OIR Rule Development Workshop Report: Dependent Coverage for Health Insurance

On Thursday, March 26, 2009, the Florida Office of Insurance Regulation (“OIR”) held a Rule Development Workshop on Proposed Rule 69O-149.150, F.A.C., pertaining to Dependent Coverage for health insurance.

Although no Rule yet has been drafted, the purpose of the Workshop was to solicit public input regarding the implementation of newly-created Section 627.6562, F.S., which also pertains to Dependent Coverage.

OIR Deputy Insurance Commissioner for Health and Life Insurance Mary Senkewicz, presided over the Workshop, during which she provided those in attendance with a prepared list of 33 questions that previously had been submitted to the OIR by industry members in regard to the law in question. 

Very little discussion transpired regarding any particular question, and the meeting generally consisted of Ms. Senkewicz reading the questions, followed by her explanation of the OIR’s position and an open forum for affected parties to comment. 

At the conclusion of the Workshop, Ms. Senkewicz stated that the OIR is not opposed to discussing legislative action that would help clarify the multitude of ambiguities and seeming mistakes in the law as it currently reads.  Ms. Senkewicz asked that anyone who wished to pursue legislative action should keep her “in the loop.”

At the end of the Workshop there also was a request for the OIR to publish an Informational Bulletin to help clarify the ambiguity regarding the applicability of this Section to individuals and health maintenance organizations.  OIR advised that it does not usually include legal interpretations in those bulletins.

The Workshop record will remain open for 10 days.

The following is the list of industry questions from the OIR, together with its answers to those questions.  The answers to the questions are in RED.

Question:  Section 627.6562(2), F.S. lists the eligibility criteria for this coverage to include language as follows:  ” . . . is not provided coverage… under any other group….policy or individual plan, or is not entitled to benefits under Medicare.”  Does this mean “actually covered” by another plan or does it mean eligible for coverage under another plan whether enrolled or not?

OIR:  The term “is not provided coverage,” means actual coverage, in terms of private health coverage.

Question:  Are the eligibility requirements for dependent coverage up to age 30 found in Section 627.6562(2), F.S. separate from, and independent of, the eligibility requirements found in Section 627.6562(1), F.S.?

OIR:  Yes, they’re independent, if the insurer offers coverage for insureds’ dependents.

Question:  Do the provisions of Section 627.6562, F.S.  apply to group dental and vision plans, or is the intent to apply only to medical coverage?

OIR:  The intent is to apply only to medical, “critical” coverage.

Question:  Under Section 627.6562(2), F.S. if an unmarried child without dependents is enrolled, and the child gives birth during the policy year, does the coverage cease on the day the baby is born?

OIR:  Yes (at the insurer’s option)

Also, what if the dependent child marries, does coverage cease on the date of the marriage?

OIR:  Yes

Does the newborn have any coverage?

OIR:  Yes, under newborn statutes, which are separate from this Section. (Note:  Additional comments were made during the Workshop about the newborn statutes being unclear in regard to this matter. 

Question:  For rating purposes, the statute allows medical underwriting of the child. Is it allowable to charge a different rating load to each child, and can we apply a different rating load to the group? For example, we have an existing group with a load of +5 percent. The parent adds a child under age 30 with a medical condition that we would rate at +15 percent, can we rate the child at +15 percent? Conversely, if the child has no medical conditions, can we rate the child at -15 percent?

OIR:  This is not a rating statute, so there is no easy answer to this question.  In the small group market, insurers are subject to the small group rating law. (Note:  There was a question about whether the OIR has jurisdiction to interpret the large group market.   The OIR initially said no; however, after further discussion, the question was left somewhat unresolved.

Question:  Can insurers move the dependent children qualifying under Section 627.6562(2), F.S. to an individual plan?

OIR:  No

Question:  Does the law pertain to self-insured employers?

OIR:  No.

Question:  Does the law pertain to self-insured plans maintained by governmental units?

OIR:  Yes, pursuant to Section 627.651(4), F.S.

Question:  Are dependents under Section 627.6562(2), F.S. eligible for coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and continuation of coverage (conversion) due to termination from their parents’ coverage at the end of the calendar year in which dependent reaches the age 30, or for any other disqualifying event?

OIR:  Ms. Senkewicz explained that this question is hard to answer without a specific example.  Also, there is an underlying question regarding whether the “disqualifying event” takes place under COBRA or mini-COBRA.

Question:  Based on the language in Section. 627.6562(2), F.S. that requires insurers to offer dependent coverage up to age 30 to the policyholder or certificate holder, we are interpreting this to mean the insurer must offer the coverage to the policyholder and the policyholder decides if coverage will be offered to the certificate holders.  Do you agree?

OIR:  No, the statute specifically references the policyholder and certificate holder.  The coverage must be offered to employees under the current plan.

Question:  For existing groups, does the law apply at renewal?  For groups that will not renew until September 1, 2009, does this mean they do not have to offer coverage to children and those up to age 30 until then?

OIR:  No, people who have “aged-out” have an election period that ends on September 1, 2009.

Question:  For groups that will not renew until after April 2, 2009, it appears that the up-to-age-30 dependents will have to show evidence of insurability, but for groups that renew prior to April 2, 2009, as long as the age 26-30 children apply prior to that date, they will not have to show evidence of insurability. Do you agree?

OIR:  No, although it is somewhat unclear because there is some language in the statute which talks about evidence of insurability.  This issue needs further review and consideration.

Question:  In a large group, a carrier is charging 110 percent of the single premium for dependents 25-30. Can a dependent elect COBRA at 102 percent of premium for 36 months and, when COBRA is exhausted; have the option to return to the plan as long as he or she is under 30?  For a current dependent under COBRA due to prior loss of eligibility, can that dependent exhaust COBRA and come back?  Similarly, what is the interplay between this election and COBRA? Can an older child first elect COBRA and then elect the extension, or must they elect the extension first?

OIR:  Ms. Senkewicz stated that this question could not be answered at this time because she still does not understand the “qualifying event” and will need to speak with others and receive feedback.

Question:  The law appears to permit the carrier the right to impose an additional charge or premium for the dependent’s election that is not to be paid by the employer.  Does the OIR agree with this interpretation? If so, under what conditions will the OIR approve such a charge or premium in the small group market? What does the OIR believe are the limitations or conditions imposed upon such a charge or premium in the large group market?

OIR:  Ms. Senkewicz said the OIR would answer this question at a later date.

Question:  Does the Older Child Coverage requirement apply to self-funded governmental entities? We believe that the requirement does not apply to ERISA self-funded entities, but we are not clear about non-ERISA self-funded plans such as self-funded governmental entities. 

OIR:  Ms. Senkewicz said the answer to this question was already addressed.

Question:  We understand that the Older Child Coverage requirements do not apply to dental and vision products because they are not creditable coverage under Section 627.6562, F.S. Please confirm.

OIR:  Ms. Senkewicz said the answer to this question already was addressed.

Question:  Do the dependent age requirements apply to children of Florida residents covered by policies issued in another state?

OIR:  No, there is no reference to this in the statute.

Question:  Did a dependent have to “age out” previously in order to be eligible for the open enrollment that ends April 1?  We have cases where the child was removed voluntarily from the parents’ plan prior to age 25.

OIR:  Yes, if there was a voluntary withdrawal, then the child is eligible.

Question:  Does a dependent between the ages of 26 and 30 have to meet the criteria under Subsection (1) and (2), or is (2) a stand-alone provision?

OIR:  In a sense yes, but (2) only comes into play if coverage is being written under (1).

Question:  Confirm if a dependent is ineligible for coverage only if he/she is enrolled in his/her own group health plan instead of just being eligible for coverage.

OIR:  Ms. Senkewicz said the answer to this question was already addressed.

Question:  I understand some plans are still telling employers it is voluntary to offer this mandated extension of age. 

OIR:  The OIR disagrees with this understanding.

Question:  One plan considered the extension of age to mean ages 26 to 30, and was telling consumers that the dependent child had to take COBRA or mini-COBRA between turning age 25 and age 26.

OIR:  The OIR will not look kindly on such a plan. 

Question:  The legislation states that the insurer has the right to medically underwrite or charge the appropriate premium.  I really need examples of how this statement applies to the legislation. Does it mean someone can be turned down due to health history?  Can they rate someone up?

OIR:  The OIR will revisit this question after consultation and review.

Question:  Is coverage for dependents up to age 30 mandatory for all group, blanket and franchise groups?

OIR:  No.

Question:  If the employer group does not want to extend coverage of dependents to age 30, does the employee have any recourse even though the contract for coverage exists between the health plan and the employer group.

OIR:  This is a consumer services issue not a legal one.

Question:  The law, while well intended, leaves many questions unanswered.  One of them is the issue of what happens if the employer declines the benefit.  If the employer refuses to administer the benefit (not price-related) how can the carrier administer the benefit?  Premiums are after-tax, not pre-tax; without the employer agreeing to administer, the carrier cannot effectively manage the benefits.

OIR:  This question went unanswered.

Question:  For small groups, is the standard practice going to be that it’s a mandatory benefit? 

OIR:  No

Question:  If yes, will the OIR allow a new tier for such coverage? (answer not provided)

Question:  Is the law applicable to individual health and HMO policies?

OIR:  Initial reaction is no, but maybe that will change.  Upon closer review, there is a lot of cross-referencing in the statutes.

Question:  Is the law applicable to health and HMO conversion policies?

OIR:  The law is probably not intended to apply to them.

Question:  As to the grandfathering clause through April 1, 2009, what is the back-date from which we have to take dependents who came off the plan – five years, two years, at anytime between coming off the plan because of turning 25 to those who are 30 as of April 2009.  Is the coverage retroactive and can the carrier collect back premium for several years?  Is the coverage effective as of the application date?

OIR:  Nothing in the statute talks about retroactive coverage, but dependents get to be reinstated on a going-forward basis.

Question:  How is the handicapped dependent statute (627.6615, F.S.) to be interpreted with 627.6562, F.S.?

OIR:  They are separate statutes; one doesn’t exclude the other.  For example, 627.6615, F.S. requires that coverage be continued for a handicapped dependent who has reached the limiting age under the policy provided the handicapped dependent is incapable of self-sustaining employment by reason of mental retardation or physical handicap and that the handicapped dependent be chiefly dependent upon the certificate holder for support.  However, a handicapped dependent may be married, or not living with the certificateholder and still be eligible for coverage under the policy according to 627.6615, F.S., but this same dependent would not meet the eligibility criteria for a dependent between the ages of 25 and 30. 

Question:  If  that handicapped dependent is between the ages of 25 and 30 and is married, has other coverage, or is not a resident of this state or a full-time or part-time student,  must the handicapped dependent be allowed to be covered under the policy? (no answer provided).

Question:  If a dependent child who is covered under the parents’ policy gets married, can coverage for that dependent child be terminated as of the date of marriage or must coverage be continued until another time period (end of the calendar year)?

OIR:  The answer to this question was already addressed.

Question:  If an employer contributes toward dependent coverage for a dependent under 25, must the employer contribute toward coverage for a dependent over 25?

OIR:  This is not an OIR issue.

 

 

Please note that the material above is a brief summary of the discussion and events that took place during a Florida Office of Insurance Regulation Rule Development Workshop.  It is not intended to be a comprehensive review of any particular issues relating to the issues discussed.  Further, this report should not be relied upon for making any specific decisions.  Should you have any questions about any of the above matters, contact Colodny Fass.  This Office will continue to follow this, and other issues related to actions taken by the Office of Insurance Regulation, and provide information on, and analysis of, those issues and events as they arise.