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Under the recently-enacted health care reform laws, all group health plans and all health insurance issuers offering group or individual coverage (collectively referred to as “health plans”) will be subject to certain, new reforms. These new requirements have different effective dates. This Alert explains the new requirements that are effective for plan years beginning on or after September 23, 2010 (i.e., January 1, 2011 for calendar-year plans).

Health Insurance Reforms

With certain exceptions for “grandfather plans” (to be discussed in a subsequent Alert), all health plans will be required to comply with the following, new requirements:

Prohibition on pre-existing-condition exclusions under 19.

Health plans will be prohibited from imposing pre-existing-condition exclusions with respect to coverage for enrollees under 19 years of age. The prohibition on pre-existing-condition exclusions will apply for enrollees 19 and over for plan years beginning on or after January 1, 2014.

No lifetime or annual benefit limits on “essential health benefits.” Health plans will generally be prohibited from imposing lifetime or annual limits on the dollar-value of the so-called “essential health benefits” for any participant or beneficiary. The standard for what benefits constitute “essential health benefits” will be determined by the Secretary of Health and Human Services through future regulations, but must be equal to what is provided under a “typical employer plan,” and must include, at a minimum, coverage for:
  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance abuse services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services (including oral and vision care).
Health plans are, however, allowed to place annual or lifetime per beneficiary limits on specific, covered benefits that are not “essential health benefits,” as long as these limits are otherwise permissible under federal or state law.

Prohibition on rescissions.

Health plans will be prohibited from rescinding coverage for an enrollee once such an enrollee is covered under a plan, except in cases of fraud, intentional misrepresentation or non-payment of premiums by the enrollee. Prior notice will be required for any cancellation.

No cost-sharing for certain preventive-services.

Health plans will be required to provide coverage for certain preventive-medicine services, and may not impose any cost-sharing for these services. These preventive services include:
  • Services with a rating of “A” or “B” in the current recommendations by the U.S. Preventive Services Task Force (available via the web at http://www.ahrq.gov/clinic/USpstfix.htm)
  • Immunizations recommended by the Advisory Committee on Immunization Practices
  • For women, infants, children, adolescents: preventive care and certain, additional screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration

Extension of dependent coverage.

If a health plan offers coverage for dependent children, those plans must extend coverage to the dependent until age 26. This provision does not, however, require a plan to make coverage available for a child of a child receiving dependent coverage.

Extension of prohibition of discrimination in favor of highly compensated individuals to fully-insured plan.

A fully-insured group health plan will be barred from discriminating in favor of “highly compensated individuals” as to both eligibility to participate and benefits provided (self-insured plans are already subject to this requirement). This requires, among other things, that all benefits provided to participants who are highly-compensated individuals be provided for all other plan participants.

Appeals process.

Health plans must implement a process for appeals of coverage determinations and claims that:
  • Include an internal claims appeals process (the process must initially comply with the Department of Labor regulations at 29 C.F.R. Section 2560.503-1, with new regulations to be issued by the Secretary of Health and Human Services)
  • Provides notice to enrollees of available internal and external appeals processes, and of assistance available through health insurance consumer assistance or the office of that state’s “ombudsman” (state agencies to be established under the new laws to assist with compliance by plans with federal and state health insurance requirements and law)
  • Allows enrollees to review their file, present evidence and testimony, and receive continued coverage pending outcome of the appeals process
  • Provides an external review process that complies with applicable state law, and includes, at a minimum, the consumer protections from the Uniform External Review Model Act of the National Association of Insurance Commissioners (or, in the case of a self-insured plan not subject to state insurance regulation, a similar, effective external review process that meets minimum standards that will be set forth by the Secretary of Health and Human Services through regulations)

This has been one of a series of “Alerts” to help guide you in understanding the new health care reform laws. If you have any questions or would like additional details, please contact David Cain at 619-806-7655.


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