A recent legislative change, Michelle’s Law, will require group health plans to continue dependent coverage for certain dependent children enrolled in post-secondary education who are no longer full-time students due to a medically necessary leave of absence or change in school enrollment status. This law is effective for plan years beginning on or after October 9, 2009, and therefore calendar-year plans must comply beginning January 1, 2010. Before year end, all group health plan documents should be amended to include this change in the law. Further, a summary of material modification for group health plan summary plan descriptions should be prepared and distributed within 210 days after the end of the plan year in which the change is adopted.
Michelle's Law, enacted in October 2008, allows seriously ill college students, who are covered dependents under health plans, to continue coverage for up to one year while on a medically necessary leave of absence from school or in case of a change in student enrollment status. The law was inspired by and named after a college student in New Hampshire who was diagnosed with cancer but continued her studies on a full-time basis in order to avoid losing health coverage under her parent’s plan. Michelle’s Law applies to both self-insured and fully-insured plans. Some of the notable provisions are discussed below:
Medically Necessary Leave of Absence. The extension of coverage applies to a dependent child’s leave of absence from a post-secondary educational institution (including colleges and universities), or any other change in enrollment such as from full-time to part-time status, on account of a serious illness or injury from which the child is suffering while covered under a health plan that would otherwise cause the child to lose dependent status for purposes of coverage under the plan. “Serious illness or injury” is not defined.
Length of Continued Coverage. Coverage continues until the earlier of (1) one year from the start of the medically necessary leave of absence (or enrollment status change), or (2) the date on which such coverage would otherwise terminate under the terms of the health plan.
Definition of Dependent Child. The child must be enrolled as a dependent under the health plan and qualify for coverage on the basis of being a student at a post-secondary educational institution immediately before the medically necessary leave of absence (or enrollment status change).
Certification by Physician. Written certification must be provided by a treating physician of the dependent child certifying that such individual is suffering from a serious illness or injury that requires a medically necessary leave of absence or change in enrollment status.
Notice. The health plan (and a health insurance issuer providing coverage in connection with a health plan) must provide a notice describing the terms of the continued coverage available under Michelle's law. This notice should be included with any notice regarding a requirement for certification of student status for coverage under the plan.
No Change in Benefits During Leave; Continued Application in Case of Changed Coverage. A dependent child is entitled to the same level of benefits during a medically necessary leave of absence as the child had before taking the leave. Moreover, if any change is made to the health plan during the leave, the child remains eligible for the changed coverage in the same manner as would have applied if the changed coverage had been the previous coverage, so long as the changed coverage remains available to dependent children under the plan.
However, there are still a number of ambiguities in this law, and further guidance has not been issued at this time. For example, nothing in the law clearly explains the interplay between these new continuation coverage requirements and COBRA. Could the Michelle’s Law continuation coverage be credited toward COBRA coverage, or is it to be treated separately? Is the notice requirement to be treated separately, or can the language be added to COBRA notices? We anticipate further guidance will clarify these issues.