Thursday, January 17, 2019

Links: ERISA Lawyer Fees; Fake Health News; Canadian Care; HSAs & Obamacare Waste, Cost Explosions & Deaths

Momma, don't let your babies grow up to be lawyers ... unless it's ERISA lawyers ..."[T]he court found that hourly rates of $450 for the associate on the case and $900 for the partner to be reasonable and within the prevailing rates in the market of ERISA attorneys.

The IRS overpaid nearly $4 billion to Obamacare customers through tax credits last year, and because of the way the law is written it can't even try to collect on a quarter of that.

Remember the claim that the ACA was going to reduce the cost of healthcare $2,500 per family?  Well, not so much.  ObamaCare to Cost Large Employers an Added $4,800 to $5,900 Per Employee Per Year.

Government Healthcare: Nothing like a 60 hour emergency room wait for a hospital bed. But hey, it's free!

#FakeHealthNews: Burying the Lede ... Rand Paul is scheduled to have the outpatient operation at the privately administered Shouldice Hernia Hospital in Thornhill, Ontario.

It Sure Looks Like This Obamacare Program Has Led to More People Dying. Under the health law, Medicare started penalizing hospitals for too many readmissions. Now mortality rates are up.

Wellness programs — which provide financial incentives for healthy activities or preventive care — don’t work, as numerous studies have shown. Here and Here

Hospitals are now required to post prices online. But most price lists are buried under many sub-menus or at the very bottom of a long page scroll. Nearly 75% of hospital websites in the study required three or more clicks to find the information. Some required 100s of clicks.

Cutting Employee Hours to Avoid ACA Requirements Costs Dave & Buster's $7.4 Million.

With HSA changes, here's how to find your best option.

Friday, December 21, 2018

Healthcare Reform & Benefit News, Week of Dec. 21, 2018











Healthcare Reform News

The ACA Remains in Place After Being Struck Down by Federal Court
December 20, 2018 – McGriff Insurance Services
Excerpt: “This lawsuit was filed by 20 states as a result of the 2017 tax reform law that eliminates the individual mandate penalty. In 2012, the U.S. Supreme Court upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, the court in this case ruled that the ACA is no longer valid under the U.S. Constitution.”

Obamacare Battle Now Before a Baltimore Judge Picked by Obama
December 19, 2018 – Bloomberg
Excerpt: “Hollander was nominated to the federal bench by Obama in April 2010, less than a month after the ACA was signed into law and the first suits were filed to dislodge it. She may issue a ruling as soon as arguments are completed, but more likely will compose a written ruling in coming days or weeks.”

House Rules to Repackage Tax-Retirement Bill Today
December 19, 2018 – ThinkAdvisor
Excerpt: “Members of the House Rules Committee are preparing to look at the big Republican retirement bill starting at 5 p.m. today, in the U.S. Capitol…The latest would version would also extend the current moratorium on the Affordable Care Act (ACA) medical device tax; put off implementation of the ACA “Cadillac plan tax,” or tax on high-cost health benefits packages; extend the current suspension of the ACA annual fee on health insurers, or “health insurer tax”; and repeal the excise tax on indoor tanning services.”

ACA Ruled Unconstitutional, But It’s Status Quo For Employers—For Now
December 17, 2018 – Fisher & Phillips LLP
Excerpt: “A Texas federal judge dealt a serious blow to the Affordable Care Act (ACA) late Friday afternoon, ruling that the tax reform law passed by Congress in late 2017 rendered the healthcare law unconstitutional. While U.S. District Court Judge Reed O’Connor’s 55-page opinion overturns the entirety of the law on a national basis, his ruling does not include any sort of injunction that would immediately cause employers to alter their practices with respect to benefit administration.”

ACA? Unconstitutional, So Declares a Federal Judge
December 15, 2018 – FisherBroyles LLP
Excerpt: “To keep track of the whipsaw that is the ACA, be aware that Democrat defenders of the ACA have confirmed they would appeal. Notably, the federal judge did not issue an injunction to stop enforcement of the law, and even the White House (though applauding) cautioned that the ACA remains in place while appeals proceed. So, now what??!!”

Texas Judge Throws Out Most of ACA
December 14, 2018 – ThinkAdvisor
Excerpt: “U.S. District Judge Reed O’Connor said today that the PPACA provision requiring many individuals to own health coverage is now an unconstitutional requirement for people to buy health coverage, not a tax that complies with the U.S. Constitution. Because PPACA contains no “severability clause,” or provision that lets the rest of PPACA survive if one part of PPACA is nullified, all of PPACA is invalid, O’Connor writes in an opinion explaining his ruling on the case, Texas et al. v. USA (Case Number 4:18-cv-00167-O).”


In Other News:

Removal of Final ADA Wellness Rule Vacated by Court
December 20, 2018 – The Federal Register
Excerpt: “This action responds to a decision of the U.S. District Court for the District Court for the District of Columbia that vacated the incentive section of the ADA) rule effective January 1, 2019.”

The Evolution of America’s Sick Leave Epidemic vs. State Efforts to Find a Cure
December 19, 2018 – Seyfarth Shaw LLP
Excerpt: “This blog presents Seyfarth Shaw LLP’s Infographic tracking the spread of paid sick leave and anti-local sick leave laws around the country. The Infographic is divided into four distinct time periods to highlight the geographic and historic evolution of these laws.”

Ohio small businesses may get more access to employee health data
December 18, 2018 – Dayton Daily News
Excerpt: “A proposed Ohio law could help small businesses shop for affordable health insurance by letting them see details on expensive health insurance claims, though critics say it would violate employee medical privacy. For employees with a claim that’s $30,000 or more, Senate Bill 227 will allow insurers to provide companies the amount paid toward that claim and the health condition being treated.”

3 Options For Providing Wellness Program Incentives In 2019…And Beyond
December 14, 2018 – Fisher & Phillips LLP
Excerpt: “Employers are about to enter into limbo when it comes to maintaining wellness programs, and you will soon need to make a decision about how you will implement any such programs at your workplace. As of January 1, 2019, the federal rules that had been put into place to govern wellness program incentives will be officially invalid…”

Health Plan Fiduciaries Liable for Restitution and Penalties Relating to Tobacco Surcharge
December 13, 2018 – Thomson Reuters
Excerpt: “A federal court has entered a consent order requiring the fiduciaries of a group health plan to repay over $145,000 to participants who, as tobacco users, were required to pay health insurance premium surcharges as part of the plan’s wellness program.”
  

Monday, November 12, 2018

Wednesday, November 7, 2018

California's Medicaid Program Paid Over $4 Billion in Illegitimate Payments Over 4 Years According to a State Audit

From Kaiser Health News:
California’s Medicaid program made at least $4 billion in questionable payments to health insurers and medical providers over a four-year period because as many as 453,000 people were ineligible for the public benefits, according to a state audit released Tuesday. 
In one case, the state paid a managed-care plan $383,635 to care for a person in Los Angeles County who had been dead for more than four years, according to California State Auditor Elaine Howle.  
She said she found “pervasive discrepancies” in Medicaid enrollment in which state and county records didn’t match up from 2014 to 2017, leading to other errors that persisted for years. The bulk of the questionable payments, or $3 billion, went to health plans that contract with the state to care for 80 percent of enrollees in California’s Medicaid program, known as Medi-Cal. 
The program for low-income residents is the nation’s largest and funded by both the federal and state governments. The state findings echo similar problems cited by federal officials and come at a time when the Trump administration has applied extra scrutiny to California’s spending on Medicaid. 
In the report, the state auditor said it’s critical for the state to have accurate information on eligibility “because it pays managed care plans a monthly premium for an increasing number of Medi-Cal beneficiaries regardless of whether beneficiaries receive services.” 
California’s Medicaid program has 13.2 million enrollees, covering about 1 in 3 residents. It has an annual budget of $107 billion, counting federal and state funds. Nearly 11 million of those enrollees are in managed care plans, in which insurers are paid a monthly fee per enrollee to coordinate care. 
The state’s Medicaid enrollment soared by more than 50 percent since 2013 due to the rollout of the Affordable Care Act and the expansion of Medicaid. 
Enrollment grew from 8.6 million in December 2013 to more than 13 million in December 2017, according to the audit report. 
In the case of the dead patient, a family member had notified the county of the enrollee’s death in April 2014. However, the person’s name remained active in the state system, and California officials assigned the patient to a managed-care plan in November of that year. 
From then on, the state kept making monthly payments of about $8,300 to the health plan until August 2018, shortly after the auditor alerted officials of the error. Auditors didn’t identify the health plan. 
There also were costly mistakes in cases in which Medi-Cal pays doctors and hospitals directly for patient care – a program known as “fee for service.” 
For instance, the state auditor found that Medi-Cal paid roughly $1 million in claims for a female patient in Los Angeles County from June 2016 to December 2017 even though the county office had determined in 2016 that she was ineligible. 
In a written response to the auditor, the California Department of Health Care Services said it agreed with the findings and vowed to implement the auditor’s recommendations. However, the agency warned it may not meet the auditor’s timeline, which called for the main problems to be addressed by June 2019. 
In a statement to California Healthline, the agency said it is implementing a quality control process and “where appropriate, DHCS will recover erroneous payments.” 
Early on in 2014, as the ACA rolled out, the state struggled to clear a massive backlog of Medi-Cal applications, which reached about 900,000 at one point. There were widespread computer glitches and consumer complaints amid the increased workload at the county and state level. 
In addition to questionable payments for care of ineligible enrollees, Howle and her audit team also discovered some patients who may have been denied benefits improperly. The state auditor identified more than 54,000 people who were deemed eligible by county officials but were not enrolled at the state level. As a result, those people may have had trouble getting medical care. 
In February, a federal watchdog estimated that California had signed up 450,000 people under Medicaid expansion who may not have been eligible for coverage.
The inspector general at the U.S. Department of Health and Human Services said California made $1.15 billion in questionable payments during the six-month period it reviewed, from Oct. 1, 2014, to March 31, 2015. 
In August, Seema Verma, administrator of the U.S. Centers for Medicare and Medicaid Services, told a U.S. Senate committee that she was closely tracking California to ensure the state “returns a significant amount of funding owed to the federal government related to the state’s Medicaid expansion.” 
Verma expressed concern that states had overpaid managed-care plans during the initial years of Medicaid expansion, resulting in “significant profits for insurance companies.” By year’s end, she said she expects the federal government to recoup about $9.5 billion from California’s Medicaid program, covering overpayments from 2014 to 2016. 
Tony Cava, a spokesman for Medi-Cal, said the state has already returned about $6.9 billion to the federal government and expects more than $2 billion more to be sent back by December.
Full story here

Healthcare Measure Routed in Palo Alto

Voters strike down Measure F, which would have required City Hall to regulate hospital bills. Similar measure defeated in Livermore.

From Palo Alto Online:
A proposal by a union of health care workers to impose caps on how much Palo Alto's medical providers can charge patients and insurance companies was emphatically rejected by local voters on Election Day on Tuesday. 
The proposal, known as Measure F, would have placed City Hall in charge of regulating the health care costs of most local medical providers to ensure that none are charging their patients more than 115 percent of the cost of "direct patient care," which excludes administrative salaries. The Service Employees International Union-United Health Workers (SEIU-UHW) had argued that the measure is necessary to curb Stanford's exorbitant costs and ensure that Stanford devotes more resources to reducing its high rate of hospital-contracted diseases. 
With 93 percent of the results counted, the measure was trailing by a huge margin, with 77.03 percent of the voters opposing it and 22.97 percent supporting it. Of all the votes cast, 10,702 went against Measure F while 3,192 went for it. ... 
 

Saturday, November 3, 2018

Palo Alto & Livermore, Calif. Attempt Price Controls on Hospitals in Upcoming Election - Unprecedented at Local Level

In Brief
  • The the best of our knowledge, local governments have never attempted to regulate hospital prices.   
  • Measures would cap prices charged by hospitals and other health care providers at 115 percent of “the reasonable cost of direct patient care.” 
  • What costs are acceptable and how will we stop providers from increasing costs as much as possible” to compensate for the cap are not clear. 
  • Stanford estimates this would cut its total revenue by 25%.   
  • Industry competition is much healthier in Southern California than in the North - where hospital charges are typically 55% to 70% higher.   
  • Health plans purchased on the state insurance exchange were 35 percent higher in Northern California than in Southern California.  
From Kaiser Health News:  
At a time of mounting national anger about rising health care prices, the country’s largest union of health workers has sponsored ballot measures in two San Francisco Bay Area cities that would limit how much hospitals and doctors can charge for patient care.

The twin measures in Palo Alto and Livermore, sponsored by the Service Employees International Union-United Healthcare Workers West, take aim primarily at Stanford Health Care, which operates Stanford Hospital and Clinics, the facility with the third-highest profits in the country from patient care services, according to a 2016 study.

The union also is sponsoring Proposition 8, a statewide measure that would impose a cap on profits for dialysis clinics. Together, the state and local measures seek to draw on public outrage over sky-high medical prices. And, for municipalities, they amount to a novel and untested effort to rein in those prices through the ballot box.

“I’ve been in this field almost 50 years, and I’ve never seen a local government regulating hospital prices,” said Paul Ginsburg, director of public policy at the Schaeffer Center for Health Policy & Economics at the University of Southern California. A number of states set hospital rates in the 1970s, and two states, Maryland and West Virginia, do so today, he said. ... 
The Palo Alto and Livermore initiatives, which also affect other medical systems in the cities, would cap prices charged by hospitals and other health care providers at 115 percent of “the reasonable cost of direct patient care.”

And there, some experts say, lies the rub.

“What is a seemingly simple idea — limiting prices to 115 percent of ‘costs’ — is neither simple in execution, nor concept,” said Benedic Ippolito, a research fellow at the American Enterprise Institute who studies health care financing. “What costs are acceptable? How will we stop providers from increasing costs as much as possible” to compensate for the cap? ...

Under the initiatives, hospitals and other medical providers would be obliged to pay back any charges above the cap each year to private commercial — but not government — insurers, and to patients who pay for their own care. They would also owe the cities a fine equal to 5 percent of the excess charges. Fines collected by the cities could be used to pay for enforcing the laws.

Stanford estimates that Proposition F, the Palo Alto measure, would reduce the health system’s budget by 25 percent, forcing it to make cutbacks and possibly end essential services, said David Entwistle, the health system’s president and chief executive officer.

Livermore would need to spend $1.9 million a year on the staff required to implement Measure U — its version of the proposal — and would likely incur another $750,000 to $1 million in legal and startup costs, according to an analysis conducted for the city by Henry Zaretsky, a health economist who has worked for the state and the California Hospital Association. ...

Industry consolidation is far more pronounced in Northern California than in Southern California, according to a recent study from the University of California-Berkeley. As a result, inpatient hospital prices in the north were 70 percent higher and outpatient costs as much as 55 percent higher than in the south. The price disparities, even within the Northern California region, can be dramatic.

For instance, independent doctors in the Bay Area are reimbursed, on average, a median $2,408.45 for a routine vaginal delivery, which includes prenatal and postnatal visits, according to a 2017 Kaiser Health News analysis of claims data from Amino, a health cost transparency company. That compares with $5,238.13 for the same bundle of services for Stanford physicians (and $8,049.84 for doctors employed by the University of California-San Francisco).

The higher cost of medical care also pushes up insurance premiums for patients. Health plans purchased on the state insurance exchange were 35 percent higher in Northern California than in Southern California, the 2018 UC Berkeley study showed.
Read full article here.

Don't Expect a PPACA Ruling Before Election Day on the Repeal Effort in Federal Court

From HealthLeaders Media
An injunction against the Affordable Care Act would create chaos for the statute's Marketplace plans, which begin enrollment on November 1. If such a ruling were handed down before the midterms, it would be a welcome gift for Democrats.

Key Takeaways

  • Republican attorneys general from 20 states want a federal judge to impose an injunction on the ACA.
  • A ruling is unlikely before next week's mid-terms.
  • The severability of the ACA's so-called individual mandate is a key issue in the suit.
  • The Court is ultimately expected to hold that the individual mandate is unconstitutional and throw out the guaranteed issued community rating and the pre-existing condition ban.  
It's been nearly two months since a U.S. District Judge in Fort Worth, Texas, heard oral arguments in Texas v. Azar challenging the constitutionality of the Affordable Care Act.

But court watchers hoping for a ruling soon probably shouldn’t expect anything from Judge Reed O'Connor until after the midterm elections next week, says Timothy S. Jost, professor emeritus at Washington and Lee University School of Law, and coauthor of the casebook Health Law.

"I'm sure Judge O'Connor is going to wait until after the election to rule," Jost says. "He's keeping his ear to the political news." ...

Jost says a ruling in favor of Texas Attorney General Ken Paxton and Republican officials from 19 other states who want to slap an injunction on the ACA would provide a pre-election gift to Democrats, as well as create upheaval for Marketplace plans, which begin open enrollment on November 1.

That was not lost on Department of Justice attorneys, who during oral arguments last month urged O'Connor to delay any injunction until 2019 to avoid "chaos."

The Republican attorneys general argued that the ACA became unconstitutional when Congress zeroed-out the tax penalty for the individual mandate, thus invalidating the sweeping legislation in its entirety.

A secondary argument by the plaintiffs focuses on the language in the 2010 statute, which says that the individual mandate is essential to creating a market in which guaranteed issued and preexisting condition exclusion bans are possible.

"The real question is what did the 2017 Congress intend to do when they zeroed out the tax?" Jost says. "Did they intend to get rid of the preexisting condition exclusions or not? You ask anyone in the Senate right now whether they think preexisting conditions should be excluded or not, they'll say, 'Oh no that's not what we did!'"

"So, the important question is when Congress repealed the tax in 2017 did they mean to get rid of the rest of the ACA?" Jost says. "Obviously they didn’t. They tried to amend parts of it in 2017 and they failed. To argue otherwise is just ridiculous."
 

Plaintiffs win likely 
"When O'Connor does rule," Jost says, "he will probably hold that the individual mandate is unconstitutional and throw out the guaranteed issued community rating and the pre-existing condition ban."

"He might also throw out all of Title I, the exchanges, premium tax credits, and the premium stabilization programs, maybe even insurance reforms such as the age rating," Jost says.

"It's very unlikely he is going to throw out the Medicare donut hole closing, and the generic biologics provisions and the reforms to the Indian Health Service and all the other things that are inconceivably, not related to the individual mandate," Jost says. ...
Full story here.
 

Monday, October 29, 2018

California’s Senior Population is Growing Faster Than Any Other Age Group. How the Next Governor Responds is Crucial

From the LA Times:
... The next governor will be confronted with a demographic shift of epic proportions: Seniors will be California’s fastest-growing population. Between now and 2026, the number of Californians 65 and older is expected to climb by 2.1 million, according to projections by the state Department of Finance. By contrast, the number of 25- to 64-year-olds is projected to grow by just more than half a million; the number of Californians younger than 25 will grow by a mere 2,500. 
That radical transformation has been largely absent from discussion as politicians grapple with education, healthcare and environmental policies. 
But the graying of California will seep into nearly every nook of the state budget and policy planning under the next governor. It will determine what services will be in demand and how money must be spent. Most significant, it will place enormous strain on the state’s already fragile network of long-term services and supports, including in-home aides and skilled nursing facilities. 
“We are exquisitely unprepared for that [oldest] age demographic pushing through,” said Dr. Bruce Chernof, president of the SCAN Foundation, an aging advocacy group. 
What does it mean to govern an aging state? It means dealing with higher healthcare costs, particularly for low-income seniors who are eligible for Medi-Cal coverage, the state-subsidized healthcare system for the poor. There are currently close to 1.2 million Californians 65 or older enrolled in the program. 
It means grappling with poverty in a different way. California politicians often focus on the state’s child poverty rate, which averaged nearly 23% from 2014 to 2016. But fewer talk about the poverty rate among seniors, which was 20% during the same time period, according to the U.S. Census Bureau’s Supplemental Poverty Measure. The fastest-growing population of homeless people is among older adults; in Los Angeles County, the number of homeless people 62 or older surged by 22% this year, even as the overall homeless population slightly dropped. ...
 Full story here.

Interactive Map Offers Easy Access to Data Breach Laws by State

Click here for the map brought to you by Baker Hostetler.  

  

Coverage for Ex-Spouses under Divorce Court Orders

Question Presented: An employee has brought us a court order that requires the employee to maintain coverage for her ex-spouse under our plan. Do we have to comply?

Short Answer: Generally the answer is no. Neither the employer, nor the group health plan, nor the insurer is typically a party in the underlying divorce proceedings. A court normally has no power to compel a non-party to take action unless there is some other law requiring that party to recognize the order.

For example a health plan would have to recognize a “qualified medical child support order” (QMCSO) even if it was not a party to the underlying divorce because the Employee Retirement Income Security Act (ERISA) requires health plans to follow valid medical child support orders. A QMCSO, however, cannot order coverage of an ex-spouse.

Of course if the employer has more than twenty employees then it would be obligated to offer the ex-spouse COBRA if notified of the divorce in a timely fashion. And, the order could compel the employee to pay the COBRA premiums but the plan would have no obligation to provide coverage if the employee failed to pay the premiums.

State law could also be applicable. A number of states have what are termed “mini-COBRA” laws that vary widely from state to state. Some only cover small employers who are not covered by federal COBRA.

There are other state laws that mandate coverage for ex-spouses even outside of the mini-COBRA laws. A survey of several of those states is contained in the detail to this Q&A.

Many of these state laws are specifically not applicable to self-insured plans. Even if they were applicable on their face, ERISA would likely preempt (supersede) those state laws and they would be inapplicable to ERISA governed self-insured health plans. A more detailed discussion of preemption is also in the detail to this Q&A.

Analysis: When an employer receives a court order directing it to enroll an ineligible person into its health plan, the employer is usually uncertain as to whether it must follow the court order or not. This sometimes happens when an employee gets a divorce and the court in which the divorce is pending enters an order that the employee’s ex-spouse must continue to be covered under the employer’s health plan – regardless of whether the plan’s terms permit an ex-spouse to remain on the plan. Most health plans do not (other than providing COBRA continuation coverage under federal or state law, as applicable, to the health plan).

While disconcerting to receive, such an order is usually unenforceable. Divorce proceedings are between the two married persons seeking to end their marriage. The employers of the two persons are not parties to the lawsuit. Thus, absent an unusual circumstance, a divorce court has no authority to order an employer’s health plan to provide coverage to any particular person, including an ex-spouse.

     A. QMCSOs.

One example of an unusual circumstance is a QMCSO. ERISA Section 609 specifically provides that QMCSOs (qualified medical child support orders) apply to group health plans governed by ERISA. A QMCSO is an order issued by a court of competent jurisdiction that requires a group health plan to provide coverage to a child of a participant in the group health plan. Section 609 provides that the order cannot require the plan to provide any type of benefit, or any option, that is not otherwise provided under the plan. Because ERISA specifically recognizes QMCSOs, group health plans must provide the coverage ordered under the QMCSO.

     B. Ex-Spouse Orders.

Noticeably absent from Section 609 of ERISA is any requirement that ex-spouses be provided coverage if an order so requires. Nor is there any other section of ERISA or any other federal law that requires a group health plan to provide coverage to ex-spouses (other than COBRA).

     C. COBRA.

If an employer has more than 20 employees, its health plan is subject to federal COBRA, and divorce is a qualifying event that triggers the right to COBRA coverage if the ex-spouse was covered under the plan at the time of divorce. Under federal COBRA, if the employee or ex-spouse notifies the group health plan within 60 days of the date of divorce, the ex-spouse must be offered COBRA continuation coverage for up to 36 months.

     D. State “Mini-COBRA” Laws.

Many states have some version of state required COBRA like coverage intended to fill in the gaps where federal COBRA does not apply, so in the case of employers who have 2-19 employees. These laws vary greatly in the amount of time they allow coverage to continue as well as eligibility for the coverage. For example, Arkansas provides continuation coverage for only 120 days after a qualifying event and requires an employee to be covered under a policy for a three month period prior to termination of employment or a divorce. Arkansas Code §§ 23-86-114 – 23-86-116. Colorado and North Carolina permit continuation coverage for 18 months. Colo. Rev. Stat. 10-16-108; N.C. Gen. Stat. §58-53-1 et seq. And California allows coverage to be extended for up to 36 months following a divorce. California Insurance Code § 10128.59.

The state mini-COBRA laws are typically part of each state’s insurance laws and are applicable only to fully insured plans. These laws vary as to their applicability. Some, on their face, apply to all insured plans while some apply to only those insured plans that aren’t covered by federal COBRA. If the mini-COBRA law did purport to govern a self-insured plan it would likely be preempted by ERISA as discussed below. But remember, self-insured plans of entities that do not fall under ERISA, like local governments and churches, may have to pay attention to these mini-COBRA laws if they purport to cover self-insured plans.

     E. State Mini-COBRA and Other State Laws Extending Coverage for Ex-Spouses.

As part of, or in addition to, mini-COBRA laws, some states have laws that specifically mandate continued health coverage for ex-spouses for an extended period of time as discussed below. This list should not be considered exhaustive and is just for illustration on the importance of consulting these state laws for fully insured plans.

1. Georgia. Group policies must provide continuation coverage for an ex-spouse who was covered by the plan for 36 months. Group policies that cover 20 or more employees must provide coverage to ex-spouses who are 60 years or older at the time of divorce for themselves and any covered dependent children to the earliest of (1) failure to pay premiums when due; (2) plan is terminated for all group members; (3) ex-spouse becomes insured under any other group health plan; or (4) ex-spouse becomes eligible for Medicare. O.C.G.A. §§33-24-21.1 and 33-24-21.2. 
2. Illinois. All fully insured plans regardless of size are required to provide continuation coverage for an ex-spouse who was covered by the health plan prior to the divorce (and dependent children) for up to 2 years if the ex-
spouse is under 55 years old or until the ex-spouse is eligible for Medicare if the ex-spouse is 55 years old or older. 215 ILCS 5/367.2. The statute states that it is inapplicable to self-insured plans. 
3. Maryland. Group policies must provide continuation coverage for an ex-spouse until the earlier of when the ex-spouse (1) becomes entitled to coverage or obtains coverage under another group health plan; (2) becomes entitled to Medicare; (3) remarries; or (4) elects to terminate coverage. Maryland Code §15-408. 
4. Massachusetts. Coverage must be continued for ex-spouses until the ex-spouse remarries or until the date for termination of coverage set forth in the court’s decree, if sooner. If the employee member remarries, the ex-spouse must be covered by a rider to the employee’s participation in the plan if the divorce decree so requires. The cost of coverage cannot be more than it would have been if the insured and ex-spouse had not divorced until at least the time the employee member remarries. Mass. Gen. Laws, Part I, Title XXII, Chapter 175, §110I. 
5. Minnesota. Group health plans must continue ex-spouse coverage until the ex-spouse is covered by another group plan or when the coverage would otherwise terminate, if sooner. Minnesota Statutes §62A.21. 
6. Missouri. Ex-spouse is entitled to continuation coverage similar to federal COBRA but if over age 55, coverage can continue for up to 10 years but can terminate sooner if the ex-spouse obtains coverage under another group health plan. Missouri Revised Statutes §376.428, §§376.892-894. 
7. New Hampshire. Ex-spouses entitled to continuation coverage until the earliest of (1) 3 year anniversary of final decree of divorce or legal separation; (2) remarriage of ex-spouse; (3) remarriage of employee member; (4) death of member; or (5) such earlier time as set forth in the divorce decree. RSA 415:18, VII-b. If the ex-spouse is age 55 and loses coverage due to divorce, the ex-spouse is entitled to continuation coverage until eligible for participation in another employer group health plan or eligible for Medicare. RSA 415:18, XVI(c)(5). 
8. Oregon. Group health plans must provide continuation coverage for ex-spouses for up to 9 months unless the ex-spouse is age 55 or older, and for them coverage continues until the ex-spouse is eligible for Medicare, or if sooner, the date the ex-spouse remarries or becomes insured under any other group health plan. ORS §§743B.343-743B.347. 
9. Rhode Island. Ex-spouses entitled to continuation coverage until the remarriage of either party, or until such time as provided in the judgment of divorce, or if the ex-spouse becomes eligible for coverage through own employment. Rhode Island General Law §27-20.4-1.
Some of the above state laws specifically recognize that they do not apply to self-insured plans which are governed by ERISA. But even those state statutes that do not explicitly recognize this fact cannot escape the application of federal preemption under ERISA.

    F. ERISA Preemption.

By its terms ERISA specifically preempts state laws that relate to ERISA plans. ERISA §514(a). Court orders and state laws that purport to require a health plan governed by ERISA to provide continuation coverage to ex-spouses “relate to” the ERISA plan. But ERISA exempts state insurance law from preemption. This is sometimes referred to as the “savings clause” because those state insurance laws are “saved” from preemption, and the savings clause is found in ERISA §514(b)(2)(A). Therefore any state laws described above would not be preempted for fully insured plans while they likely would be preempted for self-insured plans. The result for self-insured plans is made explicit in ERISA Section 514(b)(2)(B) which states that any self-insured plan will not be “deemed” to be insurance. This clause is sometimes known as the “deemer” clause.

     G. Alternatives for Ex-Spouses.

While ERISA preemption prevents the application of certain state laws to self-insured health plans, ex-spouses do have some alternatives. First, while a court order cannot force a plan to provide continuation coverage outside of COBRA, a court order can direct a person to pay for the coverage obtained by the ex-spouse, regardless of where that coverage is obtained. Then, the ex-spouse could elect COBRA for some period of time and/or obtain an individual insurance policy in the private market or on the exchange. Counsel for the divorcing ex-spouse should discuss these options with the client and insure that the parties’ expectations are documented in a court order that can be enforced instead of trying to force a group health plan to operate outside of its usual terms.

Source: BB&T of California, McGriff Insurance Services and its representatives. BB&T of CA and McGriff do not offer tax or legal advice. Please consult your tax or legal professional regarding your individual circumstances.