BY: Dawn Morgan
Vice President, Benefit Indemnity Corporation
Phone: 443-275-7412
Email: dawn.morgan@benefitindemnity.co
Health coverage is often taken for granted until it is needed the most. How a person feels about their plan is often determined at that very point. But waiting until that point, or sadly, after it, to understand how the plan works, is too often the case. This results in more work, stress and potentially, unintentional lack of coverage.
The key to a successful plan is to fully understand eligibility for coverage and to have each party accept and assume responsibility for their respective roles in maintaining it. The first step is to read your SPD (Summary Plan Document) which outlines eligibility. Here it will specifically outline when a member is first eligible to enroll, how many hours they must work on a regular basis and indicate timely notice stipulations when they otherwise do not meet these requirements.
When a member needs significant health care, it is expected that they will have time away from work. This may be in hours, days, weeks or sometimes months. The most frequent misunderstanding we see is in terms of income replacement insurance, otherwise known as short term or long-term disability insurance. While this is very important coverage to have and helps replace income when an employee is unable to work, this does not constitute eligibility for health plan coverage. Disability income insurance is simply that, a protection for lost income.
So how does an employee that is out of work due to a health condition maintain coverage under the plan? The first and most utilized is PTO (paid time off from their employer, whether sick, vacation, or general PTO). The amount of PTO provided by a company varies, but most commonly it is not more than 4 weeks each year. However standard or generous an employer is in this regard, it's important that they have proper documentation of payroll denoting PTO, if ever audited. Audits are not frequent but do occur on occasion when the time granted seems excessive compared to the norm.
The next is FMLA (Family Medial Leave Act). FMLA is a federal law and therefore applies to self-funded plans. For eligibility for the health plan to be met by FMLA, the employer must be subject to the law (In general, employs 50 or more employees. See dol.gov for more details). The next is the employee must have elected it and this must be documented. FMLA may or may not be concurrent with PTO, at the discretion of the employer. So, an employee may combine FMLA and PTO if the employer allows it, or the FMLA may be the maximum if the employer requires them to run concurrently. What if the employer is less than 50 employees, therefore not subject to the law, but wants to offer it anyway? While an employer can be as generous as they wish to their employees, keep in mind, that stop loss is protecting a plan that was approved by what is outlined in the SPD. Stop loss will not protect a member that is not eligible as defined in the SPD, therefore, additional generosity by the employer is not suggested. Any risk occurred during such would be outside the plan and at the additional cost to the employer.
How can a small employer be generous beyond PTO? In our BIC Health Plans (both Revolution and Precision), our SPD allows for up to a 30-day Company Approved Unpaid Leave of Absence, at the employer's discretion. All employers do not have to provide this, but they may. If they do, it will allow a member to maintain coverage for an additional 30 days beyond PTO. A large employer may elect this option as well.
What happens when an employee has exhausted PTO, FMLA and a 30 Day Company Approved Unpaid LOA? If the group is subject to COBRA (In general, maintained over 20 employees on over 50% of working days in the preceding calendar year, see more details at dol.gov), then the employer would terminate their active employee coverage with timely notice to the TPA. Timely notice is critical to be sure no claims are paid by the plan after which time the employee no longer meets the active employee eligibility requirements. Many employers are concerned that they can't terminate an employee that is out sick. The employers are not advised to terminate the employment (that is a legal issue to be taken up with their corporate attorney). But the employee is not meeting the 30 hour per week minimum defined in the plan for active status, and therefore would be subject to COBRA due to a reduction in hours. This notice must go out timely and the employee must elect it timely, to maintain coverage and eligibility under the plan.
If an employee has exhausted PTO and a 30 Day Company Approved Unpaid LOA and are with a small employer, that would be the extent of maintaining eligibility under the plan. Timely notice of the exhaustion of both is again critical, as claims for dates of service paid after such, would not be protected by stop loss.
In the end, it is an employer's responsibility to maintain eligibility records and timely notification otherwise to the TPA. As a broker, we encourage you to review these with the employer upon implementation of the plan and at periodic reviews. At Benefit Indemnity Corporation, we do our best to help by communicating large claimants or any potential claim that will likely indicate a need for time off to remind brokers and employers to be aware of meeting eligibility requirements. While there is no guarantee that we will be privy to all of them, we do our best to give a heads up when we do.
Feel free to reach out to us if and when you are aware of a member who is out, and we will be glad to walk you through. As always, we want to be the health plan that WORKS when it is needed.
 | Dawn Morgan Vice President, Benefit Indemnity Corporation Phone: 443-275-7419 Email: dawn.morgan@benefitindemnity.co |
