[Federal Register Volume 61, Number 212 (Thursday, October 31, 1996)]
[Notices]
[Pages 56239-56240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27964]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Requirements for Group Health Plans for Certain State and Local
Government Employees--COBRA Continuation Coverage
AGENCY: Office of the Secretary, HHS.
ACTION: Notice.
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SUMMARY: This notice contains information about the recently enacted
amendments to Title XXII of the Public Health Service (PHS) Act. Title
XXII requires that certain State and local government employers provide
certain individuals and their family members the opportunity to
continue health care coverage under a group health plan in certain
instances where coverage under the plan would otherwise be terminated.
Under the amendments, the group health plans maintained by these
employers are required to provide to employees who have elected
continuation coverage notice of the changes to the statute by November
1, 1996.
DATES: Section 421 of Public Law 104-191, ``COBRA Clarifications,''
enacted amendments which will become effective on January 1, 1997,
regardless of when the qualifying event (the event that leads to
eligibility for COBRA continuation coverage) occurred.
See section 421(d), ``Effective Date.'' Also, section 421(e),
``Notification of Changes,'' requires that, no later than November 1,
1996, each group health plan covered under Title XXII of the PHS Act
shall notify each qualified beneficiary who has elected continuation
coverage of the amendments made by this section.
FOR FURTHER INFORMATION CONTACT: David Benor, Senior Attorney, Office
of the General Counsel, Room 4A-53, 5600 Fishers Lane, Rockville, MD
20857. Telephone: (301) 443-2006.
[[Page 56240]]
SUPPLEMENTARY INFORMATION: On August 21, 1996, the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) was signed into
law (Pub. L. 104-191). Section 421 of HIPAA makes changes,
described below, to three areas in the continuation coverage rules
applicable to group health plans under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA), as amended. These three
areas relate to the disability extension, the definition of
qualified beneficiary and the duration of COBRA continuation
coverage. These changes are effective beginning January 1, 1997,
regardless of when the event occurs that entitles an individual to
COBRA continuation coverage.
Section 421(e) of HIPAA requires group health plans that are
subject to COBRA to notify, by November 1, 1996, individuals who have
elected COBRA continuation coverage of these changes. The Department is
issuing this notice to apprise State and local government employers and
plan administrators of the changes in the continuation coverage rules
made by HIPAA and to inform them of their obligation under HIPAA to
notify qualified beneficiaries of such changes. Such notification must
be given by November 1, 1996, to each qualified beneficiary who has
elected continuation coverage. The following is a discussion of the
specific changes in the continuation coverage rules made by HIPAA.
Disability Extension
Under current law, if an individual is entitled to COBRA
continuation coverage because of a termination of employment or
reduction in hours of employment, the plan generally is only required
to make COBRA continuation coverage available to that individual for 18
months. However, if the individual entitled to the COBRA continuation
coverage is disabled (as determined under the Social Security Act) and
satisfies the applicable notice requirements, the plan must provide
COBRA continuation coverage for 29 months, rather than 18 months. Under
current law, the individual must be disabled at the time of the
termination of employment or reduction in hours of employment. HIPAA
makes changes to the current law to provide that, beginning January 1,
1997, the disability extension will also apply if the individual
becomes disabled at any time during the first 60 days of COBRA
continuation coverage. HIPAA also makes it clear that, if the
individual entitled to the disability extension has non-disabled family
members who are entitled to COBRA continuation coverage, those non-
disabled family members are also entitled to the 29 month extended
period of coverage.
Definition of Qualified Beneficiary
Individuals entitled to COBRA continuation coverage are called
qualified beneficiaries. Individuals who may be qualified beneficiaries
are the spouse and dependent children of a covered employee and, in
certain cases, the covered employee. Under current law, in order to be
a qualified beneficiary an individual must generally be covered under a
group health plan on the day before the event that causes a loss of
coverage (such as a termination of employment, or a divorce from or
death of the covered employee). HIPAA changes this requirement so that
a child who is born to the covered employee, or who is placed for
adoption with the covered employee, during a period of COBRA
continuation coverage is also a qualified beneficiary.
Duration of COBRA Coverage
Under the COBRA rules there are situations in which a group health
plan may stop making continuation coverage available earlier than
usually permitted. One of those situations is where the qualified
beneficiary obtains coverage under another group health plan. Under
current law, if the other group health plan limits or excludes coverage
for any preexisting condition of the qualified beneficiary, the plan
providing the COBRA continuation coverage cannot stop making the COBRA
continuation coverage available merely because of the coverage under
the other group health plan. HIPAA makes a coordinating change to the
COBRA rules so that if a group health plan limits or excludes benefits
for preexisting conditions but because of the new HIPAA rules those
limits or exclusions would not apply to (or would be satisfied by) an
individual receiving COBRA continuation coverage, then the plan
providing the COBRA continuation coverage can stop making the COBRA
continuation coverage available. The HIPAA rules limiting the
applicability of exclusions for preexisting conditions become effective
in plan years beginning on or after July 1, 1997 (or later for certain
plans maintained pursuant to one or more collective bargaining
agreements).
Notice to Employees
As indicated above, group health plans maintained by State and
local government employers subject to Title XXII of the PHS Act are
required to notify their qualified beneficiaries who have elected
continuation coverage of the amendments described above. This notice is
required to be given by November 1, 1996. This Department believes that
supplying qualified beneficiaries with the information set forth above
(or with a copy of this notice) would constitute compliance with the
notice requirement of section 421(e) of HIPAA if this information is
sent to each qualified beneficiary who has elected continuation
coverage by first class mail at the last known address of the qualified
beneficiary by November 12, 1996.
This Department published a notice in the Federal Register on
January 7, 1987, setting forth guidance on the Title XXII requirements.
52 FR 604-606. Included as an appendix to that notice was a model
statement that covered employers (or the group health plans they
maintain) could provide their employees about their continuation
coverage rights. We also urge these employers to modify the general
notice regarding continuation coverage rights to make it consistent
with the HIPAA amendments. As provided in section 2206 of the PHS Act,
the group health plan maintained by these employers must provide such
notice to their employees at the time of commencement of coverage under
the plan; in addition, the employer, the employee, and the plan
administrator have certain other notice requirements related to
specific qualifying events.
Dated: October 25, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-27964 Filed 10-29-96; 8:45 am]
BILLING CODE 4150-04-M
