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Almost all employer group health plans, even self-insured plans, will have to be revised to comply with HIPAA (if they have not been already). For single employer plans, these requirements are generally effective for plan years beginning after June 30, 1997. A later effective date may apply to collectively-bargained plans.

Limitations on Pre-existing Condition Exclusions
Under HIPAA, a group health plan or issuer may only impose a pre-existing condition exclusion for a condition for which medical advice, diagnosis, care or treatment was recommended or received within 6 months prior to an individual’s enrollment. Coverage for pre-existing conditions may be excluded for a maximum of 12 months (or 18 months in the case of late enrollment). The maximum exclusion period is reduced by (i) the individual’s period of creditable coverage, as shown on the Certificate of Coverage from the individual’s prior health plan, and (ii) any waiting period imposed by the plan.

A plan may not impose pre-existing condition exclusions on a newborn, an adopted child or child placed for adoption under the age of 18, provided such newborn or child becomes covered within 30 days of the birth, adoption, or placement for adoption. In addition, a pre-existing condition exclusion cannot apply to pregnancy.

Special Rule for HMOs
A group health plan offering coverage through an HMO may impose an affiliation period of up to 2 months (3 months for late enrollees), provided (i) the HMO does not impose any pre-existing condition exclusions and (ii) the affiliation period is imposed uniformly without regard to health status.

Special Enrollment Rules
Under HIPAA, a group health plan must allow individuals to enroll in the plan if they lose other coverage or experience certain changes in family status. Individuals enrolling under the special enrollment provisions do not have to wait for an open enrollment period and may not be treated as late enrollees under the plan. Employers will want to review their plan’s enrollment provisions to ensure that their enrollment dates comply with the following special enrollment rules.

Special Enrollment Period for Individuals Who Lose Other Coverage
A group health plan must permit an individual who loses coverage under another group health plan to enroll in the plan if each of the following conditions is met:

• The individual is an employee (or a dependent) who is eligible to enroll in the plan and who, when enrollment was previously offered, declined because he or she had other coverage.
• When declining coverage the employee stated in writing that the other coverage was the reason for declining enrollment. This requirement will not apply unless the plan (i) required such a statement, and (ii) informed the employee of the requirement and of its consequences.
• The other coverage was (i) COBRA coverage that has been exhausted, or (ii) coverage other than COBRA coverage that has ended due to loss of eligibility or the termination of employer contributions.
• The employee requests enrollment (for the employee or a dependent) within 30 days after the loss of the other coverage.

Enrollment must be effective no later than the first day of the first calendar month beginning after the date the request for enrollment is received.

Special Enrollment Period in the Event of Changes in Family Circumstances.
A group health plan which offers coverage for dependents must contain the following special enrollment rules:

• An eligible employee not enrolled in the plan must be allowed to enroll if he or she marries, has a child, adopts a child, or has a child place with him or her for adoption. The employee’s new spouse or new child must also be allowed to enroll.
• An individual who (i) marries a participant or (ii) is the spouse of a participant at a time when a child becomes a dependent of the participant (through birth, adoption or placement for adoption) must be allowed to enroll.
• An individual who becomes a dependent of the participant through birth, adoption or placement for adoption must be allowed to enroll.

The special enrollment period must last at least 30 days from the date of such birth, marriage, adoption, or placement for adoption. If the enrollment request is received within the special enrollment period, coverage will be effective: (i) in the case of marriage, no later than the first day of the first calendar month beginning after the date the enrollment form is received by the plan; and (ii) in the case of birth, adoption, or placement for adoption, the date of such birth, adoption or placement for adoption.

Plans May Not Discriminate Based on Health Status
Under HIPAA, group health plans and issuers may not establish eligibility rules based on any Health Status Related Factor. In addition, a group health plan may not charge any individual a premium based on any Health Status Related Factor that is greater than the premium for similarly situated individuals. Health Status Related Factors include an individual’s health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence) or disability.

Significantly, under HIPAA, a plan is not required to provide any specific benefits and may limit or restrict the amount, level, extent or nature of benefits provided. However, other applicable statutes, such as the Americans with Disabilities Act, may effectively restrict a plan’s ability to limit the types levels of benefits offered under a plan. HIPAA also does not restrict the amount an insurer may charge an employer for coverage and group health plans. Insurers may also establish premium discounts or rebates and may modify copayments or deductibles in return for participation in a bona fide wellness program.

Plans Must Comply with Mental Health Parity Rules
The Mental Health Parity Act of 1996, effective for plan years beginning on or after January 1, 1998, amends ERISA to prohibit generally the imposition of lifetime or annual dollar limits on mental health benefits under a plan unless the same limits apply to medical/surgical benefits.

Curiously, the mental health parity rules do not require group health plans to provide mental health benefits, and a plan that provides such benefits is free to set its own terms and conditions as to the amount, duration or scope of benefits (including cost-sharing provisions, limits on numbers of visits or days of coverage, and requirements relating to medical necessity). Thus, the statute does not require parity in co-payments and deductibles between the mental health and medical/surgical benefits offered under a plan.

Plans of small employers (employers with at least 2 and less than 50 employees) are exempt from the mental health parity rules. Also, any employer group health plan can claim an exemption from the mental health parity rules if the application of the rules to the plan increases the cost of coverage by at least 1 percent.