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June 22, 2010

In this Compliance Corner Issue:

Interim Final Regulations for Grandfathered Health Plans Released
Early Retiree Reinsurance Program FAQs
Final Rules Issued on Pension Distributions under Domestic Relations Orders
State Updates: CA, DC, GA, ID, IA, KY, MS, MO, NY, OK and SC

HEALTH REFORM UPDATES

INTERIM FINAL REGULATIONS FOR GRANDFATHERED HEALTH PLANS RELEASED
The interim final rules for group health plans and health insurance coverage relating to status as a grandfathered health plan under the Patient Protection and Affordable Care Act (PPACA) were issued by multiple agencies on June 14, 2010. The final regulations outline the requirements applicable to grandfathered health plans including how to maintain grandfathered status, what plan design changes jeopardize grandfathered status, and other insights provided by the rules.

EARLY RETIREE REINSURANCE PROGRAM FAQS
The U.S. Department of Health and Human Services (HHS) has posted responses to nine frequently asked questions (FAQs) regarding the Early Retiree Reinsurance Program. The FAQs reconfirm that the applications will be processed in the order in which they are received. There is not a predetermined number of applications that will be accepted. The application must be signed by an authorized representative of the plan such as the plan sponsor’s CEO, CFO or HR Director. The Official Application is scheduled to be posted on the HHS website in late June.

Click here to learn more.

NATIONAL UPDATES

FINAL RULES ISSUED ON PENSION DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS
The Department of Labor (DOL) has finalized its regulations on domestic relations orders (DROs) that were issued as an interim rule in 2007. The regulations were required under the PPA to clarify certain issues relating to the timing and order of issuing DROs under ERISA and the IRS Code. The final regulations are effective August 9, 2010. The regulations rely heavily on examples to illustrate general principles, but the DOL makes clear that the examples are not intended to represent the only circumstances to which the general principles apply.

The regulations confirm that a DRO will not fail to be a QDRO solely because it is issued after, or revises, another order. There are three examples to illustrate the principle that a DRO will not fail to be a QDRO solely because of the timing of when it was issued. Finally, the regulations confirm that an order will be a QDRO only if it satisfies the requirements and protections under ERISA.

Click here to view the final rules.

STATE UPDATES

California
Effective July 1, 2010, the Department of Insurance has reduced fees for all insurance producers. Bulletin 2010-2 announces that the fees have been reduced by 6 percent due to the Department’s efforts to increase efficiencies and reduce operational costs.

Click here to learn more.
Click here to view the rates.

District of Columbia
The District of Columbia has enacted Bill 18-0743, which amends the definition and eligibility for a dependent child on a fully-insured plan. The bill requires group health plans, individual health plans and health insurers to provide health insurance coverage for dependents younger than 26 years of age on the same terms that insurance benefits are provided to other covered dependents. A dependent must also:

Be unmarried
Have no dependents
Be a resident of the District of Columbia or enrolled as a full time student in an accredited public or private institution of higher education
Not otherwise be covered by any other group or individual health plan or entitled to benefits under Medicare

As of May 1, 2010, all new and renewing group health plans, individual health plans and health insurers that provide coverage for a dependent child will amend the age limit and eligibility requirements in contracts. This provision does not apply to dental or vision plans.

Click here to view Bill 18-0743.

Georgia
SB 411 is effective July 1, 2010 and provides for exemptions from unfair trade practices for certain wellness and health promotion programs, condition or disease management programs, and health risk appraisal programs. The law permits insurers to offer rewards or incentives to insureds for participation in such wellness or health improvement programs. The rewards include merchandise, gift cards, debit cards, premium discounts, HSA contributions, and lower copayment or coinsurance amounts.

Click here to view SB 411.

Idaho
Governor Otter has approved HB 529. Effective for policies issued or renewed after January 1, 2011, a carrier may not require a dental provider to adopt fees for services that are not covered under the dental provider contract.

Click here to learn more.

Iowa
SF 2356 establishes the Iowa Insurance Information Exchange. Insurance Commissioner Voss is tasked with implementing the exchange, which will provide information about all public and private health care coverage that is available in Iowa including the cost, comparison of benefits, premiums, and out-of-pocket costs.

Click here to learn more.

Kentucky
The Department of Insurance has issued Advisory Opinion 2010-03, which clarifies requirements regarding the state’s extension of benefits provisions for group health policies. Group policies must include a reasonable extension of benefits for members who are totally disabled or hospitalized on the date that their group health policy is terminated. An explanation of the provision must be included in the certificate of coverage. A reasonable extension of coverage for a member who is hospitalized means that coverage terminates at the earlier of hospital discharge, maximum benefits are received, or at the end of 12 months. A member who is disabled would receive extended coverage until coverage is obtained under another group policy, the disability ceases, maximum benefits are received, or at the end of the 12 months. Participants do not have submit an application to receive these benefits.

Click here to learn more.

Insurance Bulletin 2010-05 summarizes insurance legislation adopted by the 2010 Kentucky General Assembly which impacts group health plans.

SB 18 prohibits health benefit plans from excluding coverage for routine patient health care costs incurred in the course of a cancer clinical trial if the health benefit plan would otherwise cover the routine care.
HB 159 requires group health plans to provide certain coverage for the diagnosis and treatment of autism spectrum disorder. Large group plans must provide coverage up to $50,000 per year for ages one through six and $1,000 per month for ages seven through 21. Small group plans must provide coverage up to $1,000 for ages one through 21. The law is effective policies issued or renewed after January 1, 2011.

Click here to learn more.

Governor Beshear has signed HB 165 into law. The law amends Kentucky Statute 344.040 to specifically permit employers to charge employees a different contribution rate for group health plan coverage based on whether the employee is a smoker or non-smoker. An employer is also specifically permitted to offer an incentive to employees to participate in a smoking cessation program.

Click here to learn more.

Mississippi
Commissioner of Insurance Chaney has issued Bulletin 2010-02 asking insurance carriers to contact group clients that are eligible for the Early Retiree Reinsurance Program under PPACA. Commissioner Chaney also asks the carriers to assist group clients in filing a timely application.

Click here to learn more.

Missouri
Effective January 1, 2011, HB 1498 changes the time frames regarding a carrier’s processing of health insurance claims. A carrier will have 30 days, which is an increase from the current 10 working days, to notify an insured of the status of a submitted claim. If additional information is needed to process the claim, the carrier must approve or deny the claim within five processing days after receiving the information, which is a decrease from the current 15 days.

Click here to learn more.

New York
Effective immediately, SB 8088 requires insurers desiring to increase premiums for any policy to submit a rate filing to the Insurance Department. Superintendent Wrynn may modify or decline the rate increase if the Superintendent finds the increase to be unreasonable, excessive, inadequate, or unfairly discriminatory. The minimum loss ratio for small group policies must be no less than 82 percent.

Click here to learn more.

Oklahoma
SB 2045 directs Insurance Commissioner Holland to develop a uniform health questionnaire for small employers to use when applying for group health insurance coverage.

South Carolina
Effective June 7, 2010, employers that have group health policies subject to South Carolina’s health care continuation coverage law must permit employees’ dependent children covered under such policies to continue coverage if they take certain leaves of absence from postsecondary educational institutions.

Click here to learn more.