Health plan will remedy improper ‘grandfathered’ status, ERISA noncompliance

Fiduciaries of the Sierra Pacific Industries Health Benefits Plan have agreed to settle claims that they failed to comply with the Affordable Care Act (ACA) and ERISA when providing healthcare benefits and deciding worker claims for healthcare benefits. After an investigation by the DOL’s Employee Benefits Security Administration, the major western lumber producer’s plan has agreed to comply with the ACA and ERISA, to pay past benefit claims in compliance with the ACA, and to correct the way it makes decisions on future claims, EBSA said in a news release.

Not a grandfathered plan. The investigation found problems with certain aspects of the plan’s claims processing, with the clarity of plan documents, and with the application of certain plan procedures for deciding claims. Investigators also found that the plan was not a “grandfathered” plan, was not exempt from certain ACA requirements, and was required to comply with the law. Specifically, as of January 1, 2013, the plan relinquished its grandfathered status because changes were made to the plan that precluded it from meeting the regulatory exceptions that would permit it to retain grandfathered status.

Remedy and compliance. The plan fiduciaries have agreed to comply with the ACA’s requirements for plans that are not grandfathered, including requirements for internal claims and appeals, and coverage of preventive health services. The fiduciaries have agreed to:

• Revise plan documents and internal procedures.

• Re-adjudicate past claims for preventive services, out-of-network emergency services, claims affected by an annual limit, and pay claims in compliance with the ACA and ERISA.

• Submit to an independent review organization claims that were eligible for external review.

• Pay claims that had been left on hold for a long time.

• Comply with timelines for deciding claims as provided in the DOL’s claim regulation.

• Forego for the 2017 plan year any increases to participant premiums, annual out-of-pocket limits, annual deductibles, and coinsurance percentages in effect for the 2016 plan year.

“The Affordable Care Act put into place standards and protections for workers covered by employee benefit plans,” noted Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “The Sierra Pacific plan was operating as though it was exempt from such requirements, when indeed, it was not. This settlement means that workers improperly denied health benefits will have their claims paid. Corrections made to plan procedures will also mean that all future claims are processed and paid properly.”

SOURCE: EBSA news release, September 29, 2016.

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