ERISA and Health Insurance Subrogation In All 50 States - Third Edition
Conclusion The decision in Montanile puts responsibility on health benefit plan fiduciaries to have in place processes to ensure that they seek reimbursement for medical expenses that they have paid to plan participants and beneficiaries promptly after those individuals have recovered those medical expenses from third parties in legal proceedings. It is especially important that these processes include a system for investigating and tracking expensive claims.
By commencing reimbursement actions promptly, the likelihood that third-party settlement funds will be wholly dissipated will be diminished. Nevertheless, as some settlements especially settlement amounts are reached in secrecy with nondisclosure agreements, it may be difficult for plans to gain sufficient information to trigger a prompt reimbursement effort. Furthermore, if lower courts interpret Montanile to apply to other types of ERISA plans, it may not be practicable for plans to quickly seek reimbursement before dissipation of pension or disability disbursements that were perhaps paid years earlier.
The full Issues in Brief archive can be found here. One current jurisdictional problem in the regulation of health benefits that perplexes regulators involves multiple employer welfare arrangements MEWAs. Also, a MEWA cannot be an aggregation of a group of trades or businesses under common control.
Specifically, the preemption provisions applicable to MEWAs declare that fully insured MEWAs must comply with state insurance laws that set standards for reserves. Self-funded MEWAs must also comply with state insurance laws to the extent not inconsistent with Title I—unless exempted by the Secretary of Labor in accordance with regulations. MEWAs have presented at least two problems for regulators that have prompted considerable attention from both state and federal regulators.
Second, because MEWAs tend to serve pools of small employers, their sponsors frequently lack the time or sophistication to investigate the solvency of the MEWA. To redress the shortcomings of current regulation, some propose that MEWAs be subject entirely to federal jurisdiction and be required to obtain federal certification, but other proposals are also pending. This discussion emphasizes ERISA and the nexus between federal and state regulation of health benefits.
The scope of federal regulation also includes other important laws that affect employment-based health benefits but do not profoundly limit state regulation of health insurance. View in own window. As the courts begin to interpret this last piece of legislation, which became effective in , their judgments about which health plan practices constitute sound distinctions and which constitute subterfuges for discrimination may limit plan discretion in ways that ERISA does not. For example, although federal courts held, in McGann v. Under current state regulation of health insurance and federal regulation of health benefits, the states continue to exercise regulatory control over those core activities that are recognized as the business of insurance.
Through ERISA and other federal laws, the federal government retains jurisdiction over employee health benefit plans. The intersection of these competing regulatory schemes is defined by the ERISA preemption clause, a circumstance that, in the eyes of some, leaves important aspects of employee health benefits insufficiently defined in law. Paper prepared by Edward F. Some editing of the paper, which initially covered a broader range of legal issues, was undertaken by IOM committee members and staff. Paul challenged his conviction and the statute by arguing that the Commerce Clause of the U.
Employment and Health Benefits: A Connection at Risk.
Constitution reserved exclusively to Congress the regulation of commerce among the states. The Supreme Court acknowledged that the Commerce Clause regulated interstate commerce but held that an insurance contract was not an "article of commerce in any proper meaning of the word. In the McCarran-Ferguson Act, Congress declared that "the regulation and taxation by the several States of the business of insurance is in the public interest, and that silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States.
Prudential Insurance Company v. The state of South Carolina was not constrained by the Commerce Clause from taxing foreign insurers. Prudential, incorporated in New Jersey, was taxed 3 percent of premiums, a rate higher than domestic carriers. Blue Cross Since Accountability as the Public Trust, Ballinger , pp. Background Data and Analysis June 9, , p. The NAIC lists cases from several jurisdictions in which courts have declined to infer a private right of action in state unfair insurance practices acts.
Insurance Federation of Pennsylvania v. Health Insurance Association of America v. Corchoran , N. The NAIC Model HMO Act, section 3 states that "no person shall establish or operate a health maintenance organization in this state, without obtaining a certificate of authority under the Act. See, for example, Self-Insurance Institute of America v. The act is frequently referred to as the Taft-Hartley Act, a reference to the sponsors of the legislation.
LMRA has been amended several times since its passage. ERISA has been amended on a piecemeal basis on several occasions, as follows: The amendments have generally had more impact on the regulation of pensions than on welfare plans. The House Committee on Education and Labor states that the Welfare and Pension Plans Disclosure Act was "weak in its limited disclosure requirements and wholly lacking in substantive fiduciary standards. Aetna Life Insurance Company, F. For example, in annual reports, only pension plans must file a statement of assets and liabilities and an actuarial statement.
The legislative history of ERISA shows that Congress believed that existing standards of conduct were inadequate, and legislation was needed to make clear who are fiduciaries and what would be their standards of accountability. Muer Corporation, F. Massachusetts Mutual Life Insurance Company v.
Russell , U. The Missouri State Superintendent of Insurance attempted to prohibit the Monsanto Company's self-insured health plan from paying benefits because such payments would constitute. Pilot Life Insurance Company v. Dedeaux , U. Golden Rule Insurance Co. Arkansas Blue Cross and Blue Shield v. Mary's Hospital, F.
American Telephone and Telegraph v.
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Mercy , F. Aetna Life Insurance Company v. California Board of Equalization , F. Chesapeake and Potomac Telephone , F. United Food and Commercial Workers v. Pacyga , F. Talguin Building Products Company , F. Eighty-five percent of large employers self-fund their health benefits. Health Care Financing Review, Sp. Recent news reports of contemporary surveys of employers state that self-insured health benefits are being used by 41 percent of employers with employees or fewer. Business Insurance, January 27, , p.
Metropolitan Life Insurance Company v. Massachusetts , U. For example, the Tax Reform Act of , P. The Wall Street Journal, p. B2, May 15, Turn recording back on. National Center for Biotechnology Information , U. The Intersection of State and Federal Law. Formation and Financial Matters Through laws on incorporation and laws on the licensing of insurance companies, states regulate the organizational structure and financial affairs of insurance companies.
Insurance Contract and Rate Regulation States regulate health insurance contracts and seek to balance the interests of consumers in obtaining fair and reasonable coverage against the interests of insurers in avoiding unreasonable or undisclosed risks. Unfair Insurance Practices Insurance regulators rely upon unfair insurance practice laws in many states to regulate discriminatory or deceptive behavior by insurers.
Coverage and Mandates States seek also to regulate the type of health insurance coverage that is available to their residents. Managed Care States also regulate insurance like, or risk -assuming, entities in what has come to be called managed care. These laws, which are briefly discussed at the end of this paper, include the following: Federal tax law, which generally makes the economic value of conferring health benefits a largely nontaxable event and provides separate rules for certain specific types of plans, including medical spending accounts and voluntary employee benefit associations VEBAs.
Antidiscrimination laws, which broadly prohibit discrimination based on race, gender, age, and disability in employee benefit plans. Federal regulation of HMOs, which includes rules applicable to employers and requires employers to offer health benefits through federally qualified HMOs. Medicare 's secondary payer rules, which define when an employer's health benefit plan must pay before Medicare will pay for an otherwise eligible Medicare beneficiary covered by employment-based health benefits.
Under ERISA, "employee welfare benefit plans" include Any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or both, to the extent that such plan, fund or program was established or is maintained for purposes of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, A medical, surgical or hospital care or benefits. ERISA requires that the following information be included in the summary plan description: Consistent with this historical perspective, Senator Harrison Williams stated at the time that [i]t should be stressed that with the narrow exceptions specified in the bill, the substantive and enforcement provisions of [the bill] The federal courts have found that the following types of state laws "related to" employee benefit plans: Practical Consequences of Opting for a Self-Insured Health Plan By choosing to self-fund an employee health benefits plan, an employer remains subject to federal regulation but is no longer subject indirectly to state insurance regulation.
Consider the following comparisons: ERISA limits beneficiary claims to the value of lost benefits; state judicial proceedings routinely target insurers as deep-pocket defendants who must pay punitive damages for bad faith denial of claims. ERISA permits cost containment incentives in terms of precertification and copayments; states frequently prohibit such practices with anti-managed-care laws. ERISA permits rapid design of innovative health plans such as employer-sponsored point-of-service HMOs; states have been less flexible in allowing state-regulated HMOs to diversify into similar lines of business.
ERISA allows employers to determine the subrogation and coordination of benefit priorities for their health benefit plans; states frequently favor other types of accident and health insurance through antisubrogation laws. ERISA does not tax the employer's contribution to a self-funded health benefit plan; states tax health insurance premiums. A dependent child ceasing to be dependent under the terms of the plan.
Much simplified, these laws can be summarized as follows: Taxation View in own window Topic: Taxation on the value of employee health benefits. Internal Revenue Code, Sec. Encourages higher contributions for health benefits and insulates employees from the cost of health coverage. Policy concerns focus on the growth of tax expenditures and on equity on health benefits. Medicare Secondary Payor View in own window Topic: Coordination of large employer health benefits with Medicare.
Requires employers with 20 or more employees to provide primary coverage for certain otherwise eligible Medicare beneficiaries e. Individuals and government may enforce this by lawsuit and obtain double damages. Subordinates Medicare payment to employers' plans and reduces outlays by Medicare. Subject of current nationwide recoupment effort; topic of past investigations. Discrimination in employment practices.
ERISA and Health Insurance Subrogation in All 50 States - Sixth Edition
Employment practices include health benefits. Protected classes for race, color, sex, religion, and national origin. Bans discrimination in health benefits based on a suspect classification. Few cases have been reported based on race discrimination; more cases arise under the Pregnancy Discrimination Act of , an amendment. Protects workers who are at least 40 years of age. Age-based distinctions are allowed pursuant to a "bona fide" benefits plan, provided that the distinctions are not a "subterfuge. Provides equal access to health benefits for older workers. Protects physically or mentally impaired persons working for employers with 25 or more employees after July 26, Protects general access to health benefits in the employment of impaired individuals.
Does not affect most insurance underwriting practices. Health Benefits Letter , No. Delta Air Lines, Inc.
Erisa and Health Insurance Subrogation - In All 50 States (Hardcover, 3rd)
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