|
HIPAA’s special enrollment rules recently cost an employer’s health plan some $750,000 in claims. The final costs will likely be even higher.
In Livingston v. South Dakota State Medical Holding (“DakotaCare”), the Court required the insurance carrier, DakotaCare, to cover an employee and her prematurely born infant and offer them COBRA coverage. Previously, the employer had been dismissed as a defendant, and the employee, Danielle Livingston, had assigned her rights in the lawsuit to Sioux Valley Hospital.
Ms. Livingston initially declined her employer’s health coverage because she was on Medicaid. She worked full-time before the May 6 birth of her son. On June 4, 29 days later, she requested special enrollment for her and her son in the plan. DakotaCare denied her request because part-time employees are ineligible. (She worked part-time from June 19 through August. 29, when she resigned).
The Court addressed whether special enrollment was required and, if so, whether COBRA coverage should have been offered.
Regarding special enrollment, employees who do not initially enroll in an employer’s plan may enroll at a later date under three circumstances: (1) open enrollment, (2) the loss of other group health plan/insurance coverage, and (3) the addition of a new dependent through marriage, birth, adoption or placement for adoption. This special enrollment right exists for at least 30 days after the event. For birth, adoption, or placement for adoption, coverage is retroactive to the event date. Ms. Livingston was on leave of absence on the date of birth and applied within the 30-day period so the Court held that her status was full-time.
Because special enrollment was appropriate, the Court determined that DakotaCare should have sent COBRA General and Election Notices. The remaining question was when the Qualifying Event occurred: June 19 (when she returned as a part-time employee) or August. 29 (when she quit). The answer: June 19. The Reduction in Hours caused a loss of eligibility of coverage.
The Court granted Sioux Valley Hospital’s motion for summary judgment on special enrollment and COBRA eligibility but left open several other issues, including the length of coverage and whether to assess daily penalties, attorney’s fees, and costs related to its HIPAA and COBRA failures.
It is interesting to note that the Court resolved ambiguities in both HIPAA and COBRA in the employee’s favor. Also, while the employer escaped liability in this case, little doubt remains that premiums will increase significantly at renewal.
###
News & Review sign-up
sheet | Archive |
