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Jim Lentini: Health care re-enrollment rights

Business Commentary

Posted: September 13, 2010 10:44 p.m.
Updated: September 14, 2010 4:55 a.m.

Health insurance providers will be sending federally required notices Sept. 1 to explain re-enrollment rights under two health care reform provisions: removal of lifetime dollar limits on benefits, and adding dependents under the age of 26. What does this mean?

According to Blue Cross, a major provider of benefits in California, members who reached their lifetime dollar limit and had to leave their health plan may re-enroll on the plan’s renewal date. Lifetime dollar limits on benefits no longer apply. 

Members’ whose children were taken off the family health plans because they reached the previous age limit, now can add children younger than age 26 back on to the policy at the time of the plan’s renewal date.

The health care reform law notes that, effective Sept. 23 plans may not discriminate in favor of highly compensated employees. This means that group health plans cannot base eligibility or the level of benefits on an employee’s earnings.

Different levels of benefits can continue to be offered, as long as they comply with Employee Retirement Income Security Act and are not tied to an employee’s wages. The legislation defines a highly compensated employee is someone who is:

- One of the five highest paid officers.

- A shareholder who owns more than 10 percent in value of the employer’s stock.

- Among the highest paid 25 percent of all employees (exceptions apply).

The health care reform law does not prohibit companies from offering plans such as executive medical plans, but it could have tax implications for the employees in those plans.

There are other changes introduced as well. Based on reports we are receiving, it appears that carriers risk losing substantial income due to the limitations, restrictions, and costs to comply with the law. This in turn could increase premium costs to insured’s.

Restrictions and limitations of the health care law may have the impact of companies canceling group benefits offered to employees as the IRS fine will be substantially less than paying for the cost of providing benefits.

As always recommended, discuss your plan and options with your health care provider, agent or broker to evaluate your options that best fit your business and personal situation.

Jim Lentini,CLU,ChFC,IAR is President of Lentini Insurance & Investments, Inc. He can be reached at (661)254-7633. His column reflects his own views and not necessarily those of The Signal.


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