“Michelle’s Law,” named after Michelle Morse, a postsecondary student diagnosed with colon cancer who opted to continue her postsecondary studies on a full-time basis against her doctor’s wishes so that she would not lose dependent status under her health plan, was signed in to law October 9, 2008. The new federal law takes effect for plan years starting on or after October 9, 2009 – meaning January 1, 2010, for calendar year plans. The law will apply to leaves beginning in that year.
Under Michelle’s Law employer health plans and group health insurers will be required to continue coverage for a full-time postsecondary student under the plan for up to one year from the date the student loses full-time status because of a medically necessary leave of absence under an amendment to the Employee Retirement Income Security Act of 1974 (ERISA).
A plan that provides dependent coverage and conditions that coverage upon postsecondary full-time student status, may not terminate the dependent’s coverage when the dependent ceases to meet the full-time student criteria due to a medically necessary leave of absence. Instead, the plan must permit dependents who lose full-time status to continue coverage for one year after the first day of the student’s medically necessary leave of absence, or the date the coverage would have otherwise ended, if earlier. In addition, any change in health coverage, including a change in provider or the funding method that occurs while the student is on a medically necessary leave of absence must continue to cover the dependent as long as the new coverage provides dependent coverage to similarly situated dependents who are not on a medically necessary leave of absence.
What is Medically Necessary?
Any “medically necessary leave of absence,” triggers coverage extension, which includes both an actual leave of absence from the postsecondary educational institution, as well as any other change in enrollment at the institution that:
(1) begins while the student is suffering from a serious illness or injury;
(2) is medically necessary; and
(3) causes the loss of student status under the terms of the health plan or insurance coverage.
What is Postsecondary?
A “postsecondary educational institution,” as defined by the statute, is an institution of higher education as defined in Section 102 of the Higher Education Act of 1965. This broad definition generally includes not only public and private institutions offering two and four year degree programs, but also many occupational education and postsecondary vocational programs, and in limited cases, comparable institutions outside the United States. As a result, plans that extend coverage to dependents that are full-time students in educational programs other than a traditional postsecondary degree will need to consult this statute to determine whether the plan must provide the coverage extension to dependent enrolled in these programs who take a medically necessary leave of absence.
What students must do:
Provide a written certification to the health plan or insurance company, from the treating physician stating that the student is suffering from a serious illness or injury and that the leave of absence or change in enrollment is medically necessary, only then will the leave be deemed “medically necessary.”
What Plan Sponsors must do:
Provide all plan participants with a description of the terms of this new coverage that includes the requirement that the dependent provide certification that the leave is medically necessary in order to remain covered under the plan. For plans that are fully insured revised SPDs may be provided by the insurance carrier. Self funded plans can satisfy this requirement by issuing either a new SPD during open enrollment for coverage years beginning on or after October 9, 2009;
What Plan Sponsors should do:
- amend their health plan documents to redefine “dependent;”
- clarify the coverage termination dates in these circumstances; and
- review their dependent eligibility certification process.
COBRA was not specifically addressed in the law but will be clarified before the law goes in to effect.
Please contact Michael F. Yates & Company Inc. for additional details. CONTACT MFYCO |
