Summary

On Oct. 9, 2008, President Bush signed into federal law a new statute known as "Michelle's Law" (H.R. 2851). The law amends ERISA, the Public Health Service Act, and the Internal Revenue Code. Michelle's law generally requires group health plans, which provide coverage for dependent children who are postsecondary school students, to continue such coverage if the student loses the required student status because he or she must take a leave of absence from studies due to a serious illness or injury. The law applies to fully insured and self-funded group health plans and will be effective for an employer's plan on the first plan year on or after Oct. 9, 2009. Michelle's Law also applies similarly to individual health insurance plans, but this summary will only address the impact on group health plans.

Background

Group health plans commonly provide coverage to dependent children, age 19 and older but under age 24, who are full-time students. However, plans often do not allow for coverage during a medical leave of absence from school. Michelle's Law requires plans to close this gap under certain circumstances, precluding termination of coverage for a certain period of time for a covered dependent child due to a medically necessary leave of absence. The law is based on a New Hampshire state insurance law that was named after a college student, who was required to maintain her full-time student status while fighting colon cancer, to avoid losing her health insurance coverage.

What the Law Requires

Continuation Requirement

Michelle's Law requires that a self-insured group health plan, or insurer of an insured group health plan ("Plan"), shall not terminate coverage of a student "dependent child" who must take a "medically necessary leave of absence", before the earlier of:

1. one year after the leave of absence begins; or
2. the date on which the child's coverage under the Pan would otherwise terminate.

Key Definitions

Dependent child means an eligible dependent under the Plan, who is enrolled for coverage based on his or her student status at a postsecondary educational institution immediately before the first day of the medically necessary leave of absence. Although Michelle's Law is generally described as protecting college students, it actually applies more broadly to any student enrolled in a school after high school.

Medically necessary leave of absence means a leave of absence from a postsecondary school, or any other change in enrollment at the school, that:

1. begins while the child is suffering from a serious illness or injury;
2. is medically necessary; and
3. causes the child to lose student status and therefore coverage under the Plan.

Client Information

• Customers should not change the way dependents/students are identified and/or enrolled.
• When UnitedHealthcare is verifying student eligibility on behalf of the customer – the student verification request letter includes verbiage and instructions for member to determine if the dependent qualifies for a medical leave of absence.
• Members exercising the right to Michelle's Law will notify Eligibility via a Student Medical Leave form. This standard form will include the member's and employee's information, as well as the effective date of the medical leave and the physician's signature. UnitedHealth Group will rely on the physician assessment/certification and will not do a further review to approve or deny the assessment/certification. (Student Medical Leave form is available via United eServices, Employer eServices and myuhc.com.)
• When the customer (including a TPA or an external vendor hired by the customer) handles verification of student eligibility – the student verification request letter will not be utilized, nor will the Student Medical Leave form. These customers own their student eligibility and should only provide to us eligible dependents.

Physician Certification

A Plan is only required to comply with the continuation requirement if it receives written certification from the child's treating physician stating that the child is suffering from a serious illness or injury and that the leave of absence (or other change in enrollment, such as a change from a full-time to part-time student) is medically necessary. There is no definition of medically necessary and it appears that the physician's determination in this regard is controlling.

Notice Requirement

A Plan must include notice of the continuation coverage under the law with any notice addressing certification of student status required by the Plan for dependent coverage. The notice must be written to be understandable to the typical Plan participant.

Benefits Applicable to Leave

• When a dependent child is receiving the continued coverage required by Michelle's Law during a medically necessary leave of absence, the benefits shall be the same as if the child remained a covered student and was not on the leave of absence. In other words, the benefits provided to the child shall be the same as those provided to dependent children who are maintaining their required student status.
• When a dependent child is receiving the continued coverage required by Michelle's Law during a medically necessary leave of absence, and the coverage level for dependent children changes (e.g., change in benefit Plan due to change in Plan sponsor's benefit program or change in insurers), the new coverage level will apply for the remainder of the continuation period.

Effective Date

The requirements of Michelle's law apply to an employer's group health plan on the first plan year on or after Oct. 9, 2009, and to medically necessary leaves of absence beginning during such plan year. For calendar year plans, the effective date is Jan. 1, 2010.

Examples

Customer guidelines and state guidelines pertain to children up to 19 years of age and students up to 25 years of age.

Example 1: A member exercising Michelle's Law at age 23 would be covered for one year without being a full-time student as generally required by the plan. After the one year, Michelle's Law no longer applies and the dependent is required to be a full-time student to remain eligible for coverage.

Example 2: A member exercising Michelle's Law at age 24 when their 25th birthday is two months away would only be covered until they attain the maximum student age of 25 allowed by the plan. Michelle's Law does not extend coverage beyond the plan maximum age.

Impacts on Group Health Plans

The impacts on group health plans will be developing procedures to maintain eligibility of dependent children protected by the law during a medically necessary leave of absence, updating SPD language to reflect the new requirements, and complying with the notice requirement when requesting certification of student status.

Michelle's Law applies to all self-insured and insured group health plans, including HMO plans. Affected plans include employer-sponsored ERISA plans, church plans and governmental plans. However, non-federal governmental plans (e.g., employer-sponsored plans of states, municipalities and other political subdivisions) may exclude themselves from the law by following federal opt-out requirements.

Group health plans within the scope of the law are plans providing medical benefits. Exceptions applicable to other federal group health reforms, such as preexisting conditions limits, mothers' and newborns' health protection, and womens' health and cancer rights, also apply to Michelle's law. Thus, the following types of coverage are excluded from the scope of the law:

• Accident only coverage (e.g., AD&D)
• Disability income coverage
• Workers' compensation
• Limited scope dental and vision coverage (if offered separately from the group health plan)
• Long term care coverage (if offered separately from the group health plan)
• Coverage for only a specified disease or illness (e.g., cancer-only policies), or hospital indemnity or other fixed indemnity coverage that pays a fixed dollar amount per day regardless of expenses incurred (if offered separately from, and not coordinated with, the group health plan)
• Medicare supplemental insurance (i.e., Medigap or MedSupp insurance as defined under the Social Security Act) and TRICARE supplemental insurance