If you have a group health plan, now's a good time to make sure it doesn't discriminate against any worker. Reason: New federal nondiscrimination rules are set to take effect with group plan years starting on or after July 1.
Some nondiscrimination provisions under the Health Insurance Portability and Accountability Act (HIPAA) of 1996 took hold three years ago. But new guidance issued early this year changes the rules at the end of this month. Here's a snapshot:
Don't consider health status
Your health plan can't deny eligibility or charge a higher premium based on an employee's health status or even on his participation in activities like motorcycling, snowmobiling, horseback riding, skiing or riding all-terrain vehicles.
The plan can, however, deny coverage for injuries that result from high-risk activities such as bungee jumping. But if a medical condition or domestic violence is the cause of an injury, it must be covered.
Different workers, different perks
Your health plan doesn't have to treat all workers alike, as long as the distinction is based on "a bona fide employment-based classification consistent with the employer's usual business practices." Those factors can include:
- Full-time versus part-time status.
- Working in different locations.
- Membership in a collective bargaining unit.
- Length of service.
- Current employee versus former employee status.
- Different occupations.
Your plan also may be able to treat employees' beneficiaries differently based on such factors as their relationship to the employee, marital status, age, student status or other factors not related to health.
Benefit limits are OK
Your plan can cap benefits as long as the limits are applied uniformly to similarly situated individuals. For example, you could have a lifetime limit on all benefits, or a condition-specific limit.
Also, the HIPAA rules place limits on how a health plan may exclude preexisting conditions.
Example: Say your plan excludes coverage for pre-existing conditions for 12 months. HIPAA says you can't waive that exclusion for workers who don't file any claims in the first six months, because that would be discriminating.
Don't monkey with premiums
Your group plan can't charge a higher premium for an individual because of his health condition.
The insurer can charge your company a higher price overall than another employer based on the health status of your employees. But the insurer can't charge or quote you rates for individuals based on their health, which is known as "list-billing."
Be consistent with start date
Under the rules, your plan can't delay eligibility for a beneficiary simply because the person is in a hospital.
You may, however, have a rule that starts coverage of new employees on their first day of work. Be careful how you cover workers who are absent on the first day. If you cover those who take vacation time on that day but not those who are sick, you'll run into trouble.
Finally, nothing in the law prevents you from being more generous to beneficiaries who have adverse health conditions. For example, if you limit eligibility to worker's children who are under a certain age, you could extend that eligibility to children who have disabilities.
For more information ...
Get a copy of two U.S. Labor Department booklets:
- Questions and Answers on the HIPAA Nondiscrimination Requirements. Find it online at www.dol.gov/dol/pwba/public/
- Questions and Answers: Recent Changes in Health Care Law. Find it at www.dol.gov/dol/pwba/
public/pubs/hippa.pdf or call (800) 998-7542.
Note: The interim final rules were published in the Jan. 8, 2001, Federal Register.
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