HHS establishes safe harbor for adverse benefit notices of non-federal governmental plans

The Department of Health and Human Services (HHS) has established an enforcement safe harbor with respect to the content of the adverse benefit determinations and final internal adverse benefit determinations issued by non-federal governmental plans. Guidance issued on August 17 indicates that HHS will not enforce the requirement, under Public Health Service Act (PHSA) Sec. 2719, that non-federal governmental plans provide notice of the private right of action under ERISA.

Similarly, HHS will not enforce the requirement that non-federal governmental plans provide contact information for the EBSA or a state department of insurance. This safe harbor is applicable as long as such a plan provides contact information for member assistance provided by any third-party administrator or health insurance issuer that is hired by or contracts with the plan, and, if available, consumer assistance offered directly by the plan such as applicable member services, employee services, human relations or fiscal or personnel department, or consumer support services, if applicable.

Notice requirement. PHSA Sec. 2719 requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage have an effective internal claims and appeals process. PHSA Sec. 2719(a)(2)(A) requires that such plans and health insurance issuers in the group market provide an internal claims and appeals process that initially incorporates the procedures of 29 CFR 2560.503-1 (the Department of Labor claims procedure regulation) and update such procedures in accordance with any standards established by the Secretary of Labor for such plans and issuers.

The Department of Labor claims procedure regulation clarifies the manner and content of notification of benefit determinations, which include certain disclosures. Among these required disclosures is a statement of the claimant’s right, under ERISA Sec. 502(a), to bring a civil action following review of an adverse benefit determination. ERISA Sec. 502(a) permits a plan participant or beneficiary to bring a civil action, among other purposes, “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”

In addition, the Departments of the Treasury, Labor, and HHS have provided model notices for adverse benefit determinations. The model notices outline information that must be provided to claimants, including contact information for EBSA or a state’s department of insurance, as well as contact information for a consumer assistance program established under PHSA Sec. 2793 if one is available in that state.

Private right of action not available. The private right of action under ERISA Sec. 502(a) is not available to participants or beneficiaries of non-federal governmental plans, and the EBSA does not provide services to these participants or beneficiaries. In some cases, state departments of insurance do not provide services to these participants or beneficiaries. However, PHSA Sec. 2722(a) requires that non-federal governmental plans comply with the requirements found in the Department of Labor’s claims procedure regulation and the rules implementing PHSA Sec. 2719, including providing information on the private right of action under ERISA Sec. 502(a), and the information contained in the model notices. HHS indicates that complying with these requirements would place non-federal governmental plans in the difficult position of providing inaccurate information to participants or beneficiaries.

Consumer assistance program. In states that do not have a consumer assistance program, non-federal governmental plans that seek to take advantage of this safe harbor must provide the contact information for HHS’ Health Insurance Assistance Team (HIAT). The contact information for HIAT is 888-393-2789.

Other requirements still apply. This guidance does not provide non-federal governmental plans with relief from any other requirements of the PHSA, including the requirement that they provide all other notices required by the Department of Labor claims procedure regulation. Furthermore, to the extent that a non-federal governmental plan purchases a fully-insured health insurance policy for its participants or beneficiaries, or to the extent that state departments of insurance provide services to these participants or beneficiaries, HHS expects that participants and beneficiaries will receive the required contact information for the state department of insurance (or any other applicable state department).