If your health insurance premiums have gone up again, you are not alone. For that reason, we frequently get questions from clients on whether there is anything they can do to get high claimants off of their plans. The short answer is no, an employer cannot kick a high claimant off their health plan even if the employee was lasered by your stop loss. There are several legal protections, including HIPAA nondiscrimination rules, Medicare nondiscrimination guidelines, and some general principles about consulting products that are too good to be true.
HIPAA Nondiscrimination Rules: Protecting Employees from Health Status Discrimination
The primary legal safeguard against discrimination in health plans comes from HIPAA. While HIPAA is most commonly known for its privacy protections, it also includes nondiscrimination rules that prohibit health insurers from using an individual’s health status to discriminate against them. In simple terms, HIPAA ensures that employers cannot remove employees from a health plan or refuse to offer coverage based on their health status, medical history, or claims history. HIPAA comes with steep penalties for both nondiscrimination and privacy violations and normally an employer attempting to get high claimants of the plan often violates both.
Medicare Nondiscrimination Rules: Protections for Medicare Beneficiaries
In addition to HIPAA, employers must also consider Medicare nondiscrimination rules if their employees are eligible for Medicare or are enrolled in the program. Medicare provides health coverage for individuals 65 and older, as well as some individuals with disabilities, and those who are receiving benefits under Social Security Disability Insurance (SSDI).
Under the Medicare nondiscrimination rules, employers are prohibited from discriminating against employees based on their Medicare eligibility or enrollment status. These rules also prohibit an employer from incentivizing employees to join Medicare where the employer’s plan would be primary (which is always true for plans covering active employees with 20 or more employees.) This means an employer cannot remove someone from their health plan or refuse to offer health coverage because they are eligible for or enrolled in Medicare nor can they offer to pay them to go onto Medicare.
Products that Sound Too Good to Be True: Beware of Scams and Unsubstantiated Claims
In a world where health insurance products are constantly evolving, it's important to be cautious about offers that seem too good to be true. There are companies that promise to help employees or employers save money on their health plan or claim they can assist in navigating high medical claims, but many of these products come with significant risks.
If a broker or consultant comes to you with a solution that claims that it can remove an employee from an employer-sponsored health plan because of high claims or suggests that a high claimant will be “dropped” from coverage in exchange for another solution, it’s a red flag. These kinds of promises may sound tempting, but they often fall short of legal standards and may violate HIPAA and Medicare nondiscrimination rules, as well as other IRS rules.
What Should Employees and Employers Do?
It's important to ensure that your health plan complies with all legal requirements, including those laid out by HIPAA and Medicare. Discriminating against employees based on their medical claims history can open your organization up to legal liability, and it can damage employee trust. There are ways to reduce risks in these programs if they are designed appropriately. If you have questions about these programs, please reach out to any of our employee benefits team and we can help.
