12/30/2010
Group administrators notified of new retroactive cancellation requirements
A new requirement under federal health care reform prohibits group health plans and insurers from cancelling members' coverage back to a prior date (i.e., rescinding coverage retroactively) except in cases of fraud or intentional misrepresentation of material fact, or unless certain other conditions have been met. This requirement is effective for all new groups and upon renewal after Sept. 23, 2010.
Letters notifying group administrators (of fully insured plans) of these changes will be mailed beginning Dec. 30, 2010. We're working with third party administrators (TPAs) to get notices to association employers. This change applies to new and renewal groups with effective dates of Oct. 1, 2010, through Jan. 1, 2011, and as groups renew through September 2011. In most cases, we'll simply need an additional signature at the bottom of a group's bill, indicating that the retroactive cancellation conditions required by the new law have been met.
The new information we'll require on requests for retroactive cancellations is as follows:
In the rare case where a retroactive cancellation is requested because of fraud or intentional misrepresentation of material fact, we'll require the relevant evidence of fraud or misrepresentation.
Cancellations that are requested due to delays in administrative record keeping that occur as a normal course of business may be acceptable as long as:
- The plan covers only active employees (or those on COBRA),
- The employee or member has paid no premium for coverage after the effective date of the cancellation, and
- The employee or member had no expectation of coverage after the requested effective date of cancellation.
Groups have several options for communicating the required information to us:
- On the remitted bill: A new statement and a flyer have been added to our bills, allowing groups to confirm that appropriate retroactive cancellation conditions have been met.
- Completion of Request for Cancellation form: This form allows groups to confirm that appropriate conditions for retroactive cancellation have been met.
- By phone: We will continue to take phone requests to cancel coverage. A group can call the membership administrator identified on their bill to request a retroactive cancellation. The membership administrator will confirm that the appropriate conditions have been met.
Once the required confirmations have been received and if all requirements have been met, the earliest termination date allowable is the last day of the month prior to the due date of a group's current bill.
If a group requests a retroactive cancellation but didn't indicate to us that the required federal health care reform conditions have been met, we won't be able to retroactively cancel the member's coverage due to a delay in administrative record-keeping. Instead, we'll cancel the member effective as of the last day of the month during which the request was received. Any premiums associated with the coverage for that entire period will be charged to the account. Once we've processed a member's cancellation, we won't be able to change that member's effective cancellation date to an earlier date (i.e., "undo" an earlier cancellation) even if a group subsequently indicates to us that the requirements have been met.
We appreciate your help addressing your clients' questions regarding these new requirements.
If you have any questions, please talk to your Asuris Sales contact.
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