On January 8, 2001, DOL, IRS, and HHS (“the Agencies”) jointly issued interim final regulations related to HIPAA’s anti-discrimination provisions. The new rules apply to group health plans and health insurance issuers and update interim regulations issued on April 8, 1997.
The new regulations have a bifurcated effective date, with items that were discussed in the 1997 interim regulations effective on May 8, 2001, and new guidance effective July 1, 2001. The rules contain a chart breaking down when each provision becomes effective. Comments on the interim regulations are invited and must be received by the Agencies by April 9, 2001. The Agencies also issued Q&As explaining the new rules. In addition to the nondiscrimination rules, the IRS, PWBA, and HCFA issued proposed regulations covering “bona fide wellness programs.” Comments related to these proposed rules also are due April 9, 2001. (Note that the regulations related to the 1997 interim rules originally had an effective date of March 9, 2001. On January 20, 2001, President Bush issued a 60-day stay for all regulations that had been published in the Federal Register but that had not yet become effective. Thus, the effective date for the nondiscrimination rules was moved back to May 8, 2001. See 66 Fed. Reg. 14076 (Mar. 9, 2001).)
A. Health Status & Eligibility Rules
HIPAA provides that a group health plan may not establish rules for eligibility based on a specified list of health status-related factors, including (1) health status, (2) medical condition, (3) claims experience, (4) receipt of health care, (5) medical history, (6) genetic information, (7) evidence of insurability, or (8) disability. The interim final regulations are meant to provide further guidance on the restrictions found in HIPAA.
The new rules prohibit plans from imposing eligibility requirements that discriminate based on any of the eight enumerated health factors. Under the new rules, “eligibility” includes rules related to enrollment, the effective date of coverage, waiting periods, late or special enrollment, benefits, and termination.
B. Source of Injury Restrictions
One of the health status factors is evidence of insurability. HIPAA’s legislative history states that this factor was meant to ensure that individuals are not excluded from health care coverage due to their participation in risky activities, such as skiing or motorcycling. Therefore, a plan may not exclude an individual who engages in a risky activity. Nevertheless, benefits for a particular injury may be excluded based on the source of the injury. The Q&As issued by the Agencies give an example that a plan may exclude coverage for injuries sustained in a high risk activities like bungee jumping, but the plan could not exclude an individuals from enrollment based on his participation in bungee jumping. In any event, a plan may not exclude coverage if the injury is based on a medical condition, such as a self-inflicted injury resulting from depression, or if the injury results from domestic violence.
C. Similarly Situated Individuals
Under the new rules, a plan may discriminate between or among groups of similarly situated individuals, as long as their distinction is not based on a health factor. For example, a plan may properly distinguish based on an employment-based classification, such as full or part-time status, geographic region, or date of hire, and impose different waiting periods for different groups of similarly situated individuals. However, a plan could not impose different waiting periods within a group of similarly situated individuals.
In the 1997 interim regulations, the Agencies had invited comments on whether this prohibition should extend to requiring parity in health benefits. The new rules clarify that they do not require a plan to provide any particular benefit to any group of similarly situated individuals. However, benefits provided under a plan must be uniformly available to all similarly situated individuals. The Agencies stated that plans would continue to have flexibility in designing benefits.
D. Pre-Existing Condition Exclusions
HIPAA permits restrictions based on pre-existing conditions, but limits the conditions that may be considered pre-existing and the length of the exclusion period. The new rules clarify that a pre-existing condition exclusion that satisfies the requirements of HIPAA is permitted if it applies uniformly to similarly situated individuals and is not directed at individual participants based on any health factor.
E. Discrimination in Premiums or Contributions
The new rules prohibit plans from requiring an individual to pay a premium or contribution that is greater than the premium or contribution for similarly situated individuals enrolled in the plan, based on any health factor. The regulations also prohibit certain billing practices, such as list billing, that would indirectly result in an individual being charged more than a similarly situated individual based on a health factor. An insurer may not quote or charge an employer different premium rates on an individual-by-individual basis in a group of similarly situated individuals based on health status. If an issuer wants to increase rates to cover additional exposure resulting from an individual’s health factor, it must blend the increase into an overall group rate.
F. Actively-At Work Requirements
The new rules prohibit plans from imposing “actively-at-work clauses” that condition an individual’s initial coverage eligibility upon the individual being actively at work. Such clauses are permissible if employees who are absent due to health conditions are treated, for purposes of health coverage, as if they were actively at work. However, plans may require an individual to begin work before coverage may become effective.
Similarly, the new rules prohibit “nonconfinement clauses” that restrict coverage, eligibility or benefits based upon hospital confinement or an inability to engage in normal life activities.” For example, a plan or health insurance issuer may not deny eligibility because the individual is confined to a hospital.
G. Bona Fide Wellness Program
The regulations include proposed rules for bona fide wellness programs. The proposed rules provide an exception from the prohibition on discrimination based on a health factor where the plan offers some type of reward for participation in a bona fide wellness program. The program must be available to all similarly situated individuals and be designed to promote good health or prevent disease. In addition, the total reward must be limited
