Notice Requirements Under PPACA November 2010 Stacy H. Barrow November 2010 © Proskauer1

2 Today’s agenda Discuss November midterm elections PPACA’s 2011 notice requirements and “best practice” disclosures Note: Materials are up-to-date as of November 15, 2010 November 2010 © Proskauer

3 Notices and “Best Practices” Certain of PPACA’s requirements may not be appropriate for inclusion in the wrap/formal plan document They may be best handled in the carrier/TPA documents, which may be included as attachments in the underlying documents November 2010 © Proskauer

4 PPACA Notice Requirement Special enrollment for children under age 26 ­ Offer special enrollment opportunity of at least 30 days (may run concurrent with open enrollment period) Model Disclosure (no need to include in plan document/wrap/SPD if it will be included in open enrollment material prior to beginning of year) ­ Individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage), because the availability of dependent coverage of children ended before attainment of age 26 are eligible to enroll in [Insert name of group health plan or health insurance coverage]. Individuals may request enrollment for such children during the period from ___ through ____. Enrollment will be effective as of [insert date that is the first day of the first plan year beginning on or after September 23, 2010.] For more information contact the [insert plan administrator or issuer] at [insert contact information]. November 2010 © Proskauer

5 “Best Practice” Disclosure Special enrollment for children under age 26 ­ Provide prominent written notice of special enrollment opportunity ­ Consider including the following on the first or second page of the enrollment materials or wrap document/plan/SPD. ­ EXTENSION OF DEPENDENT COVERAGE TO AGE 26 AND NOTICE OF OPPORTUNITY TO ENROLL Individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage), because the availability of dependent coverage of children ended before attainment of age 26 are eligible to enroll in your medical [, dental and vision] coverage provided through the [Employer] in For more information, contact the Plan Administrator at [number]. See page ___ for more details. November 2010 © Proskauer

6 “Best Practice” Disclosure Special enrollment for children under age 26 ­ Describe child eligibility (including restrictions, if grandfathered plan) ­ Define “child” or “children” Michelle’s Law language may be removed UNLESS: ­ the plan or a component plan is subject to a state law mandate requiring it to cover a child over the age of 26 who is a full-time student; or ­ the plan otherwise covers children over age 26 who are full-time students November 2010 © Proskauer

7 PPACA Notice Requirement Eliminate lifetime dollar limits; offer opportunity to re-enroll If the plan previously had a lifetime limit that is being eliminated in accordance with PPACA, the plan must include a statement that the plan has no lifetime dollar limit on “essential health benefits” and that persons who previously ceased coverage due to reaching a lifetime dollar limit may re-enroll, if they are still otherwise eligible for coverage November 2010 © Proskauer

8 PPACA Notice Requirement Eliminate lifetime dollar limits; offer opportunity to re-enroll Our tailored version of the government’s model notice: ­ Any lifetime limit on the dollar value of an “essential health benefit,” as defined in section 1302(b) of the Affordable Care Act and applicable regulations, under the Plan has been removed. Individuals whose coverage ended by reason of reaching a lifetime limit under the Plan are eligible to re-enroll. However, you must request enrollment by____ [at least 30 days from date of the notice, beginning no later than the first day of the next Plan Year]. Contact the Plan Administrator for more information. November 2010 © Proskauer

9 “Best Practice” Disclosure In light of the lack of detailed guidance (to date) regarding what constitutes an “essential health benefit”, some plans are including the following disclaimer ­ Important Notice Regarding Lifetime Dollar Limits: In accordance with applicable law, none of the lifetime dollar limits set forth in this [plan] shall apply to “essential health benefits,” as such term is defined under Section 1302(b) of the Patient Protection and Affordable Care Act of The law defines “essential health benefits” to include, at a minimum, items and services covered within certain categories including emergency services, hospitalization, prescription drugs, rehabilitative and habilitative services and devices, and laboratory services, but currently provides little further information. Accordingly, a determination as to whether a benefit constitutes an “essential health benefit” will be based on a good faith interpretation by the [Plan Administrator] of the guidance available as of the date on which the determination is made. November 2010 © Proskauer

10 “Best Practice” Disclosure In light of the lack of detailed guidance (to date) regarding what constitutes an “essential health benefit”, some plans are including the following disclaimer ­ Important Notice Regarding Annual Dollar Limits: In accordance with applicable law, none of the annual dollar limits (except to the extent they exceed $750,000 in 2011) set forth in this [plan] shall apply to “essential health benefits,” as such term is defined under Section 1302(b) of the Patient Protection and Affordable Care Act of The law defines “essential health benefits” to include, at a minimum, items and services covered within certain categories including emergency services, hospitalization, prescription drugs, rehabilitative and habilitative services and devices, and laboratory services, but currently provides little further information. Accordingly, a determination as to whether a benefit constitutes an “essential health benefit” will be based on a good faith interpretation by the [Plan Administrator] of the guidance available as of the date on which the determination is made. November 2010 © Proskauer

11 “Best Practice” Disclosure Rescission of coverage If a plan wishes to reserve the right to rescind coverage in the case of fraud or an intentional misrepresentation of material fact, include appropriate language The following is sample language regarding both prospective and retroactive terminations of coverage: ­ [The Plan Administrator] [The Company] reserves the right to terminate the health care coverage of you/and your dependent prospectively without notice for cause (as determined by [the Plan Administrator]), or if you and/or your dependent are otherwise determined to be ineligible for coverage under the plan. In addition, if you or your dependent commits fraud or intentional misrepresentation in an application for health coverage under the plan, in connection with a benefit claim or appeal, or in response to any request for information by [the Company] or its delegees (including [the Plan Administrator or a claims administrator]), [the Plan Administrator] may terminate your coverage retroactively upon 30 days notice. [Failure to inform any such persons that you or your dependent is covered under another group health plan or knowingly providing false information in order to obtain coverage for an ineligible dependent are examples of actions that constitute fraud under the plan.] November 2010 © Proskauer

12 “Best Practice” Disclosure Eliminate preexisting condition exclusions and limitations for children under age 19 If the plan excludes or limits coverage for any preexisting conditions, add the following (or eliminate entirely): ­ No preexisting condition exclusion or limitation under the Plan will apply to any child under age 19. Elimination of preexisting condition exclusions and limitations for all individuals goes into effect in 2014 November 2010 © Proskauer

13 PPACA Notice Requirement Grandfathered Plan statement ­ The Plan believes that [this plan or coverage] [certain group health plans available under the Plan] [is] [are] “grandfathered health plan[s]” under the Patient Protection and Affordable Care Act (the “Affordable Care Act”). [See Schedule A for a list of which group health plans are “grandfathered.”] As permitted by the Affordable Care Act, a grandfathered health plan can preserve certain basic health coverage that was already in effect when the Affordable Care Act was enacted. Being a grandfathered health plan means that the medical benefit option that you have elected under the Plan may not include certain consumer protections of the Affordable Care Act that apply to other group health plans, for example, the requirement for the provision of preventive health services without any cost sharing. However, grandfathered health plans must comply with certain other consumer protections in the Affordable Care Act, for example, the elimination of lifetime limits on benefits. Questions regarding which protections apply and which protections do not apply to a grandfathered health plan and what might cause a plan to change from grandfathered health plan status can be directed to the Plan Administrator at ____. You may also contact the Employee Benefits Security Administration, U.S. Department of Labor at 1–866–444–3272 or This website has a table summarizing which protections do and do not apply to grandfathered health plans. November 2010 © Proskauer

14 PPACA Notice Requirement Patient Protection disclosure (for nongrandfathered plans) For benefit options that require or allow for the designation of primary care providers by participants or beneficiaries, insert: ­ The Plan generally [requires/allows] the designation of a primary care provider. You have the right to designate any primary care provider who participates in the network and who is available to accept you or your family members. [If the Plan designates a primary care provider automatically, insert: Until you make this designation, the Plan designates one for you.] For information on how to select a primary care provider, and for a list of the participating primary care providers, contact [name] at [number].” Required for plans that require designation of PCP November 2010 © Proskauer

15 PPACA Notice Requirement Patient Protection disclosure (for nongrandfathered plans) For benefit options that require or allow for the designation of a primary care provider for a child, add: ­ For children, you may designate a pediatrician as the primary care provider. For benefit options that provide coverage for obstetric or gynecological care and require the designation by a participant or beneficiary of a primary care provider, add: ­ You do not need prior authorization from the Plan or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a Network Provider who specializes in obstetrics or gynecology. The Provider, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre-approved treatment plan, or procedures for making referrals. For a list of Network Providers who specialize in obstetrics or gynecology, contact [name] at [number]. Required for plans that require designation of PCP November 2010 © Proskauer

16 “Best Practice” Disclosure Enhanced claim procedures (for nongrandfathered plans) Self-funded plans should consult with counsel to tailor claim procedures and for assistance with coordinating with insurers/TPAs to determined how they will be complying with the new procedures Consider adding the following disclaimer in Open Enrollment materials ­ New Claims and Appeal Procedures Effective [plan years beginning on or after September 23, 2010], there are some enhancements to the claims and appeals process. This includes that if your internal appeal of a claim for benefits (not related to employee classifications) under the [plan/non-grandfathered option] is denied, you will have the right to appeal to an independent reviewer. Additional information about the new internal and external claims and appeals process will be furnished in a future communication as well as a future version of the plan’s Summary Plan Description, and in any written claim denial you receive. November 2010 © Proskauer

17 “Best Practice” Disclosure No cost-sharing on preventive services Amend plan to provide no cost-sharing for, and no cost-sharing on, preventive services Sample language: ­ Effective [January 1, 2011], in-network Preventive Health Services (based on the recommendations and guidelines noted below) under the [list non-grandfathered options] will be covered at 100%. Any additional recommendations provided in the future must be covered as of the first plan year beginning on or after the first anniversary of when the recommendations are updated. No cost-sharing (e.g., co- payments, deductibles or coinsurance) will apply for these services. November 2010 © Proskauer

18 “Best Practice” Coverage of emergency services Amend plan to provide coverage for emergency services without prior authorization and without out-of-network surcharges Check if emergency hospital services provide higher cost sharing amounts (even for out-of-network). If so, the plan must be amended to provide for the same coinsurance and copayment amounts for in- and out-of-network benefits Plan required to pay an amount equal to the greatest of three possible amounts set forth in the regulations November 2010 © Proskauer

19 Questions? November 2010 Stacy H. Barrow November 2010 © Proskauer