What kinds of information do group health plans have to give to participants and beneficiaries?
HIPAA and other legislation made important changes in ERISA’s disclosure requirements for group health plans. The DOL issued interim disclosure rules in April 1997 to implement those changes. Under the new interim disclosure rules, group health plans must improve their summary plan descriptions (SPDs) and summaries of material modifications (SMMs) in four major ways to make sure they do the following:
1. Notify participants and beneficiaries of “material reductions in covered services or benefits” (for example, reductions in benefits and increases in deductibles and copayments) generally within 60 days of adoption. This compares to old requirements under which plan changes could be disclosed as late as 210 days after the end of the plan year in which a change was adopted.
2. Disclose to participants and beneficiaries information about the role of insurance issuers (e.g., insurance companies) with respect to their group health plan. In particular, the name and address of the issuer, whether and to what extent benefits under the plan are guaranteed under a contract or policy of insurance issued by the issuer, and the nature of any administrative services (e.g., payment of claims) provided by the issuer.
3. Tell participants and beneficiaries which DOL office they can contact for assistance or information on their rights under ERISA and HIPAA.
4. Tell participants and beneficiaries that federal law generally prohibits the plan and health insurance issuers from limiting hospital stays for childbirth to less than 48 hours for normal deliveries and 96 hours for cesarean sections.
What is the definition of a material reduction in covered services or benefits that is subject to the 60-day notice requirement?
Under the interim disclosure rules, a “material reduction in covered services or benefits” means any modification to a group health plan or change in the information required to be included in the summary plan description that, independently or in conjunction with other contemporaneous modifications or changes, would be considered by the average plan participant to be an important reduction in covered services or benefits under the group health plan.
The interim rules cite examples of reductions in covered services or benefits as generally including any plan modification or change that does the following:
1. Eliminates benefits payable under the plan.
2. Reduces benefits payable under the plan, including a reduction that occurs as a result of a change in formulas, methodologies, or schedules that serve as the basis for making benefit determinations.
3. Increases deductibles, copayments, or other amounts to be paid by a participant or beneficiary.
4. Reduces the service area covered by a health maintenance organization.
5. Establishes new conditions or requirements (e.g., preauthorization requirements) for obtaining services or benefits under the plan.
Copyrighted material, Aspen Publishers. All rights reserved.