Unintended Consequences Re: Retro Terminations

[Ann H]

I received the following e-mail from Aetna about unintended consequences in PPACA and how retroactive terminations are affected. So, basically, don't count on a 30 day window of opportunity in which to retroactively terminate coverage anymore.

The health care reform law puts new restrictions in place for terminations. This means plan sponsors and insurers can only terminate a member’s coverage retroactively in specific circumstances. This affects all plans that are subject to the health care reform law, regardless of funding or grandfathering status. It is in effect as of each plan’s first renewal or effective date after September 23, 2010.​

Here’s what you and your customers need to know about the new rules concerning administrative retroactive terminations.
The plan sponsor can’t terminate coverage effective with a date in the past if:

• The member was covered through plan error, and
• The member paid premium or contributed to the cost of the plan.

In these cases, the plan sponsor can only terminate the member’s coverage with a future effective date of termination.
The plan sponsor may terminate coverage retroactively as part of a monthly reconciliation of eligibility data if:

• The member did not pay any premium or contribution for coverage past the termination date.

The plan sponsor also may terminate coverage retroactively in cases of fraud or intentional misrepresentation. In these cases, a 30-day written notice of coverage termination is required, and the rescission of coverage may be appealed. (Aetna will handle this notice for insured plans upon notification. Self-funded plans must administer this notice.).
Here are some examples:

• The plan sponsor finds it mistakenly enrolled a part-time employee who was not eligible under its plan. The employee paid premium/contribution, received medical services and submitted claims. Under the new law, the plan sponsor can terminate this employee’s coverage, but only with a prospective (future) termination date.
• A member’s employment was terminated, and the employee did not make any payment of premium/contribution toward his benefits after he left the job, but Aetna was not notified about termination of coverage until a few weeks later. In this case, the plan sponsor may terminate benefit coverage as of the employment termination date.
• The plan does not cover divorced ex-spouses, but an employee failed to notify the plan sponsor about a divorce for a period of time. As long as the employee or ex-spouse did not pay premium/contribution toward the benefit, the plan sponsor may terminate the ex-spouse’s coverage retrospectively.

How Aetna will handle retroactive terminations under the new rules
If a plan sponsor submits a retroactive termination to Aetna (or you submit it on the customer’s behalf), it must ensure that employees/dependents did not pay premiums/contributions during the retroactive termination time period.
When retroactive terminations are submitted, we will regard the submission as verification that no premium/contribution was paid by the member/dependent for that period.
Aetna’s policies related to time limits for retroactive terminations continue to apply.
Background
The Patient Protection and Affordable Care Act of 2010 (PPACA) prohibits health insurance carriers and group health plans from rescinding coverage (rescissions) except for cases involving fraud or intentional misrepresentation of material fact.
A rescission is defined as a cancellation or discontinuance of coverage that has a retroactive effect, except to the extent attributable to failure to pay required premium/contribution.
The Departments of Health and Human Services, Labor, and Treasury released interim final regulations and guidance for handling retroactive terminations. This regulatory guidance was summarized in the letter above.
This prohibition on rescissions applies to single individuals or individuals within a family, or an entire group of individuals.
More Information
We are also communicating this to plan sponsors. Read a copy of the letter.
[FONT=&quot]For additional information, please see the following websites or contact your Aetna representative[/FONT]
​

 

[businessetouch]

If we are lucky this will all go away because the bill is not funded by the republican legislature or struck down by the Supreme Court.

 

[jbage007]

Ann.
I just have one question.
Why have you opted to keep a line of communication open with THAT company?

 

[stuy119]

Ann.
I just have one question.
Why have you opted to keep a line of communication open with THAT company?

What do you have against Aetna? I've had no problems with them on the groups I've sold ....

 

[leevena]

I apologize up front, but I am a little confused about this topic. Why is this so troublesome? Am I missing something?

 

[Ann H]

Ann.
I just have one question.
Why have you opted to keep a line of communication open with THAT company?

Hi Jbage007 - I have quite a few current group clients with them, and a handful of individual clients with them. I'm not writing any NEW business with them, but some renewing clients can't move to another carrier. One other reason I read e-mails from Aetna, is I must say they are the first ones to react strongly (too strongly, in my opinion) to PPACA laws, and it gives me a hint that the other carriers may be following suit.
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I apologize up front, but I am a little confused about this topic. Why is this so troublesome? Am I missing something?

What's troubling is how the rescission laws in PPACA were interpreted, and what affect that has on normal business practices. For instance, if an employee terminates employment March 29th, and the employer doesn't notify me for a week or so, say April 5th, I can't terminate coverage retro to March 31st if payroll deduction had already occurred for that employee's share of the April premium. Normally, I would have the entire month of April in which to retro terminate coverage, the employer could refund the payroll deduction for the employee's share of April's premium, and the employer would not be required to fund the employer portion of April's premium. Now, the employer is on the hook for their portion of April's premium, even though the employee left in the month of March.

 

[AndreaSti]

Hi Jbage007 - I have quite a few current group clients with them, and a handful of individual clients with them. I'm not writing any NEW business with them, but some renewing clients can't move to another carrier. One other reason I read e-mails from Aetna, is I must say they are the first ones to react strongly (too strongly, in my opinion) to PPACA laws, and it gives me a hint that the other carriers may be following suit.
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What's troubling is how the rescission laws in PPACA were interpreted, and what affect that has on normal business practices. For instance, if an employee terminates employment March 29th, and the employer doesn't notify me for a week or so, say April 5th, I can't terminate coverage retro to March 31st if payroll deduction had already occurred for that employee's share of the April premium. Normally, I would have the entire month of April in which to retro terminate coverage, the employer could refund the payroll deduction for the employee's share of April's premium, and the employer would not be required to fund the employer portion of April's premium. Now, the employer is on the hook for their portion of April's premium, even though the employee left in the month of March.

So what you are saying here is the employer is screwed because they didn't immediately call you or the ins company as soon as the employee quit? Not that they have anything else to do, call the DOR, file separation papers, find new help, the list goes on an on. It might be they aren't thinking about insurance first. Then they might just blame you for the stupid rule, although I have found many of our business owners understand how Obamacrap is just going to make their lives crazier, so they might not blame you after all!

 

[Ann H]

So what you are saying here is the employer is screwed because they didn't immediately call you or the ins company as soon as the employee quit? Not that they have anything else to do, call the DOR, file separation papers, find new help, the list goes on an on. It might be they aren't thinking about insurance first. Then they might just blame you for the stupid rule, although I have found many of our business owners understand how Obamacrap is just going to make their lives crazier, so they might not blame you after all!

Yes, that's what I was saying. And the more I got to thinking about it, I realize that "not calling me in time" isn't going to be the real issue. Let's take the example of the employee who left the job March 29th, and should have had benefits terminated at midnight March 31st. Even if the Employer called me March 29th, but the employer had already deducted April's premium from the employee's payroll, am I going to be allowed to terminate coverage March 31st? Maybe I could do so, because it's not "retro" as in "rescinded", and maybe the employer could just refund the payroll deducted premium for April. Or maybe they would say that the payroll deduction for April's premium means coverage was purchased, and they cannot rescind it. Either way, this is too much of a burden on the employer, because, as Andrea so well stated, the employer has a lot more things to think about than just terminating the insurance coverage.

 

[AndreaSti]

Argh I am so confused! Don't do a lot of group biz. I am in the ind market mostly, some small group. No Aetna group, just some ind (we send all of our unhealthy clients to them, it just works out that way).

 

[leevena]

Hi Jbage007 - I have quite a few current group clients with them, and a handful of individual clients with them. I'm not writing any NEW business with them, but some renewing clients can't move to another carrier. One other reason I read e-mails from Aetna, is I must say they are the first ones to react strongly (too strongly, in my opinion) to PPACA laws, and it gives me a hint that the other carriers may be following suit.
- - - - - - - - - - - - - - - - - -


What's troubling is how the rescission laws in PPACA were interpreted, and what affect that has on normal business practices. For instance, if an employee terminates employment March 29th, and the employer doesn't notify me for a week or so, say April 5th, I can't terminate coverage retro to March 31st if payroll deduction had already occurred for that employee's share of the April premium. Normally, I would have the entire month of April in which to retro terminate coverage, the employer could refund the payroll deduction for the employee's share of April's premium, and the employer would not be required to fund the employer portion of April's premium. Now, the employer is on the hook for their portion of April's premium, even though the employee left in the month of March.

While I agree with your premise, it does appear to me that this is relatively minor. To begin with, how many people actually term/quit on the last day of the month that the Employer does not know about. And for those that do term/quit, it appears that the Employer would be ok to terminate the coverage for April by simply sending the termination notice directly to the carrier on that very day.