Retiree Health Coverage: A Tale of Sloppy Communication (article)
A recent Ninth Circuit Court decision (King v. Blue Cross and Blue Shield of Ill., 2017 WL 3928339 (9th Cir. 2017) confirms that a retiree-only health care plan can continue to impose annual and lifetime limits.
As a reminder, the Affordable Care Act prohibits the imposition of annual and lifetime limits on essential health benefits provided under a plan. There is an exception for health plans covering fewer than two active participants, i.e., a retiree-only plan. Critical to this analysis is that there be no active employees participating in the plan, including a retiree who returns to work.
Importantly, however, the appellate court has returned the matter to the trial court for further scrutiny in determining whether the plan properly communicated the lifetime limits imposed under the retiree-only plan to the participants. The plan did have a summary plan description and several summaries of material modification, but the Court ascertained a remaining issue as to whether these documents clearly delineated the limitations imposed under the retiree-only plan. The significant lesson here is that plan communications be clear and accurate, and easily understood by the average reader.
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