63-Day Elimination Period

MLB

We recently ran into a situation with difference in opinions between two states on the HIPAA regulations.

Per the HIPAA regs, "29 CFR §2590.701-4. Rules relating to creditable coverage," the following is quoted

(iii) Definition of significant break in coverage. A significant break in coverage means a period of 63 consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage. (See section 731(b)(2)(iii) of the Act and section 2723(b)(2)(iii) of the PHSA which exclude from preemption State insurance laws that require a break of more than 63-days before an individual has a significant break in coverage for purposes of State law.)

One state interprets "except that neither a waiting period nor an affiliation period is taken into account..." as any period in which an employee spends under a waiting period for benefit eligibility is excluded from the 63-day pre-existing condition break-in service clause. So to say that since the 1st of the month following 90-days of continuous employment is within the waiting period imposed by the employers plan requirements, the entire waiting period is excluded from the PE clause. The 63-day break in service is not taken into consideration during this "waiting period."

Another state interprets this differently. Since the employers' waiting period exceeds the 63-day break in coverage, the employee would incur a pre-exisiting condition if COBRA was not maintained during period.

Your opinions on this please since there are numerous states represented in the forum.

MLB

stilldazed

My company's experience (in Florida) has been the latter of your two situations. We collect the notice of prior coverage affidavit from the newly covered worker, and our insurance will impose pre-existing even though we have a 90-day waiting period that sometimes runs concurrent with the 63-day HIPAA elimination period. I haven't questionned the insurance company's action.

MLB

I never questioned either until this particular incident surfaced. We have operations in Alabama, Mississippi, Georgia and Wisconsin. It has become an issue due to an employee transferring positions and benefits across state lines. Our carrier in Alabama uses the first case scenario. We are being told Georiga does not.

Due to the difference, the employee would not be required to obtain the high dollar COBRA coverage in Alabama because the entire waiting time for benefit eligibility is excluded from the 63-day break in service period.

Any time in which the employee DID NOT maintain coverage prior to the required waiting period is taken into consideration for the break; however, if not more then 63-days, the PE clause is not applicable.

The employee will be required to carry COBRA in the state of Georgia since the waiting period is not excluded from the 63-day break in service; therefore, a PE problem due to the required waiting time for benefit eligibility.

There has been very little response to this question. I am not sure if very few have encounterd this situation or if this is a source of uncertainty for others as well.

NaeNae55

I guess it really does depend on what court district you are in. Our current insurance is 1st of the month following date of hire, so it doesn't come up anymore. However, I seem to remember that the here the waiting period didn't count against the employee. Truly, that seems fair to me and what was intended by the law in the first place.

Perhaps a 90 day waiting period is too long???


Good luck!

Nae

NeedCoffee

For what its worth, the "HR Executive Special Report" from M. Lee Smith on "How to Comply with COBRA Without Getting Bit" explicitly states that:

"Any time that passes during a waiting period for coverage imposed by the new employer does not count toward the 63-day break."

This is in the section on "Understanding COBRA's Interaction with HIPAA."

Perhaps one of the M. Lee Smith attys could chime in here? It seems pretty cut and dry in your publication!

E Wart

I am not sure about state laws (we are self insured), but I understand that it has to do with how your policy is worded. (I know we got into this several years ago because we have first day of the month, after 90 days of employment waiting period.)
I hope I don't get my wordage backwards... I understand but sometimes hard to put in words....
the enrollment date is "the first day of coverage by this Plan or if the Plan has a waiting period, the first day of the waiting period. The "eligibility date is first day of the month after 90 days of employment" (no. hours, etc.) Since the employee's enrollment date is the first day of their employment/first day of waiting", this "clears up" the waiting period being part of the 63 days break in service, and there would be none (at least as far as our plan is concerned.)
You may want to talk with your broker, insurance company or see if you can find anything like this in your plan. (May be under the pre-x section.)
Hope this helps.
Ellen

E Wart