Health care reform requires employers to notify their employees in advance of certain coverage changes
Dec. 02, 2010
Some Patient Protection and Affordable Care Act (PPACA) regulations will require employer group health plans or their health insurance issuers to notify their members of certain coverage changes.
Effective for plan years on or after Sept. 23, 2010, the interim rules state that the employer group health plan is responsible for providing notification to a member 30 days prior to a rescission, where a rescission is permissible. A rescission is defined as any termination or discontinuance of coverage that is retroactive. However, the federal government does not consider the following situations to be rescissions:
- A retroactive termination for nonpayment of premiums or cost of coverage
- A retroactive elimination of coverage back to the date of termination of employment, due to delay in administrative record-keeping
The 30-day notice to employees is required only in the case of a rescission. The current regulations do not specifically address the notice requirements, if any, in the case of a terminated employee. Absent additional regulatory guidance, it is believed that notice could be provided well in advance and at a time other than at termination. For example, open enrollment materials and Summary Plan Description typically state that, in the case of termination of employment, coverage is only offered until the end of the current pay period (or whatever the employment eligibility requirements are for that plan’s coverage).
Cancellation for nonpayment
Retroactive termination for nonpayment of premium is permissible, and there is no requirement that a premium be accepted after the original due date. If a group is cancelled due to nonpayment of premium, prior notice is required. The reform law stipulates that health plans or health insurance coverage may not be canceled without prior notice to the enrollee. We expect further clarification regarding notice requirements for cancellation of coverage in cases other than rescission.
Material benefit changes will require 60-day notice no later than March 23, 2012*
The employer group health plan or health insurer must provide notice to enrollees at least 60 days prior to the effective date of any material modifications in the terms of the plan or coverage.
BCBSM and BCN will update current internal policies to align with the latest regulatory information when it becomes available. We are committed to meeting additional requirements issued by the government relating to these PPACA requirements.
* The statute leaves unclear the effective date of this requirement, but we believe it is intended to be effective March 23, 2012. The Department of Health and Human Services is expected to issue additional guidance by March 23, 2011, which may provide clarification to eliminate the effective date ambiguity in the statute.
The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.