Updated procedures for HIPAA Exemption by Self-funded, non-federal government plans (article)
Under the Health Insurance Portability and Accountability Act (HIPAA), a self-funded or partially self-funded health plan sponsored by a state and local government entity, such as a city, township, or school district, could have elected to exempt itself from certain HIPAA provisions, such as the portability, preexisting condition exclusion limitation, and related provisions of the law. This exemption was only available as it relates to the self-funded portion of the plan.
However, the Affordable Care Act curtailed this ability. For plan years beginning on or after September 23, 2010, a self-funded, non-federal governmental plan could only opt out of the following four provisions:
- Maternity length of stay, pursuant to the Newborns’ and Mothers’ Health Protection Act;
- Mental health parity laws, pursuant to the Mental Health Parity Act and the Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act;
- Mastectomy-related coverage, pursuant to the Women’s Health and Cancer Rights Act; and
- Health coverage continuation rights for students on medical leave, pursuant to Michelle’s Law.
The CMS Office of Consumer Information and Insurance Oversight (CCIIO) issued procedures and requirements for requesting an exemption to the four mandated laws listed above in 2010; and have recently updated their procedures and requirements for entities electing the HIPAA exemption.
Entities seeking an opt-out are required to submit an annual exemption request to CCIIO. The election must be furnished in electronic format (hard copy election requests will not be accepted after December 31, 2014). In addition, the election must:
- Be made in conformance with all the plan sponsor's rules;
- Specify the beginning and end dates of the period to which the election is to apply;
- Specify the name of the plan, the name and address of the plan administrator, and the name and telephone number of an individual CMS may contact regarding the election;
- State that the plan does not include health insurance coverage, or identify which portion of the plan is not funded through health insurance coverage;
- Specify each requirement from which the plan sponsor elects to exempt the plan;
- Certify that the individual signing the election document, including a third party administrator, is legally authorized to do so by the plan sponsor;
- For initial elections, include as an attachment, a copy of the notice to plan enrollees; and
- For renewal elections, in lieu of attaching a copy of the notice, certify that the notice has been, or will be, provided to enrollees.
The guidance, together with the user manual, provides the methodology for electronic submission of the opt-out election.
Plans receiving the exemption are also required to provide notification of the exemption to its plan participants on an annual basis and at the time of enrolling in the plan. CMS provides model language that can be used for notifying affected individuals.
The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.