Where to Turn... Your Guide to Federal Disability Policies and Programs Authors Patrice Drew, Esq. Cathy Ficker Terrill Anne C. Parrette, Esq. Project Coordinator Janna Starr Editors Larry H. Hoffer Lisa Ward Monique Marino Brain Injury Association US Department of Health and Human Services HRSA Health Resources and Services Administration Maternal and Child Health Bureau Disclaimer The Brain Injury Association shall not be held liable for content changes made by unauthorized parties, including but not limited to: alterations of text, images or other information within Where to Turn: Your Guide to Federal Disability Policies and Programs (the Guide.) The Guide contains general information. It is not an authoritative legal document, nor shall it be construed as legal advice. The Guide shall not be relied upon as a legal authority for acting or refusing to act. The information contained in the Guide may change as Federal polices and programs are amended periodically. The Brain Injury Association is not responsible for notifying the Public of these changes. Health Care and Insurance Medicaid Waivers - Freedom of Choice Waivers I am a Medicaid recipient. I want to be able to pick my own doctors. Do I have any options? Yes. Your state may be granted a Freedom of Choice (FOC) waiver. What is a Freedom of Choice (FOC) Waiver? FOC or "1915(b)" waivers are authorized under section 1915(b) of the Social Security Act. Through this section, states are allowed to waive certain provisions of section 1902 of the Act. What can an FOC waiver do? An FOC waiver allows states to place beneficiaries in primary care case management (PCCM) programs. FOC waiver programs must ensure that Medicaid beneficiaries have a choice of at least two or more providers. What are PCCM Programs? PCCM programs are fee-for-service programs that are managed by a gatekeeper or a prepaid capitated program such as a health maintenance organization (HMO) or a prepaid health plan (PHP). What is the purpose of an FOC waiver? FOC waivers improve beneficiaries' access to health care through enrollment in a guaranteed provider network. FOC waivers also monitor beneficiaries' quality of care. Frequently, beneficiaries in these waiver programs are placed in health care systems focused on health education and preventive medicine. What federal requirements are "waived" under the FOC program? HCFA may waive certain provisions in section 1902 of the Social Security Act including: Beneficiaries' right to select their own Medicaid providers Comparability of services, and The requirement to provide any service statewide How does a state receive approval for a FOC waiver? State Medicaid agencies must assure HCFA that beneficiaries in FOC waiver programs have a choice of at least two or more providers. Not all managed care programs require FOC waivers. Programs that allow beneficiaries to choose between fee-for-service and managed care without restricting a choice of providers do not require FOC waivers. FOC waivers are approved for two years and may be renewed for two-year periods. Who approves FOC waivers? The Medicaid Managed Care Team in HCFA's Office of Managed Care approves FOC waivers. If my state is approved for an FOC waiver, how long will approval last? FOC waivers are approved for 2-year periods and may be renewed at 2-year intervals. How can I find out more information about my state's FOC waiver program? You should contact your State Medicaid Agency. For a list of the State Medicaid Agency offices, go to the HCFA website, at: www.hcfa.gov/medicaid. You also will find the number for your State Medicaid Agency in the blue section of your local phone book. RESEARCH AND DEMONSTRATION WAIVERS I have some great, creative ideas for my state's Medicaid program. How can I implement some of these ideas to improve my state's current Medicaid program? You may want to see whether your state has been granted a section 1115 waiver. What is a section 1115 waiver? Under section 1115 of the Social Security Act, a state can deviate from a great many standard Medicaid requirements in order to test new ideas. In return for greater flexibility, states must commit to a policy experiment that can be evaluated formally. These waivers are also known as "research and demonstration" waivers. What is the purpose of a section 1115 waiver? States are using section 1115 waivers more and more to enact a broad variety of initiatives. Approved waiver programs range from small-scale pilot projects that test new benefits or financing mechanisms to major restructurings of State Medicaid programs. States are also using section 1115 waivers for welfare reform projects. What have states done with a Section 1115 waiver? Upon receiving a section 1115 waiver, a state may do the following: Cover new services Offer different service packages Offer different combinations of services in different parts of the state Test new reimbursement methods Change Medicaid eligibility criteria in order to offer coverage to new or expanded groups What does a state have to show to get a section 1115 waiver? A state's 1115 demonstration waiver must be budget neutral. This means that the programs cannot cost more over their duration than the Medicaid program would have spent without the demonstration project. Is there any federal requirement a state CANNOT waive under a section 1115 waiver? Yes. States may not use 1115 demonstration waivers to waive all Medicaid policies or program requirements. Some of the federal requirements a state cannot legally waive are: Services for pregnant women and children Co-payment and other cost sharing requirements for current categorically needy eligible people Federal matching Medicaid (FMAP) rates Requirements for maintaining appropriate levels of access to and quality of care Current HCFA contract approval authority Applicable requirements of the Employee Retirement and Income Security Act (ERISA) If my state is approved for a section 1115 waiver, how long will approval last? Section 1115 waiver authority normally can be granted for up to five years at a time. This authority allows states to try out a far greater range of policies than would otherwise be permissible in ordinary FOC programs (see FOC section above). How can I find out more information about my state's 1115 waiver program? You should contact your State Medicaid Agency. For a list of the State Medicaid Agency offices, go to the HCFA website, at: www.hcfa.gov/medicaid. You also will find the number for your State Medicaid Agency in the blue section of your local phone book. ERISA What is the Employment Retirement Income Security Act? The Employment Retirement Income Security Act (ERISA) is a law that regulates broadly private-sector benefit plans sponsored by employers or unions. Despite its name, ERISA protections are not limited to pension or retirement savings plans. ERISA also regulates private-sector health and medical benefit plans sponsored by employers or unions. What benefit plans does ERISA regulate? ERISA regulates any "employee benefit plan" established or maintained by an employer or an employee organization that is engaged in interstate commerce. Important: The law says that a plan will fall under ERISA protections if the plan meets the ERISA definition, even if ERISA coverage is not intended or desired by the employer/employee. What does ERISA NOT cover? ERISA does not cover plans maintained by federal, state, or local governments, certain church-affiliated plans, and workers' compensation plans. Are there different types of ERISA benefit plans? Yes. There are three types of ERISA plans. These plans differ in how they are funded: 1. Fully-insured Plan: the employer purchases insurance to provide benefits to the employees 2. Self-funded Plan: the employer pays benefits from a trust or from the employer's corporate assets 3. Partially Self-funded Plan: the employer pays benefits from a trust or from the employer's corporate assets, up to a certain dollar threshold, and the employer purchases insurance to cover losses above that threshold amount (this is called the employer's "reinsurance.") What does ERISA regulate, exactly? ERISA regulates employer-sponsored benefit plans in the following areas only: Reporting and disclosure Fiduciary duty or responsibility Remedies for denied claims What is "fiduciary duty?" "Fiduciary duty" is a legal term that describes a person's duty to act as a trustee when dealing with another person's money. The fiduciary relationship involves trust, confidence, good faith, and honesty. A person is said to be acting in a "fiduciary capacity" when he or she handles money or business transactions that are not his or her own, for the benefit of another person. Why is fiduciary duty important in connection with ERISA? Fiduciary duty is important under ERISA because employers, plan administrators, and even insurance brokers maintain a fiduciary duty to plan beneficiaries (i.e., they are responsible for an employee's money and benefits). How do I know if a person has a fiduciary duty to me? A person has a fiduciary duty to you if her or she performs the following activities: Exercises discretionary responsibility in the administration of management of your benefit plan Provides investment advice for a fee regarding your plan assets Exercises any authority or control over the management or disposition of your plan assets What are the duties of a fiduciary? A fiduciary must: Act solely in the interest of the benefit plan and in the interest of the plan participants and beneficiaries Act prudently in dealing with a benefit plan Follow lawful terms of plan documents My State has laws that cover employee benefit plans. Do those laws apply to my plan or does ERISA apply to my plan? The answer to this question is complicated. ERISA preempts (overrides) a state law when the state law relates to an employee benefit plan. A state law is said to relate to an employee benefit plan if it is specifically designed to affect employee benefit plans or if the state law singles out certain employee benefit plans for special treatment. There is an exception to this rule under the Savings and Deemer Clauses of ERISA. What are the Savings and Deemer Clauses? The Savings Clause provides that ERISA does not relieve any person from any state laws that regulate insurance. Courts have interpreted this to mean that only fully-insured ERISA plans are subject to state laws. The Deemer Clause provides that an ERISA plan shall not be deemed to be an "insurance company" or to be engaged in the business of insurance for the purposes of any state law that regulates insurance. Courts have interpreted this to mean that self-insured and partially-insured benefit plans are NOT subject to ERISA. How does ERISA preemption of state laws work? If a state law relates to the administration of a benefits plan, the processing of claims under a benefits plan, or the remedies for denied claims under a benefits plan, and the plan is fully-insured, then state law will apply. If a state law relates to the above areas, and the plan is self-insured, then ERISA regulations will apply, not state law. My insurance plan says that I have a pre-existing condition and will not insure me for that condition. Does ERISA cover pre-existing conditions? Yes. ERISA does cover the "pre-existing condition" issue, in connection with the Health Insurance Portability and Accountability Act (HIPAA) of 1996. What is HIPAA and how does it affect me? HIPPAA created new and important protections for working Americans and their families. HIPAA especially protects working families whose members may move from one job to another, and have pre-existing medical conditions. HIPAA limits plan exclusions for pre-existing conditions, and prohibits discrimination against employees and dependents based on their health status. See below for more information on HIPAA. How exactly did HIPAA change the pre-existing condition rules? Under HIPAA, and in connection with ERISA, pregnancy may never be treated as a "pre-existing condition." Also, a patient's genetic information may not be treated as pre-existing. My plan does have a pre-existing condition period, is this legal? Yes, with limitations. A pre-existing condition exclusion may not last for more than 12 months (18 months for late enrollees) after a person's enrollment date. A "late enrollee" is a person who enrolls in a plan after the first date on which he or she was eligible to enroll. A new employer is required to give a person credit for the length of time he or she had continuous health coverage. This will reduce the 12-month exclusion or waiting period in a new plan. What is continuous coverage? Continuous coverage or "credible coverage" is credit a beneficiary receives for his or her previous health insurance coverage. To receive credit toward a 12-month exclusion period in a new plan, the previous coverage must have occurred without a break in coverage for 63 days or more. E.g., Sally began employment with her current employer 45 days after her previous group health plan coverage terminated. Under her previous employer's group health plan, Sally had 24 months of continuous coverage. A 45-day break in coverage is not considered to be a "significant break" in coverage, so Sally's previous coverage will be credited toward the 12-month exclusion period under her new employer's plan. Also, since Sally had over 12 months of creditable coverage, she will not be subject to any pre-existing condition exclusion period. How can I prove that I had continuous coverage? The employee's former group health plan and/or insurer are required to provide a certificate to the employee upon termination from the health plan stating when the employee was covered under the health plan. What is considered a "pre-existing" condition? A pre-existing condition under HIPAA is defined as a condition for which "medical advice, diagnosis, care or treatment was recommended or received within the 6-month period prior to the enrollment date." This means that if you had a certain condition, but you did not go to the doctor for it or receive care for it within the 6-months before your enrollment date with your medical insurance, a pre-existing condition cannot be said to apply. Some health plans, however, do have a waiting period. What is a "waiting period?" A health plan may have an eligibility waiting period. If it does, the enrollment date begins on the first day of the waiting period. If the health plan does not have an eligibility waiting period, then the enrollment date begins on the first day of coverage. Remember, enrollment dates are important when you are looking to see whether a pre-existing condition exclusion is valid in a policy (see above). When did HIPAA go into effect? HIPAA went into effect on July 1, 1997. Prior to July 1, 1997, a plan definition of pre-existing conditions could be as broad as the drafter of the policy wanted it to be. All health plans were required to be in compliance by January 1, 1998. Can ERISA help me with the processing of my medical claims? Yes. ERISA can help ensure that your claims are processed within in a reasonable period of time. ERISA states claims must be paid or denied within 90 days. Unfortunately, ERISA does not provide a specific time within which a claim must be paid before penalties may be applied. Can ERISA help me with medical claim denials? Yes. under ERISA, a claimant must be given 60 days from the date of the claim denial notice to appeal. ERISA also states that a denial notice must meet certain requirements. A claims denial must: Provide a written explanation of the specific reasons of the denial Contain specific reasons for the denial, with specific references to pertinent plan provisions Important: You should know that under ERISA, you are entitled to request and receive your entire claims file from your plan, including all notes, memoranda, and reports contained in your file that may have been considered by the plan in denying your claim. You are also entitled to "full and fair" claims review under ERISA. What is "full and fair" claims review? Under ERISA, when a claim is denied, the claimant is entitled to a full and fair review of the claim denial by a named fiduciary of the plan. Claimants must exhaust all remedies under this procedure prior to filing suit in court. What happens after I appeal a claims denial? Your plan has 60 days to review your appeal. Your plan also must respond to your appeal within 120 days. HIPAA Tell me more-What else should I know about HIPAA? HIPAA made the following important changes to employee health coverage plans: Limits exclusions for pre-existing conditions Prohibits discrimination against employees and dependents based on their health status Guarantees renewability and availability of health coverage by providing better access to individual health insurance coverage Protects many workers who lose health coverage by providing better access to individual health insurance coverage What does HIPAA apply to? HIPAA applies to any group health plan and its insurer. What does HIPAA NOT apply to? HIPAA does not apply to small group health plans that, on the first day of the plan year, have less than two participants who are current employees. HIPAA does not apply to governmental and church plans. If HIPAA is a Federal program, why has my state modified HIPAA laws? States can enact laws that modify HIPAA, but only if those laws impose stricter obligations on health insurance issuers. Does HIPAA only affect employed, adult people? No, HIPAA also provides special rules for newborns, adopted children, or children newly placed for adoption. Newborns, adopted children, and children newly placed for adoption cannot be subject to a pre-existing condition exclusion or limitation if they are enrolled within 30 days of birth, adoption, or placement for adoption. COBRA For the last two years, I have been covered by a health insurance plan offered by my employer. I recently quit my job so that I could better care for my child with a disability for a few months. What can I do about health insurance for my child and me? Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employers must offer continuation of health insurance coverage to qualified beneficiaries who lose coverage due to a qualifying event. Tell me more about COBRA. COBRA was passed in 1985 to provide employees, former employees, their spouses and dependents with a temporary extension of group health insurance coverage when their health insurance coverage is lost due to certain qualifying events. The COBRA coverage must be identical to the coverage provided to similarly-situated employees. COBRA coverage must be offered for 18 months following the employee's qualifying event. What are "qualifying events" under COBRA? The following "qualifying" events will provide health insurance coverage to an employee, spouse of an employee, dependent child of an employee, or child placed for adoption with an employee during the 18-month COBRA period. The employer is responsible for knowing when any of these qualifying events have occurred: Voluntary termination (e.g., an employee quits his or her job) Involuntary termination (e.g., an employee is fired for a reason other than "gross misconduct") Reduction of hours (e.g., an employee experiences a strike, layoff, leave of absence, or moves from full-time to part-time work) Does the employee have any responsibilities under COBRA? Yes. The employee must inform the employer or the plan administrator of the occurrence of the following qualifying events within 60 days from the date of the event: Divorce Legal Separation Dependent child ceasing to be a dependent How will I know if I am eligible for COBRA benefits? Employers are required to notify an employee of their COBRA rights within 14 days from the date they learn of the qualifying event. If the employer and the plan administrator are one in the same, then the plan administrator only has 14 days from the date of the occurrence of the qualifying event to notify the employee. The notice should inform the employee that they have certain rights to continue their group health coverage under COBRA. Notice to the employee must be sent via first class mail to all qualified beneficiaries at the last known address. Handing a notice to an employee during an exit interview is not sufficient notice. How long do I have to decide whether I wish to elect COBRA coverage? You have 60 days to elect COBRA coverage from the date you received notice of COBRA eligibility or from the date you lost your health insurance coverage, whichever event is later. Does my employer continue to pay for my coverage when I elect COBRA? No. The COBRA-eligible employee is responsible for paying COBRA premiums. Once an employee elects COBRA coverage, he or she has 45 days from the date of the election to pay the health coverage premiums. Note that the COBRA-eligible employee must pay retroactive premiums as well. The retroactive premium is the amount due from the loss of coverage date to the date of COBRA election. What if I am late paying my COBRA premiums, do I lose coverage immediately? It is important to pay your COBRA premiums on time. If you are paying monthly premiums, you are allowed a minimum 30-day grace period each and every month to pay. Can my employer or former employer take away my COBRA coverage? Yes. But only under limited circumstances. An employer can cancel COBRA coverage and still be in compliance with the law when the following situations occur: Payment of a premium is not made timely The beneficiary becomes covered under another group health plan that does not contain an exclusion or limitation regarding a pre-existing condition The beneficiary becomes eligible for Medicare The employer ceases to maintain any group health plan for any of its employees Who enforces COBRA? The COBRA law is enforced by different governmental entities. For example, if an employer fails to comply with COBRA, the Internal Revenue Service (IRS) can levy excise taxes; and the Department of Labor can file a lawsuit against the employer. Finally, an affected beneficiary can sue the employer in court. Will an employer incur penalties for failing to comply with COBRA laws? Yes. The IRS can levy a nondeductible excise tax of $100 a day, per COBRA violation. Since COBRA's requirements are part of ERISA, failing to comply with COBRA can subject an employer to an ERISA penalty of up to $100 per day, per COBRA violation. An employer who fails to comply with COBRA laws is required to pay beneficiary claims. Courts have held employers violating COBRA laws responsible for payment of damages and attorney fees.