The fall 2010 open enrollment period provides employers with an opportunity to explain benefit changes, many of which are required as a result of the health care reform legislation enacted in March 2010 (the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act), and to allay any fears that employees have regarding their employers’ group health plans.
Open enrollment also is the perfect time for employers to review their group health plan documents and employee communications—including summary plan descriptions and other notices—to ensure that such documents are distributed timely and in compliance with recent law changes.
Explanation of Benefit Changes
Most employers are required to amend their group health plans to include new benefits as a result of the health care reform legislation for plan years beginning on or after Sept. 23, 2010. For calendar year plans, these benefit changes are effective Jan. 1, 2011. For non-calendar year plans, the provisions of the reform act might be effective earlier. Some employers might want to implement optional plan design changes for the upcoming plan year. Open enrollment provides an excellent opportunity for employers to communicate and explain these benefit changes.
Employers that wish to use their open enrollment materials to satisfy their benefit change notification requirements might need to rethink this practice. Certain provisions of the reform act might make it prudent for employers to communicate such benefit changes well in advance of their open enrollment periods or schedule earlier open enrollment periods. For instance, the reform act includes a requirement that plan administrators of group health plans provide a notice of material modifications of benefits to participants by 60 days prior to the date the changes are effective.
It is unclear whether this new requirement is effective Jan. 1, 2011, (for calendar year plans) or March 23, 2012. Cautious employers will want to notify employees at least 60 days prior to the effective date of the benefit changes for the upcoming plan year. For calendar year plans, this means that employees will need to be notified of benefit changes prior to Nov. 1, 2010. This date is earlier than open enrollment periods scheduled in November and December for calendar year plans.
Summary Plan Descriptions
Open enrollment is also a good opportunity for employers to ensure that their summary plan descriptions (SPDs) are timely distributed to plan participants and revised to comply with recent law changes. A plan administrator for a group health plan must provide a SPD to new participants within 90 days after enrollment and to other participants at least every 10 years, provided that the plan terms do not change materially. The plan administrator is required to notify plan participants of changes to the group health plan. This can be accomplished by providing plan participants with an updated SPD or a summary of material modifications.
There has been a surge in federal and state legislation impacting group health plans over the past few years. Employers should verify that their SPDs have been updated for these recent law changes, including, but not limited to, Michelle’s Law, the Mental Health Parity and Addiction Equity Act, the Genetic Information Nondiscrimination Act (GINA), and the Children’s Health Insurance Program Reauthorization Act (CHIPRA).
Open enrollment provides a convenient opportunity for employers to provide notices required by various federal laws to group health plan participants. Employers are encouraged to use open enrollment as an opportunity to audit their group health plans to ensure that the required notices are up to date and timely provided. The following is a list of notices that are required to be provided to participants of group health plans:
• Notice of special HIPAA enrollment rights must be provided at or before the time an employee is initially offered the opportunity to enroll in a group health plan. This notice must include the new CHIPRA special enrollment rights.
• Notice of special CHIPRA enrollment rights for eligible employees and dependents to enroll in employer group health plans must be provided annually (and can be combined with notice of special HIPAA enrollment rights). The U.S. Department of Labor recently published a model notice that can be used to satisfy this requirement and can be found at www.dol.gov/ebsa/chipmodelnotice.doc.
• Notice of enrollment opportunity attributable to extension of coverage to adult children up to age 26 must be provided no later than the first day of the first plan year beginning after Sept. 23, 2010, and the adult child must be given 30 days to enroll.
• Notice of HIPAA pre-existing condition exclusions, if applicable to the group health plan, must be given to participants prior to enrollment or prior to the date the group health plan imposes a pre-existing condition exclusion.
• Notice of HIPAA privacy rights (updated for GINA) must be provided to new enrollees and to other participants at least once every three years by the plan administrator if the group health plan is self-funded, or by the insurer if the plan is fully insured.
• Notice of Women’s Health and Cancer Rights Act rights must be given to participants upon enrollment and annually thereafter.
• A statement of state and federal law regarding minimum length of stays for mothers and newborns, as required by the Newborns’ and Mothers’ Health Protection Act, must be included in the plan’s SPD.
• Notice of creditable/non-creditable prescription drug coverage must be given to Medicare Part D eligible individuals annually prior to eligible individuals’ annual coordinated election period, prior to enrollment in the group health plan, and prior to the date prescription drug coverage ceases.
• COBRA notice to new enrollees must be provided to all covered individuals. This notice should be addressed and sent to the most recent address for the employee and spouse and should not be included in open enrollment materials.
A Unique Opportunity
The fall 2010 open enrollment period, perhaps more so than in previous years, presents employers with a unique opportunity. Because of the many recent law changes affecting group health plans, employers’ plan documents and communication materials will need to be reviewed and updated. Employers should seize this opportunity and conduct an in-depth audit of their plan documents and communication materials to ensure that they reflect current law accurately.
Employers should not assume that their third-party administrators or insurers have completed these updates for them. Maybe more importantly, though, employees will be relying on employers to explain effectively changes made to group health plans as a result of health care reform. Employers can use open enrollment materials to provide information to reassure employees and address their concerns.
Peggy Bomberger is a member of law firm Bricker & Eckler LLP's employment group. Her practice focuses on employee benefits with experience in qualified retirement plans, 403(b) plans, nonqualified deferred compensation plans, welfare plans and ESOPs. Additionally, she has handled a variety of ERISA issues, and she designs qualified retirement plans, welfare benefit plans and executive compensation programs and reviews plans for compliance with IRS regulations.
© 2010 Bricker & Eckler LLP. All Rights Reserved.
Reposted with permission.
This article should not be construed as legal advice.
Start Spreading the News, HR Magazine, August 2010
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