the start of the enrollment period as October 15th. Further, all previous CMS notices should be discarded, and any other material referencing the Medicare Part D enrollment period and creditable coverage notice deadline should be revised, since the November 15 through December 31 annual enrollment timeline is now incorrect.
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Employers offering group health plan coverage with a prescription drug benefit are required to notify all Medicare participants before October 15 of each year whether that coverage constitutes creditable prescription drug coverage. Creditable coverage here is defined as the employer-sponsored drug benefit is, on average for all plan participants, expected to pay out as much as standard Medicare prescription drug coverage pays. If the plan offers creditable coverage, the notice must indicate that it does, define creditable coverage, and ex plain why it is important. If the plan does not offer creditable coverage, the notice is still required and must clearly state this, as well as information about when to enroll in Part D.
The notice requirement is to provide a written disclosure notice to all Medicare eligible individuals annually to the following:
- Medicare eligible individual when he/she joins the plan.
- Medicare eligible active working individuals and their dependents,
- Medicare eligible COBRA individuals and their dependents,
- Medicare eligible disabled individuals covered under your prescription drug plan
- Medicare eligible retirees and their dependents.
Employees must receive the notice:
- Prior to an individual’s Initial Enrollment Period for Part D
- Prior to the effective date of coverage for Medicare-eligible employees that enroll the employers plan,
- When prescription drug coverage ends or becomes non-creditable, or
- Upon request
Individuals who do not enroll in Medicare Part D prescription drug coverage when they are first eligible will become subject to a late enrollment penalty if they have gone 63 days or more without prescription drug coverage that is creditable. That is why it is important that employees are provided this information about their employer-sponsored prescription drug plan, so that they can make an informed decision.
The revised Model Notices can be found at: https://www.cms.gov/CreditableCoverage/Model%20Notice%20Letters.asp#TopOfPage
Call Tucker Administrators if you have any questions about this important change at 704-525-9666.
