HIPAA Special Enrollment Rights (Part 2)Posted on: May 28, 2015Categories: HR & Compliance
Group health plans often provide eligible employees with two regular opportunities to elect health coverage—an initial enrollment period when an employee first becomes eligible for coverage and an annual open enrollment period before the start of each plan year.
In addition, to make health coverage more portable, the Health Insurance Portability and Accountability Act (HIPAA) requires group health plans to provide special enrollment opportunities outside of the plans’ regular enrollment periods in certain situations.
Special enrollment must be available in these situations:
- A loss of eligibility for other health coverage;
- Termination of eligibility for Medicaid or a state Children’s Health Insurance Program (CHIP);
- The acquisition of a new spouse or dependent by marriage, birth, adoption or placement for adoption; and
- Becoming eligible for a premium assistance subsidy under Medicaid or a state CHIP.
This Legislative Brief summarizes HIPAA’s special enrollment events. It also discusses the interaction between HIPAA’s special enrollment provisions and the cafeteria plan election change rules.
Applicable Health Plans
HIPAA’s special enrollment rules broadly apply to group health plans and health insurance issuers offering group health insurance coverage.
However, certain categories of coverage—called “excepted benefits”—are not subject to HIPAA’s special enrollment rules. Excepted benefits include, for example, the following:
- Benefits that are generally not health coverage (such as automobile coverage, liability insurance, workers’ compensation and accidental death and dismemberment coverage);
- Limited-scope dental or vision benefits; and
- Most health flexible spending accounts (FSAs).
HIPAA also includes an exemption for very small group health plans, including retiree-only plans. HIPAA’s special enrollment rules do not apply to a plan that, on the first day of the plan year, has fewer than two participants who are current employees.
|ELIGIBILITY FOR PREMIUM ASSISTANCE SUBSIDY|
|Compliance Question||HIPAA Special Enrollment Requirement|
|What triggers this special enrollment right?||Group health plans must offer a special enrollment opportunity if an employee or dependent becomes eligible for a premium assistance subsidy through a Medicaid plan or a state CHIP.|
|What is the deadline for requesting enrollment?||The group health plan must allow an enrollment period of at least 60 days after eligibility for a premium assistance subsidy is determined.|
|Who has special enrollment rights?||The employee who is eligible, but not enrolled, for coverage under the terms of the plan (or a dependent of such an employee if the dependent is eligible, but not enrolled, for coverage under such terms).|
|When must coverage be effective for special enrollees?||No guidance on this issue, although it may be reasonable to begin coverage no later than the first day of the calendar month after the plan receives a timely special enrollment request.|
Cafeteria Plan Issues
Mid-year Election Change Rules
Many employers sponsor cafeteria plans (or Section 125 plans) to allow employees to pay for their health coverage on a pre-tax basis. As a general rule, participant elections under a cafeteria plan must be made on a prospective basis and cannot be changed until the beginning of the next plan year. However, cafeteria plans may recognize certain mid-year election change events to allow employees to make election changes during a plan year.
Application to Other Dependents
HIPAA’s special enrollment rights do not always apply to all of the employee’s dependents. For example, under the special enrollment event for acquiring a new dependent, only the employee, spouse and any newly acquired dependents receive special enrollment rights. Other dependents (for example, siblings of a newborn child) are not entitled to special enrollment rights upon the acquisition of a new dependent. Some plans go beyond what HIPAA requires and allow employees to enroll all of their eligible dependents during the special enrollment window.
The cafeteria plan rules permit mid-year election changes for dependents who have special enrollment rights. In addition, the cafeteria plan rules go beyond HIPAA and permit election changes to add other dependents at the same time. This accommodates plan designs that are more generous than what is required under HIPAA’s special enrollment rules.
The cafeteria plan rules include an exception to the general rule prohibiting retroactive election changes. If a newborn child, an adopted child or a child placed for adoption is enrolled within the HIPAA special enrollment period, the child’s coverage (and the coverage of any others who can be added under this special enrollment event) must be retroactive to the date of birth, adoption or placement for adoption. The cafeteria plan rules provide that a cafeteria plan may permit the employee to change his or her salary reduction election (for future pay periods) to pay for the extra cost of the coverage retroactive to the date of birth or adoption.