Health
Plan Portability
All group health plans with at least two participants on the
first day of the plan year who are current employees are covered
by the federal health plan portability rules, which became
effective in 1997.
The law sets the maximum number of months that a group health
plan may exclude coverage for preexisting conditions at 12
months, or at 18 months for late enrollees. Late enrollees are
participants or beneficiaries who enroll in the plan other than
the first period when eligible or under a special enrollment
period.
A preexisting exclusion is permissible only if it concerns a
physical or mental condition for which medical advice,
diagnosis, care or treatment was recommended or received within
six months of the date of enrollment in the new plan. Conditions
that have not been diagnosed or treated within the six-month
period are not subject to any coverage exclusion. Genetic status
is not an excludable condition, unless diagnosis or treatment
was rendered within the six-month period.
Reducing the exclusionary period. The plan's
preexisting condition exclusionary period is reduced, month for
month, by the length of the employee's prior coverage for
medical care under a wide variety of health plans, including
group health plans, individual policies, HMOs, Medicare and
other governmental medical care programs. Prior coverage reduces
the time of the plan's exclusionary period, unless there has
been a break in the coverage of more than 63 days.
For example, it is possible for employees and their
dependents with 12 months of coverage with one employer to move
to a new employer with new coverage without being subject to the
new employer's preexisting condition exclusion. Pregnancy may
not be excluded, however, regardless of a break in coverage.
Waiting periods and affiliation periods are not counted as
breaks in coverage. When such a break has occurred, only the
coverage after the break may be credited.
Certification of coverage. Employers must provide
employees with a written certification of coverage showing the
employee's creditable coverage when any of the following occur:
- an individual ceases to be covered under the plan or
otherwise becomes covered under a COBRA
coverage provision
- COBRA continuation coverage is exhausted
- upon request by the individual within 24 months of leaving
the plan or at the end of COBRA coverage, whichever is later
To the extent that medical care under a group health plan
consists of health insurance coverage offered in connection with
the plan, the plan will satisfy the certification requirement if
the issuer provides the certification.
Certification starting dates. The employer's
obligation to provide certifications began on June 1, 1997.
There is no need to report events before July 1, 1996. However,
an employee may make a written request for a certification for
events that occurred after June 30, 1996, and before October 1,
1996.
In general, no period before July 1, 1996, is taken into
account when determining creditable coverage. Under a
transitional rule, individuals who need to establish creditable
coverage for a period for which certification is not required
because it occurred before June 30, 1996, must present evidence
of the coverage in order to establish the period of creditable
coverage.
Enrollment periods. Employees must enroll in an
employer's group health plan at the first opportunity to take
advantage of the 12-month preexisting condition exclusion
period. Otherwise, the 18-month period for late enrollees may
apply.
When an otherwise eligible employee declines coverage because
he or she has other coverage available, perhaps as a dependent
on a spouse's plan, and that coverage was lost, the employee
must be given 30 days after the loss of coverage to enroll, upon
request.
In order for this special enrollment period to apply, the
prior coverage must have been (1) under another health plan and
then COBRA and the COBRA coverage was exhausted; (2) the other
coverage was terminated upon loss of eligibility (due to
separation, divorce, death, termination of employment or
reduction in number of hours worked); or (3) employer
contributions were terminated.
For dependent beneficiaries. When the group health
plan covers dependents, and an eligible employee acquires a
dependent through marriage, birth, adoption or placement for
adoption, enrollment must be provided, measured 30 days from the
date dependent coverage is made available or the date of
marriage, birth, adoption or placement for adoption. Coverage
will be effective, without waiting periods, on the date of
birth, adoption or placement for adoption. In the case of
marriage, not later than the first day of the first month
beginning after the date the completed request for enrollment is
received.
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