Recently Issued Insurance Guidance Will Impact Ohio Employment-Based Health Plans

Alerts / March 30, 2020

In an effort to alleviate the COVID-19 public health threat, the Ohio Department of Insurance (ODI) issued bulletin 2020-03, titled “Health Insurance Coverage Flexibility for Ohio Employees” (the Bulletin), effective March 20 and for the duration of the COVID-19 public health emergency. The Bulletin applies to all entities transacting the business of insurance in the state of Ohio, or that are subject to the jurisdiction of the superintendent of insurance, that reimburse the cost of healthcare services under a health plan in the state of Ohio. The Bulletin casts a wide net over health insurance issuers, stop-loss carriers, multiple employer welfare arrangements (MEWAs), non-federal governmental health plans and other entities (for purposes of this summary, insurers).

While the Bulletin is aimed at insurers and does not apply directly to most Ohio employment-based health plans, such plans likely will be impacted by the Bulletin, which sets forth the following:

  • Employee Eligibility: Insurers must permit employers to continue to offer coverage to employees who otherwise would lose eligibility for coverage when they experience a reduction in hours or do not meet an “actively at work” requirement. This means that Ohio employers facing the difficult decision of reducing employees’ hours or instituting furloughs likely will be able to offer their reduced-hour and furloughed employees continued health coverage.
  • Insurance Rates: Insurers are not permitted to raise group plan rates in response to a decrease in covered lives as a result of COVID-19. This means that Ohio employers will have certainty as to their premium rates for the duration of the COVID-19 public health emergency.
  • Premium Payment Grace Period: Insurers must permit policyholders (including employer plan sponsors) a 60-day premium grace period from each premium due date, during which no interest will accrue. This will permit employers, particularly those experiencing cash flow hardships, to defer premium payments for 60 days without penalty. Employers take note – premium amounts collected but not immediately remitted to the carrier should not be used for any purpose other than plan purposes, and such amounts should be remitted to the carrier as soon as possible to avoid violation of the plan asset rules under the Employee Retirement Income Security Act of 1974 (ERISA).
  • Special Enrollment Rights: Employees terminated from employment will continue to have a special enrollment right to obtain (potentially subsidized) coverage on the federal health insurance exchange as well as off-exchange coverage. In addition, the Bulletin requires insurers to waive special enrollment waiting periods for off-exchange coverage and to make such coverage effective as of the day following an employee’s termination from employment. This means that terminated employees may be able to obtain new coverage with little or no waiting period.
  • COBRA Continuation Coverage: As long as one employee remains actively employed and enrolled in a group health plan, the normal COBRA continuation coverage (both federal and state COBRA) notice and election procedures will continue to apply. This means that COBRA rights will remain intact for employees who are terminated during this public health emergency as long as one employee remains employed and enrolled in coverage.

On March 27, the ODI also published some frequently asked questions (FAQs) related to the Bulletin. These FAQs provide some additional information and can be accessed here.

The Bulletin brings welcome relief to employers and employees struggling during the COVID-19 public health emergency. Any employer, MEWA or health plan looking to take advantage of the relief outlined in the Bulletin should consult with counsel to ensure that such actions do not run contrary to other applicable legal obligations, such as those under ERISA and the Ohio Revised Code. The BakerHostetler COVID-19 Task Force is actively advising clients on the Bulletin and many other COVID-19 matters, and we are available to assist you and your organization.

Authorship Credit: Jennifer A. Mills, Susan Whittaker Hughes and Seth J. Hanft

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