Eligibility – Best Practices for Health Insurers

Healthcare reform will continue to require more responsibility from employers – especially small employers – which will, in turn, require more oversight by insurers. If employer groups are not properly enrolling, verifying eligibility, and reporting members, the health plan could find itself at risk with its reinsurer. The best way to avoid potential conflicts is to make sure your master contract is clear – and then to enforce it. In the midst of this constantly evolving marketplace, observing best practices becomes more important than ever. Health plans can encourage compliance by following these simple strategies:

  • Know the employer’s eligibility requirements in regard to initial eligibility waiting period, eligible classes of employees, and the point at which an employee or dependent would no longer be eligible for coverage. Evaluate whether the Summary Plan Description clearly represents the employer’s eligibility rules and practices.
  • Establish processes to verify the eligibility status of new enrollees with the employer group.
  • Understand the processes in place at the employer group to identify any potential issues with obtaining current and updated eligibility data.
  • Create strong plan language with regard to maintaining eligibility.
  • Know what circumstance would cause an employee’s job-based coverage to end and COBRA to be an option to continue coverage with that employer group. Monitor those situations. If an employee elects to continue the group coverage via COBRA, establish a process for surveying COBRA continuees on a regular basis to ensure they continue to meet the COBRA rules for coverage. (Once an employee is no longer eligible for their job-based coverage, s/he has the option of signing up for COBRA or to enroll in other coverage, such as a marketplace plan.)
  • Perform a yearly review to ensure covered dependents are still eligible and/or that there isn’t other coverage that could be primary. (Yearly audits are imperative due to a clause in the Affordable Care Act that states plans cannot retroactively terminate ineligible enrollees unless an intentional act of fraud occurred. An audit of dependents would present opportunity to clearly define what is considered an act of fraud as well as the eligibility requirements.)
  • Identify triggers in claim activity and obtain leave of absence documentation from the Employer group. If the employee is on unpaid leave, typically s/he would not be eligible for continued coverage until they return to an active at work status. (An exception to this would be the Family Medical Leave Act. This is a federal law in which the employee has 12 weeks of protected unpaid leave. If the employer is covered by this law, the employee’s health benefits would not be affected and they would be protected from job loss during this period. Therefore, obtain this information from the employer and document when the FMLA period begins and ends.)

It is important to regularly review current processes and enforce consistent eligibility practices for the plan of benefits. A health plan could be impacted by eligibility exceptions and/or failure to monitor. Because this would indicate that the same rules would not be applied to all plan participants, either condition could be viewed as discrimination, thus affecting the plan’s ability to enforce the eligibility rules across all members.

Written by Claims Manager Kira Sturgis.