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Self-Insured Plans Must Incorporate New Coverage Requirements

Recent legislative developments will have a significant impact on self-insured governmental health plans, including self-insured plans sponsored by school districts. Specifically, 2009 Wisconsin Act 14 and 2009 Wisconsin Act 28 (better known as the Budget Bill) will implement new coverage requirements and expand the class of individuals eligible as dependents under the plan. Governmental sponsors of self-insured health plans will need to take prompt action to review plan documents and make any necessary amendments.

Act 14 contains new coverage requirements related to hearing aids and cochlear implants. Self-insured governmental health plans are required to cover the cost of hearing aids and cochlear implants prescribed by a physician or licensed audiologist for a child covered by the plan who is under the age of 18 and who has been certified as deaf or hearing impaired. This coverage of hearing aid costs is limited to the cost of one hearing aid per child every three years. Coverage also includes the cost of treatment related to hearing aids and cochlear implants, including procedures for implantation of cochlear devices for a covered child under 18. Coverage under this provision is subject to the limitations, cost-sharing provisions, and exclusions (except preexisting condition exclusions) that apply generally under the plan.

Act 28 contains several new coverage requirements related to benefits that must be offered under a self-insured governmental health plan. One new requirement involves coverage for autism spectrum disorders, including autism disorder, Asperger’s syndrome, and other pervasive developmental disorders. The new law divides required coverage into two levels of benefits: intensive-level services and nonintensive-level services. Intensive-level services include therapy designed to help an individual with autism spectrum disorder and the behavioral deficits associated with that disorder. Nonintensive-level services include therapy occurring after completion of intensive-level services that is designed to sustain the gains made during intensive-level services, or therapy for an individual who will not receive intensive-level services that will improve the individual’s condition.

The new law also specifies a minimum coverage requirement of at least $50,000 for intensive-level services per insured per year, including a minimum of 30 to 35 hours of treatment per week for a minimum of four years. Nonintensive-level services are subject to a minimum of at least $25,000 per year. These specified limits will be adjusted annually. The Office of the Commissioner of Insurance has also issued emergency regulations providing more detailed definitions of a variety of terms, including specific guidance regarding intensive and nonintensive-level services. Coverage under these provisions is subject to deductibles, coinsurance, or copayments that generally apply to other conditions covered under the plan, but is not subject to limitations or exclusions.

Another coverage requirement included in Act 28 is mandatory coverage of contraceptives for self-insured governmental health plans. This coverage includes coverage for consultations, examinations, procedures, and medical services necessary to provide contraceptives, if the plan covers these services for any other prescription drug benefits. Coverage under this provision is subject to the exclusions, limitations, and cost-sharing provisions that apply generally to coverage of outpatient health care, preventative treatment, or prescription drugs under the plan.

Act 28 also significantly modifies the scope of an eligible dependent under self-insured governmental plans. Specifically, such plans must now cover an unmarried child who is over 17 but less than 27 years of age and who is not eligible for coverage under a group health plan offered by an employer of the child and for which the amount of the child’s premium contribution is no greater than the premium amount for his or her coverage as a dependent under his or her parent’s plan. The provision also ensures coverage for a child described above who is a full-time student, regardless of age, who was under 27 and was attending an institution of higher education on a full-time basis when he or she was called to active duty in the National Guard or in a reserve component of the U.S. Armed Forces.

On October 27, 2009, the Office of the Commissioner of Insurance (“OCI”) enacted an emergency rule with regard to the new dependent coverage requirements in an effort to clarify conflicting interpretations of the law. However, this rule creates some further confusion with regard to the original language in Act 28, especially relating to the effective date for collectively bargained plans and the calculation of premium amounts for dependent eligibility. These areas of confusion may be clarified in the coming weeks as OCI prepares the permanent rule.

These new legislative provisions become effective on January 1, 2010, with the exception of the autism spectrum disorder coverage, which is effective as of November 1, 2009. This means that self-insured governmental plans must comply with these provisions as of the first day that the plan is established, extended, modified, or renewed on or after January 1, 2010 (or November 1, 2009 for autism spectrum disorder coverage). If a plan covers employees affected by a collective bargaining agreement, and the agreement contains contractual language specifically inconsistent with the new provisions, the plan must comply with the new provisions on the date that the plan is established, extended, modified, or renewed on or after the earlier of the day on which the collective bargaining agreement expires or the day on which the collective bargaining agreement is extended, modified, or renewed.

Failure to incorporate these new coverage requirements will result in noncompliance with Wisconsin’s Insurance Code. Please contact a member of the Davis & Kuelthau, s.c. Employee Benefits Practice Group with any questions regarding these or other health insurance coverage requirements.

If you have questions regarding the information in this article please contact your Davis & Kuelthau, s.c., attorney