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Solving Disability Discrimination
of Health Plan Benefit Plans

The Department of Labor has instituted disability nondiscrimination regulations which may apply to those with "health factors."  The regulations are complex; for example, they would prohibit a plan from refusing to enroll participants with a disabilty into the general medical benefits plan, but the regulations would not prohibit the exclusion of benefits for the treatment of the disability itself, so long as the exclusion applied to all members of the plan equally. Similarly, limits on one therapy which apply to all illnesses would be acceptable.  However, a plan  cannot modify its rules in response to a particular person's claims. This regulation compliments the ADA which prohibits discrimitation against Americans with Disabilities. 

The regulation is based on a section of HIPAA, 29 U.S.C. sec. 1182,  which states that a plan may not establish rules for eligibility (including continued eligibility) of any individual to enroll under the terms of the plan based  a health status of the individual or a dependent.  The regulation expands the statute by using an expansive view of eligibility.  Like the statute written by Congress, the regulation does not mandate any coverage.  State legislatures have mandated certain coverages, such as minimum treatments for serious mental illnesses, but these State-specific mandates do not apply to large employer plans which are self funded.

This law applies to health plans which are supplied by private employers.  Governmental employers may be covered, but some, such as the City of Chicago, have opted out of the rules. 

The basic rule is as follows:

(b) Prohibited discrimination in rules for eligibility--(1) In general--

(i) A group health plan, ..., may not establish any rule for eligibility ...of any individual to enroll for benefits under the terms of the plan or group health insurance coverage that discriminates based on any health factor* that relates to that individual or a dependent of that individual.
(ii) For purposes of this section, rules for eligibility include ...
(A) Enrollment;
(B) The effective date of coverage;
(C) Waiting (or affiliation) periods;
(D) Late and special enrollment;
(E) Eligibility for benefit packages (including rules for individuals to change their selection among benefit packages);
(F) Benefits (including rules relating to covered benefits, benefit restrictions, and cost-sharing mechanisms such as coinsurance, copayments, and deductibles);
(G) Continued eligibility; and
(H) Terminating coverage (including disenrollment) of any individual under the plan.

This rule is subject to the provisions of 
paragraph (b)(2)  (explaining how this rule applies to benefits) [ie, no mandate for any coverage]
paragraph (b)(3) (allowing plans to impose certain preexisting condition exclusions),
paragraph (d) (containing rules for establishing groups of similarly situated individuals),
paragraph (e) (relating to nonconfinement, actively-at-work, and other service requirements),
paragraph (f) (relating to bona fide wellness programs), and
paragraph (g) (permitting favorable treatment of individuals with adverse health factors).

*Definition of Health Factor
(a) Health factors. (1) The term health factor means, in relation to an individual, any of the following health status-related factors:
(i) Health status;
(ii) Medical condition
Medical condition or condition means any condition,whether physical or mental, including, but not limited to, any condition resulting from illness, injury (whether or not the injury is accidental), pregnancy, or congenital malformation.
(iii) Claims experience;
(iv) Receipt of health care;
(v) Medical history;
(vi) Genetic information;
(vii) Evidence of insurability
Evidence of insurability includes: conditions arising out of acts of domestic violence; and participation in activities such as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding, skiing, and other similar activities.
or (viii) Disability.

(c) Prohibited discrimination in premiums or contributions--
(1) In general--(i) A group health plan, ... may not require an individual, as a condition of enrollment or continued enrollment under the plan or group health insurance coverage, to pay a premium or contribution that is greater than the premium or contribution for a similarly situated individual  enrolled in the plan or group health insurance coverag...based on any health factor that relates to the individual or a dependent of the individual.

A plan is not required to provide coverage which would benefit a person with a disability.
The regulation states:
"(b)(2) Application to benefits--(i) General rule--
(A) Under this section, a group health plan ... is not required to provide coverage for any particular benefit to any group of similarly situated individuals.
(B) However, benefits provided under a plan ... must be uniformly available to all similarly situated individuals... Likewise, any restriction on a benefit or benefits must apply uniformly to all similarly situated individuals and must not be directed at individual participants or beneficiaries based on any health factor of the participants or beneficiaries ...

Thus, for example, a plan or issuer may
  • limit or exclude benefits in relation to a specific disease or condition,
  • limit or exclude benefits for certain types of treatments or drugs, or
  • limit or exclude benefits based on a determination of whether the benefits are experimental or not medically necessary,
 but only if the benefit limitation or exclusion
  • applies uniformly to all similarly situated individuals and
  • is not directed at individual participants or beneficiaries based on any health factor of the participants or beneficiaries.
 In addition, a plan or issuer may impose annual, lifetime, or other limits on benefits and may require the satisfaction of a deductible, copayment, coinsurance, or other cost-sharing requirement in order to obtain a benefit if the limit or cost-sharing requirement applies uniformly to all similarly situated individuals and is not directed at individual participants or beneficiaries based on any health factor of the participants or beneficiaries. ...
 (Whether any plan provision or practice with respect to benefits complies with this paragraph (b)(2)(i) does not affect whether the provision or practice is permitted under any other provision of the Act, the Americans with Disabilities Act, or any other law, whether State or federal.)
(C) For purposes of this paragraph (b)(2)(i), a plan amendment applicable to all individuals in one or more groups of similarly situated individuals under the plan and made effective no earlier than the first day of the first plan year after the amendment is adopted is not considered to be directed at any individual participants or beneficiaries."

For the more of the actual text of the regulation click 29 CFR sec. 2590.702

Relation to the Mental Health Parity Act of 2008.

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was enacted in late 2008.  Like the nondiscrimination rule discussed above, it does not require plans to provide any particular coverage, but if the plan does, then the benefits levels must be on par with general medical benefits.

Important points:
  • In general the law does not become effective to most plans until 2010.
  • The old Parity law restricted some caps on coverage, but the new law lifts caps, such as the number of visits per year payable and the amount of copayment.
  • The new law does not  require employers to cover mental illness or any other type of illness.  Companies can choose which disorders to cover or not cover.  If the plan does cover mental illness, and if the treatment is covered, then the copays and visit numbers must be the same as for general medical claims.
  • Out-of-network mental coverage will apply in the same way the Plan covers medical out-of-network claims.
  • Plans must supply the criteria for medical necessity determinations.
  • The Act does not give a solid definition of mental health benefits.
  • The Parity Act applies only to employers with more than 50 employees.
  • Part (b) of the Act also applies the new rule to nonFederal governmental employees (under the PHSA).
  • Part (c) of the Act requires compliance for the plan to retain taxfree treatment under the Internal Revenue Code
  • Part (d) of the Act requires Secretaries of Labor, Health and Human Services, and the Treasury to write regulations.
  • State's mental health laws stay in effect if they are broader, unless preempted by a self-funded employer plan.
  • The law does not apply to nonemployer plans, which are governed by State insurance rules.
July 2010: The Federal government issues temporary "Safe Harbor" regulations for the terms of a plan. 
Until it issues final regulations, the Department of Labor has establish an enforcement safe harbor:  It will not take enforcement action against a plan that divides its outpatient benefits into two sub-classifications for the purpose of applying the financial requirement and treatment limitation rules under the Parity Act (1) office visits, and (2) all other outpatient items and services. After the sub-classifications are established, the plan may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification (i.e., office visits or non-office visits) that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification.  Other than as permitted under this enforcement policy, sub-classifications are not permitted when applying the financial requirement and treatment limitation rules under Parity Act. Separate sub-classifications for generalists and specialists are not permitted.

Summary: This Act is about parity, not coverage.  Its benefits extend if there is medical coverage, and employers and insurers can exclude some diagnoses.  They can also impose managed care and precerticification rules to to the same extendt as the medical coverage.

Relation to Americans with Disabilities Act

Like HIPAA, the ADA requires that individuals with disabilities be given equal access to employer-provided group health insurance. The EEOC believes the ADA prohibits the use of coverage limitations or exclusions that are "disability-based distinctions" unless it can be shown that certain criteria are met. Specifically, it must be shown that the insurance plan is within the protective ambit of 501(c) of the statute in that it is a "bona fide" plan, that the disability-based distinction is justified by the risks or costs associated with the particular disability limited or excluded, and that all conditions with comparable risks and costs are treated in the same way. See 42 U.S.C. 12201(c); 29 C.F.R. 1630.16(f). A coverage distinction is disability-based if it singles out a particular disability, a discrete group of disabilities (e.g., kidney diseases, cancers), or disability in general.

copyright 2006, 2007, 2008,  Frank E. Stepnowski. No claim to original U.S. government works.

Remember that every case is different, and the rules are technical.  Proving a case is different from making an allegation.  .  Also, the law has technical requirements which may exclude those who are not qualified employeees or employers.

Please do not use this article as definitive advice, as your situation may vary, and the laws and statutes may change.
Nothing on this page creates an attorney client relationshiop

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