IMPACT
Volume III Issue 2
November/December 1997
Copyright 1997, Neighborhood Legal Services, Inc.
Newsletter of the Assistive
Technology Advocay Project
A Project of Neighborhood Legal Services, Inc · 295 Main Street,
Room 495 · Buffalo NY 14203
(716) 847-0650 · (716) 847-0227 FAX · (716) 847-1322TDD · NLS01@sprynet.com ·
http://www.nls.org
Supported by NYS Office of Advocate for Persons with Disabilities,TRAID
Project, a Project
Funded by The National Institute on Disability and Rehabilitation Research, U.S.
Department of Education.
Opinions expressed herein are not necessarily those of either TRAID or NIDRR
In this issue
PRIVATE INSURANCE CONTRACTS,
PART I
Introduction
Will Insurance Pay for AT? A 3-Step analysis
Obtain the Actual Insurance Contract
Who is Covered? Rights & Limitations
Waiting periods, preexisting conditions & coverage of adult
children
Kennedy-Kassenbaum law of 1997
Right to continued coverage after lay off or job termination
Conclusion
special features
SSA issues new policies governing pass
Administrative Hearings
Private Insurance Contracts: Part I
In previous articles we detailed the availability of assistive technology (AT) funding through agencies of federal or state government. This two-part article addresses the availability of funds for AT from private insurance companies. The focus will be health insurance through traditional individual/family policies and through Health Maintenance Organizations (HMO) policies. We will not discuss an additional type of private insurance known as the Medicare Supplement, a policy designed to fill the gap in benefits for those individuals receiving Medicare.
Although this two-part article is comprehensive, we will not discuss every facet of insurance law. We will present a practical guide to understanding insurance policies and how they can be used to fund AT. We will also explain, in some detail, the most important state and federal laws governing health insurance. Keep in mind, however, that health insurance is a hot topic among state and federal law makers and new legislation could quickly make this article out of date.
The present article will focus on one primary issue &emdash; who is covered by the policy? Our discussion will then branch into two sub-topics: the use of preexisting conditions clauses to limit coverage and the right to continued coverage after a lay off or job termination.
Part II will appear in our
January-February 1998 issue. It will discuss two additional issues: 1) whether a
particular item of AT is covered by the insurance contract and 2) if so, whether the item
will be considered medically necessary for the individual. The article will then discuss
the options available to appeal adverse decisions, both administratively and through the
courts. We will also present a very limited discussion of the Americans with Disabilities
Act and its impact on private health insurance plans.
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WILL THE
INSURANCE POLICY PAY FOR AT?
A THREE-STEP ANALYSIS
This article uses the terms insurance "contract" and insurance "policy" interchangeably. To determine whether an individual is entitled to an AT device, such as a power wheelchair, one must address three issues:
If the answer to each questions is yes, the insurance policy will pay for the AT device, subject to any co-payments or deductibles.
The remainder of this article
will focus on the various contractual, legal and practical issues raised by the first of
these three questions. Before we go into that analysis, however, we need to distinguish
between the insurance contract and other documents which summarize the contents of the
contract.
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MAKE SURE YOU
OBTAIN THE
ACTUAL INSURANCE CONTRACT
It is important to distinguish between the actual insurance policy or contract and any other document which is a description of the contract provisions. In our experience, many individuals have in their possession a document which they refer to as their contract which is actually something else. Often the document is called by a name such as "Employee's Health Benefit Handbook." Most likely this document is not the insurance contract, but is a summary written in plain English for the employee's or beneficiary's convenience.
The actual health insurance contract is likely to be a much larger document and is likely to be written in more technical language. Typically, this document will contain language on the title page describing it as the health insurance contract or policy. It is the contract and not some other summary of its provisions that will be the basis for determining whether the individual and his or her family members receive specific benefits through the health insurance policy.
It is also important to obtain
copies of any amendments, riders and supplemental policies for which the individual or
employer is paying. As noted in Part II, the provisions covering AT will typically appear
in a major medical rider.
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WHO IS COVERED BY THE POLICY? RIGHTS TO CONTINUED COVERAGE, LIMITATIONS ON COVERAGE
In the typical case, this
analysis is easy. An individual policy covers one person, a family policy also covers the
spouse and other dependents, typically the children. In many cases, however, we must look
further to determine whether the particular individual, the medical condition or the
benefit sought is covered by the contract. Most of these issues will be resolved by
reference to the language of the contract. Other issues will be resolved by reference to
various state and federal laws, which we discuss below.
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Waiting
Periods, Preexisting Conditions,
Coverage of Adult Children
Many policies contain provisions which, as a practical matter, result in certain individuals being uninsured for all purposes or with respect to certain conditions or items covered by the policy. Unless otherwise limited by law, these provisions are legal and will serve to limit who and what is covered. You must read the policy carefully to determine whether these limitations exist.
A typical provision, traditionally found in many policies, creates a 10 or 12 month waiting period for coverage of conditions which existed prior to the first month of coverage. These provisions would appear to target pregnancy or those situations in which a person is likely to switch jobs or purchase insurance for the purpose of covering the preexisting condition. Although some of these provisions are still legal, their use has been greatly limited by the Kennedy-Kassenbaum law of 1997 which is discussed below.
At what age does the coverage
of a child end? This will vary from policy to policy. Typical provisions for family
coverage provide that a child is covered until age 18 or 19, or through age 22 or even age
25 if the child is a full-time college student. Often, the coverage is extended
indefinitely if the adult child has a disability. In our experience, disability is defined
in terms similar to the definition of disability in the Social Security or Supplemental
Security Income (SSI) programs. Because few people thoroughly review their health
insurance policies, many are unaware that potential insurance policy coverage for AT may
exist for an adult child with a disability who is well into his or her 20s or 30s.
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The Kennedy-Kassenbaum Law of 1997
The Group Health Plan Portability, Access, and Renewability Act of 19961 is also known as the Kennedy-Kassebaum law. It applies to plan years beginning after June 30, 1997. This new law eliminates, in most cases, the use of preexisting conditions clauses to bar insurance coverage. Under Kennedy-Kassenbaum, two issues must be addressed to determine whether an individual or dependent faces a period of non-coverage due to a preexisting condition.
Is the Condition Preexisting?
The first issue is whether the person has a preexisting condition. Under this law, a "preexisting condition" is limited to those situations in which the condition was first evident during the six months immediately preceding entry into the plan.2 Although we may think of certain longstanding conditions as preexisting, one which arose three years before entry into the plan, for example, is not preexisting under Kennedy-Kassenbaum.
Even if the condition for which treatment is sought began during the six months preceding entry into the plan, the law protects three major classes of beneficiaries:3
Pregnant women: The law prohibits the exclusion of pregnancy as a preexisting condition
Newborns: It prohibits the exclusion of newborns, who would otherwise be covered by the policy, so long as they are born within 30 days of the date coverage begins.
Adopted children: The law also prohibits the exclusion of an adopted child who is covered under the group health plan within 30 days of the adoption or placement for adoption.
If Condition is Preexisting, What is the Maximum Period of Exclusion?
If it is determined that an insured person has a preexisting condition, the insurer cannot deny coverage of that condition for more than 12 months.4 The 12-month exclusion period is reduced by periods of prior, continuous coverage,5 whether through private insurance, Medicaid, Medicare, state risk pools, or other programs or plans. This allows individuals to change jobs without triggering a new exclusion of treatment. This rule applies not only to standard group health insurance and HMOs, but also to self-insured plans provided by the employer.
Examples
For each example below, assume that the insurance plan year began after June 30, 1997 so that the Kennedy-Kassenbaum law applies.
Case # 1: John starts a new job on December 1, 1997. He is covered by a group health insurance plan. John has multiple sclerosis which was first diagnosed in 1992. John wants to use his insurance policy to purchase a roll-in shower. At his last job, which John held from 1990 to 1997, he had no health insurance coverage.
John does not have a preexisting condition under the Kennedy-Kassenbaum law because his condition did not begin during the six months immediately preceding his entry into the plan. Therefore, he is fully covered by the insurance policy with no preexisting exclusion. John will be entitled to coverage for the roll-in shower if such items are covered by the contract and if the item is determined to be medically necessary for him.
Case # 2: Mary graduates from college in May 1997 and takes her first job starting on December 1, 1997. In the new job, she is covered by a group health insurance plan. Mary injured her knee in a biking accident in October 1997, and outpatient surgery on the knee is planned for February 1998. Mary hopes to use her insurance policy to pay for the surgery and for a short-term rental of a wheelchair.
Mary does have a preexisting condition under the Kennedy-Kassenbaum law because her condition began during the six months immediately preceding her entry into the plan. Her period of exclusion from coverage will last up to 12 months, depending on what is provided for in the insurance contract. If her insurance contract contains a preexisting conditions clause, it is likely that neither the knee surgery nor the wheelchair rental will be covered.
Case # 3: Eric has cerebral palsy, a lifelong condition. He is 35 years old and has worked at the ABC Corporation for 10 years. At ABC, he is covered by an employee health insurance benefit through the New York Insurance Company. The current health benefit allowed Eric to obtain a $10,000 power wheelchair six years ago. The insurance policy has also paid for wheelchair repairs and many other expenses related to his condition.
Eric has been offered a job making more money at the XYZ Corporation and would be covered by the Erie Insurance Company at this new job. He is worried that he will face a preexisting conditions clause with the new insurance contract. The new job would start January 1, 1998. Eric hopes to obtain a new power wheelchair through the new insurance contract.
Eric would not have a preexisting condition under Kennedy-Kassenbaum, as his lifelong condition did not begin during the six months immediately preceding his entry into the contract. His right to the new power wheelchair will depend on the terms of the new contract. If the language of the new contract is not as favorable as that of the old, he should consider trying to obtain the wheelchair before he leaves his present job.
Case #4: Darlene's husband, Doug, worked for the same employer for 10 years, through January 1998. In February 1998 he starts a new job for a new employer. He was covered by one family health insurance contract on the old job, and will be covered by a different one at the new job.
Darlene had a stroke in November 1997 and has lost her ability to speak. Her speech pathologist has recommended that she obtain an augmentative communication device (i.e., a talking computer) known as a Dynavox at a cost of $7,800. Will the new insurance policy pay for it?
Darlene has a preexisting condition under Kennedy-Kassenbaum as her condition began during the six months immediately preceding her entry into the new plan. Under the law, her insurance contract could impose a period of exclusion of up to 12 months. However, since the exclusion period is reduced by a period of continuous coverage through a previous plan, Darlene will be immediately eligible for coverage so long as she was covered during the last year by the old policy. Her right to the Dynavox will depend on the terms of the new contract.
Kennedy-Kassenbaum's Anti-Discrimination Provisions
Under Kennedy-Kassenbaum,
a health insurance issuer offering group health insurance coverage is prohibited from
discriminating. It may not establish rules for plan eligibility based on any of the
following health status factors in relation to the individual or a dependent:6
The Right
to Continued Coverage
After a Lay Off or Job Termination
Under Kennedy-Kassenbaum
Insurers are required to offer individual coverage to people who lose their group coverage, whether through job termination, a change in employment to a job not offering health insurance, or other factors. To qualify for guaranteed conversion from group to individual coverage, the individual must have 18 continuous months of prior coverage under a group plan, exhaust his or her full COBRA coverage if available (see below), and be ineligible for other coverage through programs such as Medicare and Medicaid.7
Under COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)8 applies to employers who customarily employed 20 or more employees on a typical business day in the preceding calendar year. COBRA provides an option for continuing insurance coverage for employees and their dependents after a lay off or job termination.
Under COBRA, the employee or dependent has a minimum of 60 days to elect continued coverage.9 The employee or dependent is entitled to continued coverage, at their own expense, for a period of 18 months following the termination. COBRA limits the premium to 102 per cent of the group rate paid by the former employer and permits payment in monthly installments.10 COBRA does not, however, apply to employees who are terminated as a result of gross misconduct.11
COBRA protects individuals during the period they are between jobs or awaiting Medicare eligibility. It protects an employee's spouse and dependent children12 when they lose eligibility under the group health plan as a result of the employee's death, entitlement to Medicare, termination of employment or reduction of work hours. COBRA also protects a spouse in the event of divorce or legal separation and protects dependent children who lose their right to coverage as dependants because they get older or marry. Furthermore, a person who marries an employee already receiving continued COBRA coverage becomes eligible for that coverage as does any child who is born to or adopted by the covered employee during the period of that employee's continued coverage.
The 18 months of continued coverage is extended to 29 months for individuals who are determined to be disabled under the Social Security or Supplemental Security Income programs when employment is terminated or when continuation coverage begins. To extend coverage to 29 months, the employee must provide notice of his or her disability before the 18 month continuation period expires.
If a spouse or dependent child is already on an 18 month continuation because of an employee's termination of employment and a second qualifying event occurs, the spouse or dependent child is entitled to an additional 18 month extension of coverage. Examples of a second qualifying event include divorce, legal separation, death of the employee and the dependent child going beyond the maximum age for coverage.
COBRA is a complex piece of
legislation. Therefore, anyone who is entitled to its protections or wants to know if he
or she is entitled to its protections should consult with an advocate or someone familiar
with the law or, at the very least, with the former employee's personnel department.
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Part I of this two-part article has primarily addressed the issues related to whether a particular individual will be covered by a health insurance policy. When a person is covered by the policy, the Kennedy-Kassenbaum law of 1997 greatly limits the use of preexisting conditions clauses to limit coverage of longstanding conditions when a person changes jobs and changes insurance plans. When a person loses a job and loses the right to insurance coverage as an employee benefit, both Kennedy-Kassenbaum and COBRA provide extensive protection, allowing the employee and his or her dependants to opt for continued coverage to bridge the gap while the individual is either between jobs or awaiting Medicare eligibility.
Part II, which will appear in
the January-February issue of IMPACT, will explore two additional issues that will
determine whether a particular AT device will be funded &emdash; whether the item in
question is covered by the policy, and whether the item in question is medically
necessary. We will then discuss appeal options available when a claim is denied, both
administrative and through the courts. As we will point out in Part II, many advocates
have had considerable success in getting insurance companies to reverse the original
denial and award funding for AT devices.
___________________________
1 29 U.S.C. §§ 1181 et seq. This law is
also found at 26 U.S.C. § 9801. All subsequent citations shall refer to 29 U.S.C.
2 29 U.S.C. § 1181(a)(1).
3 Id. § § 1181 (d)(1), (2) and (3).
4 Id. § 1181(a)(2).
5 Continuous coverage is coverage with a gap no longer than 63 days. Id. §
1181(c)(2)(A).
6 Id. § 1182(a)(1).
7 Id. § 1181(f)(1).
8 Id. § 1161 et seq.
9 Id. § 1165.
10 Id. § § 1162(3)(A) and (B).
11 29 U.S.C. § 1163(2).
12 29 U.S.C. § 1167(3).
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SOCIAL
SECURITY ADMINISTRATION (SSA) ISSUES
==========================================
NEW POLICIES GOVERNING PASS
"Emergency Instructions" Will Make It Easier to Have
PASS Approved, Amended or Reinstated
On November 28, 1997, SSA issued Emergency Instructions governing the Plan for Achieving Self Support (PASS). Responding to severe criticism from persons with disabilities and their advocates, SSA's new policy clarification [EM-97-191] addresses many of the major concerns about the implementation of policies issued in April 1996. On December 1, 1997, SSA's Carolyn Colvin, Deputy Commissioner for Programs and Policy, issued a Statement and attached Summary Sheet which describes the policy changes. [Both documents, along with this summary, appear on our web page (www.nls.org). You can also obtain hard copies of these documents by calling Vivian Cosentino at 716-847-0650 ext. 271.]
We previously described the PASS as an income and resource exclusion rule of the Supplemental Security Income (SSI) program, allowing persons with disabilities to accumulate income and resources to purchase assistive technology (AT) and other goods and services related to a vocational goal. We explained the 1996 policy changes and how they could be expected to affect PASS applications. See IMPACT (May-June 1997); PASS: Supplemental Security Income's Plan for Achieving Self Support, 30 Clearinghouse Review 1101 (March-April 1997). This summary supplements those articles.
The 1996 Program Operations Manual System (POMS) provisions [POMS SI 00870.001 (April 1996)], if interpreted liberally, should have allowed for the interpretations now contained in the Emergency Instructions. However, most of SSA's PASS Specialists have been very restrictive in interpreting these policies. The resulting statistics have been staggering. In the quarter ending December 31, 1995, 10,332 PASSes existed nationwide. On September 30, 1997, that number was down to 2,483. This is a 76 percent drop off that neither the documented nor perceived abuses of the PASS, prior to 1996, could justify.
The following is a brief description of the major provisions contained in the Emergency Instructions:
Entry level positions: Under the new policy, the "occupational goal must be the earliest point on the career path at which earnings can reasonably be expected to cover . . . living expenses (as they exist during the PASS), uncovered medical expenses, and work-related expenses. In this context, prior education and training are relevant only to the extent that they would enable the individual to achieve the occupational goal without the steps and expenses provided for in the PASS."
The new policy would appear to allow a person to use a PASS to pursue an advanced degree if the "profession of the individual's choice" required this degree to enter this profession. It would also appear to allow approval of a PASS even if the person is already working or about to start work if the level of income to be generated would not currently meet the expenses listed above.
Feasibility of goal, feasibility of plan: The new policy requires SSA to look separately at the feasibility of the goal and the plan. When the PASS is denied based on feasibility concerns, SSA's notice must state whether it is the goal or the plan that is not considered feasible. The new policy clarifies that both the goal and the plan are presumed feasible if the PASS is prepared by a vocational rehabilitation (VR) professional. It requires the PASS Specialist to discuss the matter with the VR professional if he or she is prepared to reject the VR professional's opinion. Similarly, before denying a plan as not feasible the PASS Specialist must "contact the PASS applicant, explain why the plan is not viable, and discuss modifications that would make the plan viable."
Start-up costs, downpayment, installment payments: Existing guidelines suggest that PASS approvals would be strictly limited to start-up costs and downpayments. Exceptions to these rules were either ignored or misunderstood. The new policy states that "if a major purchase is found reasonable and necessary, funds set aside for it will be excluded to the extent that the expense remains necessary to achieve an approved goal and earnings do not negate the need to continue the exclusion. In other words, funds set aside for installment payments may now be excluded."
Communication with PASS Specialists: The new policy puts special obligations on the PASS specialist to communicate directly with the SSI recipient who has an approved PASS. In addition to the periodic compliance reviews, the PASS Specialists "will augment these reviews with periodic progress checks . . . to see if the individual has encountered or foresees any problems . . . ."
Departure from the plan, retroactive amendments: "When there has been a departure from the plan, or a change has occurred, and the departure or change does not compromise the integrity of the plan, it should be incorporated as a retroactive amendment." In light of the new requirements for progress checks, it is reasonable to expect that the PASS Specialist will assist the individual in determining when an amendment is necessary.
Notice to persons whose PASSes were denied, 4/96 to 12/97 -- right to submit new PASS: "Anyone whose PASS was terminated or denied after March 1996 will be contacted, informed of these changes, and invited to submit a new PASS." Since many individuals were probably denied or terminated under an improper interpretation of PASS policy, advocates must be vigilant to make persons with disabilities and others aware of this requirement.
These revised policies
represent a significant move forward by SSA, encouraging the approval of PASS applications
when the individual facts show that the income or resources to be set aside are truly
needed to help the person achieve the chosen vocational goal. We are hopeful that the new
policies and statement from Deputy Commissioner Colvin also represent an attitudinal
change by SSA and that its PASS Specialists will begin to issue decisions that will allow
persons with disabilities to achieve true self support.
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Matter of Richard C.: Kenneth Shiotani of Southern Tier Legal Services successfully represented Richard C. in a Medicaid fair hearing for an Uppertone Exercise Unit.
Matter of Paul S.: Bill Mastroleo of the Assistive Technology Advocacy Project successfully represented a terminally ill client after Medicaid denied his prior approval request for the six month rental of a semi-electric hospital bed.
Matter of Sherisse S.: Lorne Marshall, our student intern, successfully represented this young lady after Medicaid denied her prior approval request for a Quickie Zippie Tilt in Space wheelchair because she resided in a skilled nursing facility.
P.S.: Lorne Marshall soon will end his internship with the AT Advocacy Project. Lorne has proven himself to be a dedicated advocate with a keen eye for creative evidence. He is always professional, but never tolerates anyone who adds to the suffering of his clients. We will miss him, but we will all be better advocates for having worked with him. We wish him the best of luck in his future endeavors!
For copies of any of these decisions, contact Vivian Cosentino at 716-847-0650 ext. 271 or nls01@sprynet.com. Ask for Matter of Richard C. (F.H. # 89469275), Matter of Paul S., (F.H.# 2717562z), or Matter of Sherisse S. (F.H. # 2665487H).
Welcome to Neighborhood Legal Services' data bank!
Do you have decisions of interest relating to assistive technology in the following areas? Medicaid, Medicare, Vocational Rehab, VA, Special Education, Physically Handicapped Children's Program, Private Insurance, etc.
Other advocates can benefit from your experience. If you have fair hearing decisions or are involved in or have completed litigation in these areas, we want to know about it.
Please send information to:
FAX: (716) 847-0226
Attn.: Marge Gustas
Handsnet: HN0627
Neighborhood Legal Services
e-mail: nls01@sprynet.com
Ellicott Square Building
Web
Site: www.nls.org
295 Main Street Room 495
Buffalo, NY 14203
(716) 847-0650
(716) 847-1322 TDD
In our Upcoming Issues...
AT and Private Insurance, Part II|
AT Related Resources on the Internet
Report Writing: How to Satisfy the AT Funding Source