North Carolina Health Insurance Law
In this guide we will go over all major individual and group health insurance laws particular to the North Carolina health insurance market.
Small Employer Group Health Coverage Reform Act
North Carolina’s Small Employer Group Health Coverage Reform Act was enacted in 1992. The purpose of the Act is to promote the availability of accident and health insurance to small employers, eliminate abusive rating and underwriting practices, and improve fairness in the health insurance marketplace. All insurance companies who market or offer small group health insurance in North Carolina must offer all their plans to small employers who have one to 50 employees, provided that the employees reside within the insurance company ’s service area.
Self-employed individuals (as defined by the IRS) do not have guaranteed access to all plans, but they must be offered two standardized plans established by state law (known as the Standard and Basic health plans) regardless of their health status. North Carolina General Statutes define a “small employer” as any individual actively engaged in business that, on at least 50 percent of its working days during the preceding calendar year employed no more than 50 eligible employees, the majority of whom are employed within this state, and is not formed primarily for purposes of buying health insurance and in which a bona fide employer/employee relationship exists.
Insurance companies have the right to verify whether small employers and self-employed individuals applying for coverage meet the above stated definitions. Insurance companies will most likely request tax and business documents during the application process and may refuse to issue coverage if proper proof is not provided. Additionally, those documents may be requested periodically after coverage is issued to verify ongoing eligibility.
No company may single out a small group for termination or non-renewal if it will continue to serve other small groups in the same geographic area. The Small Employer Group Health Coverage Reform Act also establishes limits on how much insurance companies can vary premiums from one small employer to another.
INDIVIDUAL COVERAGE VS. GROUP COVERAGE
What Happens if I Lose my Employer Group Coverage ?
When leaving an employer, continued coverage may be available through COBRA continuation, or through State continuation. COBRA (Consolidated Omnibus Budget Reconciliation Act) Federal COBRA Continuation law applies to employer groups covering 20 or more employees. This law generally allows eligible individuals to continue under the employer’s group policy for up to 18 months, but the
individual is responsible for paying the premiums. In some cases, the coverage can continue for longer than 18 months.
COBRA continuation law applies to both insured and self-funded plans; however, it does not apply to church plans, plans covering less than 20 employees or plans covering federal employees. Detailed information on your rights under the federal COBRA laws can be obtained from the U.S. Department of Labor’s Employee Benefits Security Administration, Atlanta Regional Office at (404) 302-3900.
For a complete list of publications provided by the EBSA, call their hotline at 1-866-444-3272 or visit the U.S. Department of Labor’s Web site at www.dol.gov.
North Carolina’s State Continuation laws allow employees and dependents to continue coverage under the employer’s group health plan after they terminate employment or otherwise lose eligibility. Under State Continuation guidelines, employees who terminate employment for any reason, whose hours are reduced or who lose eligible employee status may continue their basic health insurance coverage for up to 18
months. Upon termination or loss of eligible status, dependents covered by the policy will also be able to continue coverage for 18 months. Unlike COBRA, State Continuation laws do not provide for extensions of coverage beyond 18 months. In order to obtain more information about State Continuation contact the North Carolina Department of Insurance toll free at 1-800-546-5664. A “Consumer’s Guide to State Continuation” is available on the Internet at www.ncdoi.com.
All insurance companies that sell group health insurance plans must offer an individual conversion policy to individuals who lose coverage under the group plan, without imposing exclusions of pre-existing conditions.
Conversion policies may cost substantially more than your previous group coverage. Some people may qualify as HIPAA (Health Insurance Portability and Accountability Act) eligible individuals and also be eligible for coverage under individual conversion policies.
If you find yourself having both of these options, you should carefully compare the premiums and benefits and choose the plan that best meets your needs.
HIPPA “Guaranteed Issue” Individual Health Insurance
All private insurance companies that sell individual health insurance must offer a choice of at least two “guaranteed issue” plans for qualified HIPAA-eligible individuals.
Those two plans must contain benefits that are similar to those offered under the insurance company’s other plans.
HIPAA-eligible individuals must offer all of their individual insurance policies. However, there are no restrictions on the rates that insurance companies can charge HIPAA eligible individuals for these plans, as long as there is an actuarial basis for the rates.
This means that the policies HIPAA-eligible persons are entitled to buy tend to be rather expensive. To qualify as a “HIPAA-eligible individual,” you must meet all of the following requirements:
You must have had at least 18 months of continuous “creditable coverage,” of which at least the last day must have been under an employer group health plan.
You must have used up any COBRA or State Continuation coverage for which you were eligible. You must not be currently eligible for coverage under Medicare, Medicaid or another group health plan.
You must not presently have health insurance. (If, however, you know your group coverage is about to end, you can apply as a HIPAA eligible individual for coverage to go into effect when your group coverage ends.) You must apply for health insurance as a HIPAA eligible individual no later than 63 days after losing your group coverage.
Fully Insured Vs. Self-Funded Group Health Plans
Fully insured group health insurance policies are offered by licensed insurance companies. The insurance company collects premiums and uses the money collected to pay claims. These types of policies are regulated by the North Carolina Department of Insurance, and are protected by the Life and Health Guaranty Association in the event that a licensed insurance company becomes financially insolvent. If this occurs, the Association provides up to $300,000 per person to cover unpaid claims.
Self-Funded or Self-Insured
Some employers and labor unions provide group health benefits for their employees or members through what is called a self-funded health plan.
In a self-funded plan, the employer or group collects premiums itself and uses those funds to pay for claims. While an insurance company or other company may be responsible for administering the plan (provider network, claims processing , customer service, etc.), the employer retains responsibility for making sure that there are enough funds to pay claims.
Self-funded health plans do not involve a health insurance policy; therefore, they are not insurance plans, and are not subject to North Carolina insurance laws or the North Carolina Department of Insurance’s regulatory authority. In addition, the North Carolina Life and Health Insurance Guaranty Association does not cover self-insured plans in the event of plan insolvency. Single employer and union sponsored self-funded health plans are regulated by the U.S. Department of Labor’s Employee Benefits Security Administration, under the guidelines of the Employees’ Retirement Income Security Act (ERISA) of 1974.
As noted earlier, self-insured MEWAs (which cover multiple employers) are licensed and regulated by the North Carolina Department of Insurance, but are not covered under the Guaranty Association.
For more information on this topic, see “Your HIPAA Rights and Guide to Individual Health Insurance” on the Department of Insurance’s
Web site, www.ncdoi.com.
Government Sponsored Health Insurance
NC Health Choice for Children NC Health Choice for Children (the State of North Carolina Children’s Health Insurance Program) is a program funded by the federal and North Carolina governments.
NC Health Choice may be discontinued at any time if federal money is no longer available. A child (under the age of 19) who lives in North Carolina and has no health insurance may be eligible, depending on family income.
County health departments and social service departments determine whether a child qualifies for coverage under NC Health Choice. In order to obtain more information about this program, contact the North Carolina Division of Medical Assistance toll free at 1-800-367-2229. Information can also be found on the Internet at www.dhhs.state.nc.us/dms/cpcont.htm.
Medicaid provides medical assistance to low income families and individuals of all ages participating in cash assistance programs. Federal and state governments jointly finance Medicaid.
All states, the District of Columbia and some U.S. territories have Medicaid programs. Medicaid programs are governed by federal guidelines, but eligibility criteria and covered services can vary from state to state. In North Carolina, each county determines eligibility. For individuals who qualify for both Medicaid and Medicare, Medicaid pays Medicare cost-sharing amounts and fills in many gaps in Medicare’s benefit package, especially in the area of long-term care services and prescription drugs.
In order to obtain more information about this program, contact your county’s Department of Social Services (DSS). You may go to the DSS to apply or ask them to send you an application in the mail. Applications are also available at your county’s health department. You may complete the application yourself and return it in person, or mail it to the DSS.
If you cannot locate the phone number for your local DSS or if you have further questions regarding Medicaid eligibility, call the Office
of Citizen Services CARE-LINE Information and Referral Service toll-free at 1-800-662-7030.
For local calls or calls from outside of North Carolina, dial (919) 733-4261. The Office of Citizen Services has a dedicated TTY line at 1-877-452-2514 or for local TTY or TTY calls from outside of North Carolina, dial (919) 733-4851 for the deaf and hearing impaired.
Medicare is a federal health insurance program for people age 65 years or older, people with certain disabilities, and people with permanent kidney failure being treated with dialysis or a transplant. Medicare has two parts: Part A (hospital insurance) and Part B (medical insurance). For more information concerning Medicare and Medicare supplements, contact the North Carolina Department of Insurance’s Seniors’ Health Insurance Information Program (SHIIP) tollfree at 1-800-443-9354, or visit our Web site at www.ncdoi.com.
North Carolina law requires insurance carriers to include certain benefits in major medical health insurance policies that are offered in this state. Some of these benefits are:
Every insurance company must cover emergency services necessary to screen and stabilize the insured person, if those services meet the “prudent layperson” standard (meaning that a layperson would have reasonably believed that an emergency medical condition existed). A managed care plan cannot require prior authorization for emergency services, or require that an in-network hospital’s emergency room be used. Copayments and/or deductibles generally apply.
Minimum Hospital Stay Following Childbirth Health benefit plans that provide maternity and childbirth benefits are required to cover
both the mother and her newborn child for a minimum of 48 hours of inpatient care after normal childbirth, or for a minimum of 96 hours of inpatient care following a cesarean section, as long as the physician determines that inpatient care is appropriate. Unless the child is covered as a dependent under a parent’s plan, coverage for the newborn’s care will end after the first 48 hours (or 96 hours for a cesarean section). State law does not require health insurance plans to offer maternity care.
Mammograms and Pap Smears
Every policy must cover pap smears and lowdose screening mammography.
Bone Mass Measurement
Health benefit plans must cover scientifically proven and approved bone mass measurement for the diagnosis and evaluation of osteoporosis or low bone mass in certain “qualified” individuals. To be a qualified individual, the insured person must meet certain characteristics.
Diabetes Treatment and ServicesPolicies must cover medically appropriate and necessary diabetes treatment and services.
Outpatient self-management training and educational services, equipment, supplies, medications and laboratory procedures used to treat diabetes must also be covered.
Mastectomy Length of Stay and Reconstructive Breast Surgery Following Mastectomy
Insurance companies must allow the patient’s physician and the patient to determine how long she will remain in the hospital following a mastectomy. Coverage must be provided for reconstructive breast surgery following a mastectomy performed in the course of treating cancer or breast disease.
All insurance companies offering group policies must offer benefits for the care and treatment of chemical dependency.
Every insurance company providing a health benefit plan covering prescription drugs or devices must also provide coverage for prescription contraceptive drugs or devices.
REQUIRED BY LAW BENEFITS
This includes outpatient contraceptive services if outpatient care is provided. Religion-based employers may request an exemption. Newborn Hearing Screening All health insurance companies are required to cover hearing screenings for newborn children, subject to the deductibles, copayments and coinsurance that generally apply to other services covered by the plan.
All health insurance companies are required to cover medically necessary expenses for phase II, III and IV clinical trials that are not directly related to conducting the trial itself, not provided by the parties conducting the trial, and that would be covered if provided outside of a clinical trial. To be covered, the trials must meet certain minimum medical and scientific requirements.
Adding Newborn Infants and Adopted or Foster Children
Newborn children, newly adopted children and newly placed foster children who are covered as dependents are considered to be covered from the moment of birth or moment of placement in a home, as long as the policy was in effect at that time. When coverage becomes effective in this manner, exclusions and waiting periods for pre-existing conditions may not be applied. If your existing policy automatically covers your new child with no additional premium, then the policy is considered to be in place at the moment of birth or placement, regardless of whether you provided your insurance company with advance notification of your new child. However, notifying the insurance company prior to or soon after birth or placement is a good idea in order to avoid delays in claim processing.
If your policy will require additional premium, however, you must notify your plan prior to birth or placement or within 30 days of birth or placement, in order for the coverage to be in effect from the moment of birth or placement. Otherwise your plan may exclude or place a waiting period on coverage for preexisting conditions, including birth defects.
Mentally Retarded or Physically Handicapped Children
The age limitation for dependent children will not apply for a child who is, and continues to be:
Incapable of self-sustaining employment by reason of mental retardation or physical handicap; and Chiefly dependent on the policyholder for support and maintenance. Policy guidelines must be followed to properly notify the insurance company of any request to continue coverage for qualified children.
Managed care (HMO and PPO) plans must maintain adequate provider networks that provide access to covered services within a reasonable distance, and without unreasonable delay. If a managed care plan’s network does not offer reasonable access to an appropriate provider, then the plan must allow its member to receive needed care from out-of-network providers, without holding the member responsible for any more than the standard in-network copayment, coinsurance or deductible. Managed care plans are required to establish their own standards for network accessibility.
Exceptions to Drug Management
All health plans that use a closed prescription drug formulary must cover drugs that are not on the formulary, under certain circumstances:
A plan member’s physician notifies the insurance company that the formulary drug has been used to treat the patient for the condition in question; and The formulary drug was either ineffective in treating the condition, harmful to the patient, or is reasonably expected to be harmful to the patient and therefore, the non-formulary drug is necessary to treat the condition.
Restricted access drugs (formulary drugs that are covered only with insurance company’s prior approval, or only after other specified formulary drugs have been tried without success) must also be covered on an exception basis, without prior approval or first having to try other formulary drugs, when:
A plan member’s physician certifies to the insurance company that the other formulary drug(s) has been used to treat the patient for the same condition previously; and The drug(s) was either ineffective or harmful to the patient and is expected to be harmful if used again.
Standing Referrals to Specialists
Managed care plans that require members to obtain a referral from their primary care physician (PCP) before seeing a specialist must allow the PCP to issue a standing referral for up to 12 months if the patient has a serious or chronic condition that is degenerative, disabling or life-threatening and ongoing specialty care is necessary.
Transitional Coverage when a Provider Leaves the Network (Continuity of Care) Managed care plans must allow members to continue receiving coverage for treatment from providers who leave the plan’s network, in order to ensure continuity of care while the member changes providers. This coverage is dependent upon specific conditions being met, including:
The member has a serious acute condition that requires treatment to avoid death or permanent harm, at the time he/she was notified that the provider was leaving the network (up to 90 days of transitional coverage is provided); or, has a chronic condition that is life threatening, degenerative or disabling and requires treatment over a prolonged period of time, at