As everyone knows by now, the Affordable Care Act (ACA) is doing away with preexisting condition exclusions under group health plans, applicable for plan years beginning on or after January 1, 2014. There’s an important change in the reporting requirements too.
No more Certificates of Creditable Coverage after Jan. 1, 2015
Anytime the government does away with another form to fill out, it’s a good thing. And that’s what’s happening with Certificates of Creditable Coverage, a provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
In the past, employer-sponsored group health plans have been required to provide individuals who lose their coverage (or would lose it if they didn’t get continuing coverage through COBRA) with a Certificate of Creditable Coverage. The certificate has been used to provide proof of coverage that might reduce the length of a pre-existing condition exclusion under another health plan – especially important when an employee changes companies and health plans.
But with preexisting condition exclusions no longer allowed, Certificates of Creditable Coverage are going away too, and the Departments of Labor, Treasury, and Health and Human Services recently issued their final regulations eliminating the requirement effective December 31, 2014.
Certificates of Creditable Coverage may soon be obsolete, but it’s still crucial to document the dates of creditable coverage – including COBRA early termination notices.
For individuals who leave a company and lose their health coverage, COBRA coverage is generally available for a maximum period up to 18, 29, or 36 months. But group health plans can terminate that coverage early under certain circumstances, including:
- Payments not made timely
- A qualified beneficiary begins coverage under another group health plan after electing COBRA coverage
- A qualified beneficiary becomes entitled to Medicare benefits after electing COBRA coverage
- A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving COBRA coverage, such as submitting a fraudulent claim
If COBRA coverage is terminated early, the plan administrator is required to give the qualified beneficiary a Notice of Early Termination of Continuation Coverage as soon as practicable following the decision to terminate COBRA coverage. And whether it’s one of your former employees on COBRA or a new hire that’s been on COBRA and is now signing on to your group health plan, the individual needs documentation of when their previous coverage ended.
Without that paper trail showing who provided coverage and when, the COBRA person could have difficulty tracking their coverage for tax purposes, employers could be in for some sticky overlapping coverage issues, HR nightmares, and unnecessary costs. (If you would like an example, click here to download our report about one employer’s $24,000 oversight!) There has to be a defined cutoff date to facilitate coordination of benefits among everyone involved in administering the old and new plans. After all, insurance companies aren’t likely to pay for anything for which coverage should never have been in place.
The ACA has forever altered the healthcare landscape, and with the evolving regulations and requirements, the need for accurate records, clear communication, and efficient plan administration is greater than ever. Making sure dates of creditable coverage are well documented is one way to keep things running smoothly.
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