New health care reform law guidance eases previous rules on how health care plans handle disputed claims and clears up uncertainty on coverage provided to employees’ adult children.
The Labor Department guidance also suggests that regulators will ease a requirement that now makes it harder for employers to win grandfathered status for their health care plans.
Under the health care reform law, employees in self-funded plans can request a “federal external review” after their request for coverage of a claim or benefit is denied through internal reviews by employers and plan administrators.
Under previous regulations on the new law, health care plans are required to contract with at least three independent review organizations and rotate claims assignments among them.
Using a question-and-answer format, the Labor Department on September 20 said self-funded plans do not have to contract directly with independent review organizations but could access those services through their third-party claims administrator.
“Where a self-insured plan contracts with a third-party administrator that, in turn, contracts with an independent review organization, the standards of the technical release can be satisfied in the same manner as if the plan has contracted directly,” the Labor Department said.
The department also clarified a key provision in the health care reform law that requires group plans to extend coverage to employees’ adult children up to age 26 generally as of January 1, 2011.
Many plans now stop coverage when a child turns 18 or 19, or 22 or 23 if the child is a full-time college student. Some employers though, voluntarily extend coverage to employees’ grandchildren, nieces and nephews if certain conditions, such as financial support and residency, are met.
The Labor Department said such eligibility restrictions can continue to be imposed on employees’ relatives who are not sons, daughters, stepchildren, adopted children or foster children.
For a relative such as a “grandchild or niece, a plan may impose additional conditions on eligibility for health coverage, such as a condition that the individual be a dependent for income tax purposes,” the Labor Department said.
Reacting to the guidance, Rich Stover, a principal with Buck Consultants LLC in Secaucus, New Jersey, said it means that “employers will be able to continue to impose their own requirements.”
The department also said that it will “shortly address” situations under which so-called grandfathered plans may change insurance carriers without losing that status. Previous rules stipulated that a change in insurers automatically would result in a loss of grandfathered status.
Grandfathered plans are shielded from certain health care reform law requirements, such as providing full coverage of preventive services.