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Inaccurate Leave of Absence Provisions May Lead to Stop Loss Carrier Denial of Claims

For employees on a leave of absence (?Ç£LOA?Ç¥) or a furlough, employers often extend group health plan coverage during the LOA or furlough for a prescribed time period. With regard to group health plans that are considered to be ?Ç£self-insured,?Ç¥ generally, the employer?ÇÖs reinsurer, or stop loss carrier, is only required to cover claims (above the policy?ÇÖs self-insured retention level) incurred for a covered person based on the written terms of the plan. In other words, the policy underwrites the coverage that is provided under the plan document. If extended coverage during a LOA or furlough is not expressly set out in the plan document, a stop loss carrier could seek to deny claims incurred during that period. It is thus recommended that employers with self-insured plans review their health plan documents to ensure consistency with administrative practices regarding coverage during LOAs and furloughs and coordinate as necessary with the… Continue Reading

Have You Notified Participants of Extended Deadlines?

As noted in our prior post here, the U.S. Departments of Labor and Treasury recently issued a notice requiring all employee health and welfare benefit plans to disregard the period from March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency (or other announced date) when determining the deadline to request HIPAA special enrollment, elect COBRA coverage, make a COBRA premium payment, notify the plan of a COBRA qualifying event or determination of a disability, file a benefit claim or appeal, or request an external review of a benefit claim denial. Although the notice did not address whether plan participants needed to be notified of these extended deadlines, plan administrators should be aware that they likely have a fiduciary duty to accurately convey this information to participants. For example, a COBRA election notice that states a deadline to elect or make premium payments without mentioning… Continue Reading

Court Holds that Benefit Denial Letters Must Disclose Limitations Period for Judicial Review

The Third Circuit U.S. Court of Appeals, in Mirza v. Insurance Administrator of America, Inc., recently held that a notice of benefit denial under ERISA must include a statement of any time limits for filing a claim for judicial review in order for such limits to be enforceable under ERISA. The claimant exhausted the internal appeals process under the employer?ÇÖs group health plan and received a final benefit denial letter from the claims administrator. Although the letter included a statement of the claimant?ÇÖs right to bring a civil action under Section 502 of ERISA, the letter did not mention the plan?ÇÖs one-year limitations period for filing a lawsuit. The federal district court dismissed the lawsuit as being time-barred because notice of the limitations period was contained in the plan?ÇÖs summary plan description (?Ç£SPD?Ç¥). In reversing, the Third Circuit held that regardless of whether the claimant had notice of the plan?ÇÖs… Continue Reading

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