Employer Health Plan Legal Update – It’s Time to Re-Issue your HIPAA Privacy Notice

April 9, 2007

Privacy Notice Update Due for Small Group Health Plans.    
If you provide a health plan for your employees that is self-funded or receives more than summary and enrollment information from the carrier, you must comply with the HIPAA privacy rules.  These rules apply to medical flex accounts as well, unless the plan has no more than 50 participants AND the employer processes all claims in-house (no outside administrator is used).

If your group health plan is subject to the HIPAA privacy rules, your privacy notice is due to be re-distributed to all covered individuals every three years.  If your plan is categorized as a small plan because annual premiums or claims paid are not more than $5 million, your first distribution of the notice was probably in April, 2004, when the notice was first required, and your notice must be distributed again by April 14, 2007.  (For large plans with more than $5 million in premiums or claims, the first notice was generally due April 14, 2003, and the three year update was due April 14, 2006.)

Two More Notices to Remember: Medicare Part D Notices.  
Employers who sponsor a group health plan that includes prescription drug coverage have obligations to provide certain notices under the new Medicare Part D rules.  Employers are required to give a notice to any persons covered by the health plan who are also covered by Medicare upon enrollment and again each November 14th.  This notice must state whether the prescription drug coverage in the employer’s plan is as good as Medicare Part D - creditable coverage, or not as good - non-creditable coverage.  Since most employers do not know whether individuals covered by the health plan are also covered by Medicare, most employers give notice to all covered individuals.

Employers are also required to give notice to CMS each year of whether the coverage is creditable.  The notice must be given electronically through the CMS website at http://www.cms.hhs.gov/creditablecoverage/.  The notice is required to be given within 60 days after the beginning of each health plan year.  The notice must also be provided again within 30 days after termination of the prescription coverage or of any change in the status of the coverage as creditable coverage.  There is an exemption from the filing requirement for plans that contract with Medicare or a Part D provider to provide Part D Medicare coverage.  No filing is required for plans that provide prescription coverage solely through one of those means.     

For assistance with these compliance obligations, please contact Alison Stemler at 502.568.0244 or astemler@fbtlaw.com or any member of the Employee Benefits and Executive Compensation Practice Group.

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