In my last article, (Part Three – Bona Fide Associations…still waiting), I observed that the state regulatory filings for health plans issued to association trusts to be treated as large group plans were not available on the Washington Office of the Insurance Commissioner (OIC) website. Nothing has changed since July. Most industry insiders predict that the OIC will allow non-compliant plans to continue providing coverage at least until the end of the year.
Of course, employers and beneficiaries can always create legal surprises when they realize that they either didn’t get required benefits or paid too much for coverage. If you think I’m joking take a read of this case where employers sued Blue Cross of Montana for overcharging for a health plan sold through an association with experience rated premiums – Fossen v. Blue Cross & Blue Shield of Mont., Inc., 660 F.3d 1102, 51 EBC 2697 (9th Cir. 2011) (No. 11-1155 U.S. Supreme Court cert. denied 1/22/2013 ).
Here’s the DOL brief to the Supreme Court arguing that ERISA does not preempt state law claims alleging unfair practices in health plan rates. Here is the NAIC amicus brief to the 9th Circuit in which the Commissioners argued, “Plaintiffs’ claims for return of excess premium charges are governed by [state law], which prohibits premium discrimination between individuals based on health status. The Montana statute is not preempted by ERISA’s civil enforcement provisions.”
Associations continue to sell and the OIC continues to review; but, the OIC has taken no official action identifying association plans that qualify for treatment as a single, large group plan. Moreover, the OIC has yet to decide what it will do about plans currently sold to small employers through these filed but unapproved association plans. The OIC has gone back and forth with insurers; but, the agency appears stuck between old decisions and new rules.
For a glimpse of this “back and forth,” here is the OIC’s direction to Premera as to how to resolve “grandfather plan” issues with a new bona fide plan filing for the Washington Biotechnology and Biomedical Association (I intentionally omitted the names). Note the dates of correspondence:
Objection Letter Date 06/11/2014
Submitted Date 06/11/2014
Respond By Date 07/11/2014
Thank you for your filing submission. To allow our continued review of this filing, please reply on or before the Respond By Date.
Comments: Thank you for your response to Objection 1. We stand by our objection that an association cannot be both a true employer association as defined by ERISA [WAC 284-170-958(1)] and an association offering grandfathered closed pool plans [WAC 284-170-958(3)].
However, to address your concerns related to grandfathered health plans, you may split your filing into two submissions (one for grandfathered and one for non-grandfathered). This means that you must keep this filing as an association under true employer since the corresponding rate filing only identifies the association as a True Employer.
For the grandfathered closed pool plans under WAC 284-170-958(3), you will need to file a separate form filing with a corresponding rate filing. Per WAC 284-170-958(3), a grandfathered closed pool include groups that do not meet the definition of true employer under ERISA and WAC 284-170-958(1). Therefore, you must not name your grandfathered closed pool plans in connection with a True Employer association under ERISA. Please also note that WAC 284-170-958(4) requires issuer to submit specific information for each grandfathered plan in the rate filing.
OIC Comments: You have submitted forms for a True Employer association as defined by ERISA 3 (see WAC 284-170-958), and an association offering grandfathered large group plans (see WAC 284-170-985). The corresponding rate filing identifies the association as a True Employer under ERISA. Please withdraw the applicable forms identified as grandfathered plans under this filing.
Premera Response: We respectfully disagree that a True Employer cannot offer a mixture of non-grandfathered and grandfathered plans. Federal regulations, 45 CFR 147.140(a) states in part that: “The rules of this section apply separately to each benefit package made available under a group health plan or health insurance coverage.” The rules are specific that grandfathered status is determined on a benefit package-by benefit package basis. Therefore, an employer can have some plans that are grandfathered, and others that are not. The Federal Grandfathering rules (75 CFR 34559-60 as an example) include multiple examples which indicate that a group may have multiple benefit plans, including a mixture of grandfathered and non-grandfathered plans. 75 CFR 34560, Example 2 states, in part: “…(j) Facts. A group health plan offers two benefit packages on March 23, 2010, Options F and G. During a subsequent open enrollment period, some of the employees enrolled in Option F on March 23, 2010 switch to Option G. (ii) Conclusion. In this Example 1, the group health coverage provided under Option G remains a grandfathered health plan under the rules of paragraph (b)(1) of this section because employees previously enrolled in Option F are allowed to enroll in Option G as new employees.”
The Federal rules are clear regarding the permissibility of an employer’s having a mixture of nongrandfathered and grandfathered plans. The OIC’s General Filing Instructions are not clear on how to submit group filings when the group offers a mixture of grandfathered and non-grandfathered plans. If your office requires a split of the filing into two separate submissions (one for grandfathered and one for nongrandfathered) we can accommodate that. We would appreciate your guidance on this question.
Naturally, a handful of readers have been annoyingly persistent in asking that I publish the filings. Following my public disclosure request for these filings, marked as unavailable on the OIC website, the OIC provided filings made in 2014 by insurers for treatment as large group, “single employer,” association health plans not subject to health care reform’s small employer coverage standards. I will post for other carriers later. These carriers have not made as many filings as Prermera.
Premera Blue Cross of Washington
Below you will find the Rate/Form filings made by Premera in 2014 on behalf of “bona fide” associations as disclosed by the Washington Office of the Insurance Commissioner on August 29, 2014:
- Aerospace Industry
- Agriculture Industry
- Business Services Trust
- Community Services Organization Industry
- Construction Industry
- End-Line Manufacturers
- Healthcare Industry
- Information Technology
- Media Industry
- Northwest Financial Associations
- Retail Industry
- Tourism Industry
- Transportation Industry
- Washington Auto Dealers
- Washington Biotechnology
- Washington Clean Technology Alliance
- Washington Counties Insurance Fund
- Washington Rural Hospitals
- Wenatchee Valley Traffic Fruit Growers Program
- Wholesale Industry