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May 24, 2011
In This Compliance Corner Issue:
- Reminder: Retroactive Amendment for Section 125 Cafeteria Plans Required by June 30, 2011
- Health Reform Legal Challenge: Three Federal Appellate Courts to Consider PPACA Challenges
- Attempts by Republicans to Defund PPACA
- Update on PPACA’s Temporary High-risk Pool, the Pre-existing Condition Insurance Plan
- HHS Issues Guidance on MLR Requirements
- CMS Revises Medicare Part D Model Notice
- Annual HSA Contribution Amounts Adjusted for 2012
- Medicare Secondary Payer Mandatory Reporting User Guide Revised, CMS Issues Clarifications for HRAs
- Long Awaited Employee Benefits Decision Issued by Supreme Court
- Draft of Form 8955-SSA Now Available
- State Updates: AZ, DE, GA, HI, ID, IA, KY, MD, MS, NE, NC, ND, UT, VA, WA
- Frequently Asked Question – Are employees who drop coverage at open enrollment for themselves or any dependents offered COBRA?
REMINDERS AND ANNOUNCEMENTS
REMINDER: RETROACTIVE AMENDMENT FOR SECTION 125 CAFETERIA PLANS REQUIRED BY JUNE 30, 2011
As reported in the Sept. 14, 2010 edition of Compliance Corner, Internal Revenue Service (IRS) Notice 2010-59 provides that effective Jan. 1, 2011, the cost of an over-the-counter (OTC) medicine or drug may not be reimbursed from flexible spending arrangements (FSA) or health reimbursement arrangements (HRA) unless a prescription is first obtained. This change does not affect insulin, even if purchased without a prescription, and does not affect other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.
Similar rules apply to health savings accounts (HSA) and Archer medical savings accounts for medicines or drugs purchased after Dec. 31, 2010. Distributions from these accounts that do not satisfy the new (OTC) rules are considered to be for nonqualified medical expenses. These nonqualified medical reimbursements would be includible in gross income and subject to a 20 percent additional tax.
The rules governing cafeteria plans generally require plan amendments to take effect on a prospective basis. However, Notice 2010-59 provides that notwithstanding this general rule, an amendment to conform a cafeteria plan to the requirements of Notice 2010-59 may be made effective retroactively – if it is adopted no later than June 30, 2011. This will apply to expenses incurred after Dec. 31, 2010 (or after Jan. 15, 2011, as may be permitted for health FSA and HRA debit card purchases).
HEALTH REFORM UPDATE
HEALTH REFORM LEGAL CHALLENGE: THREE FEDERAL APPELLATE COURTS TO CONSIDER PPACA CHALLENGES
The Patient Protection and Affordable Care Act (PPACA), is currently the subject of numerous legal challenges across the country, and three of those challenges are currently pending before federal appellate courts. The first federal appellate court to hear such a challenge, the U.S. Court of Appeals for the Fourth Circuit, heard oral argument for two separate cases, both originating from Virginia, on May 10, 2011. These cases were decided differently at the district court level; with one court ruling that PPACA’s individual mandate was constitutional and the other ruling it is unconstitutional. The three-judge panel that heard the cases was picked at random and comprised of all Democratic appointees. In a separate challenge to PPACA originating in Michigan and now being appealed, the Sixth Circuit recently announced that the randomly selected three-judge panel for its case will consist of two Republican appointees and one Democratic appointee. The Sixth Circuit is scheduled to hear argument in the case on June 1, 2011. In still another challenge, originating in Florida and filed by more than 26 states in which the district court ruled the individual mandated to be unconstitutional; the Eleventh Circuit is scheduled to hear oral argument on June 8, 2011. The Supreme Court is ultimately expected to render an opinion on this issue. Stay tuned for additional developments.
Link to Sixth Circuit
Link to Fourth Circuit
Link to Eleventh Circuit
ATTEMPTS BY THE REPUBLICANS TO DEFUND PPACA
The majority of programs under PPACA are funded through mandatory spending instead of discretionary spending. Discretionary programs are funded by the annual appropriations process, whereas mandatory programs cannot be defunded in a budget bill. To defund a mandatory program, the mandatory spending must be repealed. Thus, to defund implementation of PPACA, Republicans have continued to push for changes to mandatory spending. On April 13, 2011, the U.S. House of Representatives passed HR 1217, which would repeal the Prevention and Public Health Fund established by PPACA. The Prevention and Public Health Fund contains almost $18 billion in mandatory spending, including $200 million for small business wellness plan grants, and is a major component of health reform. However, this bill will not likely pass the Senate. Even if it were to obtain Senate approval, the White House released a Statement of Administration Policy on HR 1217 indicating that any attempts to eliminate funding or repeal the Prevention and Public Health Fund will be met with a veto.
In a separate measure, the U.S. House of Representatives approved HR 1213 on May 3rd to defund mandatory federal funding to states to establish health insurance exchanges under PPACA. One day later, the House passed HR 1214 to cancel mandatory PPACA funding for the construction of school-based health centers. Both measures were passed along party lines, and neither bill is expected to gain traction in the Senate.
UPDATE ON PPACA’S TEMPORARY HIGH-RISK POOL, THE PRE-EXISTING CONDITION INSURANCE PLAN
PPACA prohibits group health plans and individual policies from imposing any preexisting condition exclusions, effective for plan years beginning on or after Jan. 1, 2014. This prohibition takes effect earlier—as of plan years beginning on or after Sept. 23, 2010 (i.e., Jan. 1, 2011 for calendar-year plans) with respect to individuals enrolled in the plan who are under 19 years of age. Beginning in 2014, individuals who do not have access to affordable employer coverage will be eligible to purchase insurance (with subsidies, if they qualify) through state health insurance exchanges regardless of any pre-existing conditions. In the near term to cover individuals with pre-existing conditions who have been uninsured for six months, PPACA required and appropriated $5 billion for the creation of interim federally subsidized high-risk pools specifically designed for such individuals. The pool is known as the federal Pre-existing Condition Insurance Plan (PCIP). This national program can work with existing state high-risk pools and will end on Jan. 1, 2014, once the exchanges are operational and other pre-existing condition and guarantee issue provisions take effect. A number of states have chosen to operate the federal high risk pool themselves, while other states have opted for the U.S. Department of Health and Human Services (HHS) to administer the program in their states.
To date, more than 18,000 individuals have enrolled in the PCIP, which is 47 percent more than in February 2011 and more than twice as many as in late 2010. Thus far, the enrollment figures are significantly below the five million which were expected to enroll in the PCIP. According to recent reports, Pennsylvania has the highest number of enrollees, 2,684, followed by California with 1,543 enrollees, and Texas, with 1,298 enrollees. North Dakota had the fewest number of enrollees, six.
HHS ISSUES GUIDANCE ON MLR REQUIREMENTS
HHS has issued guidance in the form of questions and answers relating to health care reform’s medical loss ratio (MLR) requirements for health insurers, which are applicable to insurance coverage regardless of grandfathered status. As background, insurers are required to report to HHS how they spend premium dollars and must provide rebates to enrollees unless at least 85% of premium dollars in the large group market (80% in the small group and individual markets) are spent on clinical services and health care quality improvement. In December 2010, HHS issued interim final regulations addressing the MLR requirements. In this latest guidance, there are 17 questions and answers regarding the MLR regulations; ranging from the definition of a small employer, mini-med and expatriate plan MLR reporting, reimbursement for clinical services provided to enrollees, third party vendor payments, activities that improve health care quality, and state requests for adjustment to the MLR standard.
While the MLR rules apply directly only to insurers, the effect on the insurance market may have significant indirect impacts for employer-sponsored health plans. The clarifications provided by HHS in guidance will be helpful to insurers as they prepare to comply with the MLR rules. The first annual reports, containing calendar-year 2011 plan data, are due by June 1, 2012. Insurers are required to make the first round of rebates by August 2012 based on their 2011 MLR.
FEDERAL UPDATES
CMS Revises Medicare Part D Model Notice
CMS has posted on its website revised model disclosure notices that are to be provided to Medicare Part D eligible individuals after April 1, 2011. The revisions reflect the change in the Medicare Part D annual coordinated election period from its prior timeframe (Nov. 15 to Dec. 31) to its new timeframe (Oct. 15 to Dec. 7). The change applies beginning with plan year 2012 (i.e., beginning with the 2011 election period). Employers using the model disclosure notices will need to replace them with the revised versions. Employers that use a customized version of the notices should make sure their versions are consistent with the revised model notices. There is no requirement that notices be provided in any language other than English; however Spanish versions of the model notices are available.
All Creditable Coverage Model Notices
Model Creditable Coverage Disclosure Notice
Model Non-Creditable Coverage Disclosure Notice
Model Creditable Coverage Disclosure Notice (Spanish)
Model Non-Creditable Coverage Disclosure Notice (Spanish)
ANNUAL HSA CONTRIBUTION AMOUNTS ADJUSTED FOR 2012
Revenue Procedure 2011-32 sets forth the 2012 inflation adjusted deduction limitations for annual contributions made to an HSA. For 2012, the annual limitation on HSA deductions for an individual with self-only coverage under a high deductible health plan (HDHP) is $3,100 and with family coverage under a HDHP is $6,250. This represents an increase from $3,050 and $6,150 respectively. The HSA contribution limits apply to the individual HSA account holder on the basis of his or her taxable year, which for almost everyone, is the calendar year.
For 2012, an HDHP must have an annual deductible that is not less than $1,200 (no change from 2011) for self-only coverage or $2,400 (no change from 2011) for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,050 for self-only coverage or $12,100 for family coverage. As a reminder, an individual may take an above-the-line deduction for contributions made to the individual’s HSA (i.e., the amounts will reduce the individual’s adjusted gross income).
Medicare Secondary Payer Mandatory Reporting User Guide Revised, CMS Issues Clarifications for HRAs
CMS has revised its Mandatory Reporting User Guide published due to the enactment of Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) at the end of 2007. The revisions were needed to clarify certain provisions, make some technical changes, incorporate previously announced revisions, and describe a few new procedures. As a reminder, the Guide outlines the requirements of “responsible reporting entities” (RREs) to report to CMS about whether group health plans (GHP) are (or have been) primary to Medicare. Some of the revisions are outlined below:
- HRAs. The instructions have been revised to state that amounts carried over from previous years must be included when determining whether the current year’s annual benefit value is less than $1,000 for purposes of the HRA reporting exemption. Also, termination dates should not be submitted simply because the annual benefit value of an HRA drops below the $1,000 threshold or is exhausted.
- 30-Day Exception Eliminated. A provision was deleted that prohibited the posting of “MSP occurrences” (i.e., periods in which GHP coverage is primary to Medicare) when the period lasted less than 30 days. As a result, RREs must submit coverage information and termination dates for periods of less than 30 days.
- Annual Confirmations by RREs. Beginning in 2012, the authorized representatives of RREs will receive annual profile reports by email that will need to be reviewed, signed, and returned within 30 days, or the RRE’s reporting ID may be deactivated.
- TIN Reference Response File. Beginning Oct.1, 2011, CMS will implement a new procedure for validating taxpayer identification numbers (TINs) and addresses.
- Alerts. The Guide notes that additional information about the reporting process will be provided in the form of alerts, which will be posted on the CMS web site and incorporated into the Guide when it is reissued. Alerts published subsequent to the latest Guide must be consulted to get a complete picture of the reporting requirements.
MMSEA Section 111 Mandatory Reporting Group Health Plan User Guide, Version 3.2
Long Awaited Employee Benefits Decision Issued by Supreme Court
On May 16, 2011, the U.S. Supreme Court issued its long awaited decision in CIGNA Corp. v. Amara. In the opinion, the Court vacated a federal district court’s order directing CIGNA Corp. to reform its pension plan due to ERISA notice-provision violations in summary plan descriptions (SPDs) issued when CIGNA transferred the existing pension plan into a new cash balance plan. The district court found that the evidence created a presumption of “likely harm” to plan beneficiaries and that reformation of the plan was warranted under ERISA section 502(a)(1)(B), which authorizes a plan participant or beneficiary to bring a civil action “to recover benefits due to him under the terms of his plan.” The Supreme Court granted review to address the proper legal standard of harm for determining whether ERISA notice violations warrant legal relief.
The Court first addressed and then rejected section 502(a)(1)(B) as legal authority for a district court to reform a plan following a violation of ERISA’s notice provisions. According to the court, section 502(a)(1)(B) merely provides for enforcing the terms of a plan; it does not authorize reforming terms to conform to representations made in SPDs. The Court also rejected an argument put forth by the U.S. Solicitor General, which urged that the district court had actually enforced the plan’s terms through its reformation order because the terms of the SPDs are themselves part of the plan. In rejecting that line of argument, the Court noted that SPDs are communications about a plan; they are not part of the plan itself.
Although the Court held that section 502(a)(1)(B) does not authorize plan reformation, it also held that such relief is authorized by section 502(a)(3), which allows a plan beneficiary “to obtain other appropriate equitable relief” for violations of ERISA. Having decided the basis for a court’s authority to reform a plan following an ERISA violation, the Court then noted that the legal standard of harm required to obtain “appropriate equitable relief” will depend on the equitable theory through which a court provides relief, and the Court remanded the issue to the district court.
Draft of Form 8955-SSA Now Available
A draft of new Form 8955-SSA is now available. As mentioned in the March 3, 2011, edition of Compliance Corner, IRS Announcement 2011-21 provided details on the new Form 8955-SSA to be used to report participants with deferred vested benefits from an employer-sponsored retirement plan. The draft Form 8955-SSA is subject to change and requires approval from the Office of Management and Budget before it is officially released. If you have any comments on this draft form, you can submit them to the IRS on their web site. Include the word “DRAFT” in your response. Submit your comments within 30 days from the date the draft was posted. As a reminder, for calendar year plans, the 2009 8955-SSA due date (without extension) will generally be Aug. 1, 2011. This annual filing replaces the former Form 5500 Schedule SSA, which was removed from Form 5500 electronic reporting because such reports were available for the public to view and the Schedule SSA contained information on individuals, including their social security numbers. Thus, plan sponsors filed their 2009 Form 5500 without the Schedule SSA and have been waiting for further guidance with regards to the 8955-SSA.
IRS Announcement 2011-21
Draft Form 8955-SSA (2009)
Form 8955-SSA 2-D Barcode Standards
FAQs regarding Form 8955-SSA
STATE UPDATES
ARIZONA
On April 28, 2011, the governor signed into law HB 2102. The new law amends existing licensing laws to require an individual applying for an insurance license to provide documentation of citizenship or alien status that contains a photograph of the individual. The law also applies to existing registered agents in Arizona. HB 2102 is effective July 20, 2011.
On April 25, 2011, the governor signed into law SB 1357. The new law provides that physicians or primary care practitioners that provide medical services may charge a $25 missed-appointment fee to patients who miss a scheduled appointment. The new law relates to the Arizona Health Care Cost Containment System, and is effective immediately.
DELAWARE
On May 11, 2011, Governor Jack Markell signed Delaware’s civil union bill, SB 30, into law. Effective Jan. 1, 2012, the state of Delaware will recognize the legal relationship of a civil union between two persons of the same-sex validly formed in jurisdictions outside of Delaware as well as within the state of Delaware. Under the law, same-sex couples will be provided certain legal protections and benefits previously only available to opposite-sex couples, including all of the same rights, benefits, protections and responsibilities as married persons under Delaware law. Importantly, the law does not change federal law, which restricts marriage benefits to opposite-sex couples. The law also does not revise the definition of marriage or eligibility requirements for marriage.
SB 30 clearly states that a party to a civil union is included in any definition or use of the terms “dependent”, “family”, “husband and wife”, and “spouse”, among others as those terms are used throughout the laws of the state. Therefore, as a result of this legislation, private employers that offer fully insured group insurance coverage may be required to offer the same benefits to the partners of employees who have entered into civil unions as are offered to spouses of employees in opposite sex marriages. We will watch for guidance from the Delaware Insurance Department on whether they interpret the civil union law in this manner.
In contrast, an employer that provides insurance through a self funded plan will not be affected by the civil union law in this way. This is because self funded plans are governed by the federal ERISA, and are not regulated by the state. Employers with self funded plans should be aware, however, that certain provisions of the new law may extend to self funded employers in other employment matters (i.e., leave laws, bereavement policies, or other employment policies that benefit married employees).
Employers should anticipate a rise in requests for civil union partner benefits, particularly with respect to health plans. Prior to Jan. 1, 2012, employers should review their current benefit plans and policies, watch for guidance from the Delaware Insurance Department, and then determine what actions, if any, need to be taken to comply with the law. We anticipate that guidance regarding civil unions and employee benefit plans will continue to evolve, and we will keep you posted on any new developments in this area.
GEORGIA
On May 13, 2011, the governor signed into law HB 87. The new legislation, entitled the “Illegal Immigration Reform and Enforcement Act of 2011″, requires public and private employers to register with and use E-Verify to verify employment eligibility information of newly-hired employees, and to submit annual reports . E-Verify is a federal electronic verification program maintained by the U.S. Department of Homeland Security. The new E-Verify requirement applies to public employers, which includes every department, agency, or instrumentality of the state with more than one employee. Further, public employers may not enter into a contract for services unless the contractor registers and participates in E-Verify, and the public employer must submit certain annual reports to the state auditor. The effective date for public employers is Jan. 1, 2012.
The new E-Verify requirement applies to private employers with more than 10 employees, and the effective date of the new requirement for private employers depends on the exact size of the employer. For employers with 500 or more employees, the effective date is Jan. 1, 2012. For employers with 100 to 499 employees, the effective date is July 1, 2012. For employers with 10 to 99 employees, the effective date is July 1, 2013.
HAWAII
On April 8, 2011, the governor signed into law SB123. The new law requires insurance producers to keep a record of all transactions consummated under the producer’s license. The record must include each insurance contract procured or issued, the names of the contracting parties, the amount of the premium paid, and a statement of the subject of the insurance. The records must be kept in the licensee’s office and must be made available upon request for five years after the date of the transaction. The new law is effective April 8, 2011.
IDAHO
On April 8, 2011, the governor signed into law HB 299, which relates to the Idaho Health Carrier External Review Act (IHCERA). The new law amends existing law to provide an opt-in election for single employer self funded benefit plans subject to ERISA. Generally speaking, IHCERA applies only to fully insured plans. However, HB 299 provides that self funded plans that wish to implement the external review processes described in IHCERA may by timely and appropriate written notice voluntarily elect to comply with IHCERA. HB 299 also gives the Insurance Director the authority to promulgate rules establishing the procedures (and related fee) for a plan administrator to voluntarily comply with IHCERA.
IOWA
On April 28, 2011, the Iowa governor signed HF 597, which creates new procedures for external review of health care coverage decisions by health carriers under Iowa state law. The legislation also includes transition and applicability provisions, as well as model language to be used in the event of a final adverse determination by a health carrier. This legislation is in response to state mandated requirements under PPACA, including the requirement for a state to adopt an external review program by July 1, 2011.
KENTUCKY
On April 29, 2011, the Commissioner of Insurance issued Bulletin 2011-3, which provides a summary of bills adopted by the 2011 Kentucky General Assembly during the Regular Session, and its individual affect on Kentucky’s insurance statutes. Of particular interest are:
- SB 112- Prohibition on Copayment and Coinsurance for Occupational and Physical Therapy
- SB 114- Health Benefit Plan Wellness Programs
- HB 255- Health Insurance Tax Exclusion for Insurance Premiums Deductible Pursuant to PPACA
Each of these were previously described in detail in the March 29, 2011 and April 11, 2011 Compliance Corner editions.
MARYLAND
On May 10, 2011, the governor signed into law SB 850. The new law requires insurance producers to provide to certain small employers information about the Maryland Medical Assistance Program and the Maryland Children’s Health Program for the small employer to distribute to its employees during open enrollment period. Specifically, producers must provide income eligibility thresholds and application instructions for the two Maryland state programs. The new law is effective Oct. 1, 2011.
MISSISSIPPI
On May 17, 2011, the Mississippi Insurance Department issued Bulletin 2011-6. The bulletin is directed towards all licensed insurers offering dental insurance, and is meant to remind those offering dental insurance in Mississippi of the various laws relating to dental services. The bulletin specifically mentions Mississippi laws relating to the freedom of choice of dental practitioners, a dentist’s right to participate in a network, X-ray requirements, in- and out-of-network provider payments, prompt pay laws, fees for non-covered services, and the legal relationship between a dentist and a patient.
NEBRASKA
On March 10, 2011, the Nebraska governor approved LB 197, which permits a mother to breastfeed her child in any public or private location where she is authorized to be. No further explanation or guidance has been provided at this time. The legislation is effective Sept. 8, 2011.
NORTH CAROLINA
On April 29, 2011, the North Carolina Department of Insurance issued Bulletin 11-B-06 concerning the establishment of the Long-term Care Partnership Program. The program became operationally available for marketing on March 7, 2011, but insurance carriers have been awaiting further guidance detailing the requirements to certify a policy under the Partnership Program. This bulletin suffices as such guidance, and includes the parameters for policy requirements. The bulletin also clarifies that a producer already authorized for long-term care insurance sales in North Carolina is not required to undergo any additional education requirements to market Partnership plans, but they will be required to meet continuing education requirements.
NORTH DAKOTA
On April 26, 2011, the governor signed SB 2237, which amended current law concerning unfair discrimination by insurance agents, brokers and salespersons. The slight change in the language of existing law clarifies that consideration of an individual’s history or status as a subject of domestic abuse would be considered unfair discrimination, and is prohibited. The law is effective August 1, 2011.
On April 25, 2011, the governor signed HB 1175, relating to limitations on insurance rebates. The law created a new subdivision which permits an insurance producer to give a gift, prize, promotional article, logo merchandize, meal, or entertainment activity directly or indirectly to a person in connection with marketing, promoting, or advertising the business, as long as the aggregate retail value does not exceed fifty dollars per person, per year. The definition of a “person” for this purpose includes the named insured, policy owner, or prospective client or the spouse of any of these individuals. While a gift card is permitted, cash is not. Additionally, any refund or discount in premium is prohibited. Also, an insurance producer cannot condition the gift or prize on obtaining a quote or a contract of insurance. Finally, the law specifies that an insurance producer may make a donation to a 501(c)(3) nonprofit organization, as long as the donation is not an inducement to obtain a quote or a contract of insurance.
On April 26, 2011, the governor signed SB 2138, which addresses the payment of accrued paid time off to employees who quit on fewer than 5 days’ notice. If an employee voluntarily terminates employment with a private employer in North Dakota, the employer may withhold payment of accrued paid time off if:
- At the time of hiring, the employer provided the employee with written notice of this limitation on accrued paid time off;
- The employee was employed by the employer for less than 1 year; and
- The employee gave the employer fewer than 5 days’ written or verbal notice.
The previous statute required employers to pay employees, whether terminated voluntarily or involuntarily, all unpaid wages by the next payday. The change in the law is effective Aug. 1, 2011.
UTAH
On May 4, 2011, the Utah Department of Insurance issued Bulletin 2011-3. The bulletin is directed to insurers and producers selling health benefit plan insurance and is meant to provide guidance regarding the requirements for a producer to be authorized to sell insurance products on the Utah Health Insurance Exchange. Specifically, in order for a producer to be authorized to sell products on the Exchange, the producer is required to have an individual producer license, complete the defined contribution market training, and have a direct individual appointment with all carriers that offer a defined contribution arrangement on the Exchange. The bulletin provides more information on the process a producer must follow to meet the above requirements.
VIRGINIA
On April 29, 2011, the Virginia governor signed into law HB 1958. The new law brings inconsistent and conflicting requirements of Virginia’s health insurance laws into conformance with corresponding provisions of PPACA that became effective on Sep. 23, 2010. The PPACA provisions that are implemented into Virginia law under HB 1958 include, among others, the adult dependent coverage mandate, the limits on rescission of health insurance policies, and the prohibitions on lifetime and annual essential benefit limit, preventive care cost-sharing, and pre-existing condition exclusions for children under age 19. HB 1958 is effectively immediately and will expire on July 1, 2014.
On April 29, 2011, the governor signed into law SB 1062. The new law requires health insurers, health care subscription plans, and HMOs to provide coverage for the diagnosis of autism spectrum disorder (ASD) and treatment for ASD in individuals from age two to six. Treatment for ASD includes applied behavioral analysis when provided or supervised by a board-certified behavior analysis and the prescribing practitioner is independent of the provider of the applied behavior analysis. The law does not apply to individual or small group policies, contracts, or plans. SB 1062 is effective July 1, 2011.
WASHINGTON
On April 20, 2011, the governor signed into law HB 1432. Under the new law, private employers in Washington are covered by the military status discrimination prohibitions concerning veterans’ preference. This means that such employers can give preference for employment to honorably discharged soldiers, sailors and marines who are veterans of U.S. wars or U.S. military campaigns for which campaign ribbons are awarded, as well as their widows or widowers. Employers may also give preference for employment to spouses of honorably discharged veterans who have a permanent, total service-connected disability. HB 1432 is effective July 22, 2011.
On May 3, 2011, the governor signed into law HB 1454. The law permits certain categories of workers who are at risk of exposure to human immunodeficiency virus (HIV) to request that a person be tested for blood-borne pathogens at the same time HIV testing is ordered. Specifically, law enforcement officers, firefighters, health care providers and staff that are considered at risk of substantial exposure to HIV, upon a substantial exposure to another person’s bodily fluids in the course of their employment, may request a state or local health official to order testing for HIV upon the person to whose bodily fluids they were exposed. If the state or local official refuses, then the at-risk employee may petition the superior court for a hearing as to whether testing should be ordered.
The new law provides that testing for other blood-borne pathogens may be performed at the same time HIV testing is performed, if so requested by the at-risk employee. While Washington state privacy laws generally protect unauthorized use or disclosure of the results of the HIV test or the identities of the individuals involved, the new law provides that certain individuals may receive such information, including claims management personnel employed by or associated with an insurer, HMO, or self funded health plan. Employers of at-risk employees and employers that sponsor self funded plans should be aware of the new law.
FREQUENTLY ASKED QUESTIONS
Are employees who drop coverage at open enrollment for themselves or any dependents offered COBRA?
Employees who drop their own coverage or a dependent’s coverage at open enrollment are generally not eligible for COBRA as cancelling plan coverage is not one of the seven possible COBRA triggering events. Such an employee or dependent could be eligible for COBRA if the open enrollment happened to coincide with a COBRA triggering event. However, in that case, the employee or dependent would need to timely notify the employer as designated by the COBRA Initial Notice of the triggering event to ensure protection of COBRA rights.
COBRA specifies seven triggering events that can be qualifying events if they result in a loss of coverage:
- Voluntary or involuntary termination of the covered employee’s employment other than by reason of gross misconduct;
- Reduction of hours of the covered employee’s employment;
- Divorce or legal separation of the covered employee from the employee’s spouse;
- Death of the covered employee;
- A dependent child ceases to be a dependent under the generally applicable requirements of the plan;
- A covered employee becomes entitled to benefits under Medicare; and
- An employer’s bankruptcy, but only with respect to health coverage for retirees and their families.
Dropping one’s own coverage or dropping a dependent during open enrollment is not one of seven possible COBRA triggering events. Thus, a cancellation of coverage at the employee’s request during open enrollment will not in itself trigger COBRA.
Please note that there may be exceptions to this rule when coverage was dropped during open enrollment in anticipation of a divorce. Additionally, the terms of any applicable qualified medical child support orders should be consulted prior to dependents being dropped during open enrollment.