House Bill 2851 (HR 2851), otherwise known as Michelle’s Law, is a federal law that requires health plans and issuers of health insurance coverage to continue coverage for college students who are forced to take a leave of absence or change their enrollment status due to a serious illness or injury. This law applies to fully insured and self-funded (ERISA and non-ERISA) Group and Individual medical, pharmacy, behavioral health and, when part of the health plan, dental and vision coverage.

The requirements of the new law are effective October 9, 2009, and apply to all policies that are issued or renewed on or after that date. The following is a list of requirements:

• A dependent child who is eligible for continued coverage under Michelle’s Law is entitled to the same level of benefits during a medically necessary leave of absence as would be available to the child if he/she had not taken a leave of absence.
• Additionally, if the child experiences a change in coverage during the leave of absence, the child remains eligible for continued coverage under the changed plan to the same extent that he/she would have been eligible for continued coverage under the prior plan, so long as the changed plan continues to provide coverage for dependent children as beneficiaries.

The coverage must be continued until the earlier of:

• the date that is one year after the first day of the medically necessary leave of absence (or change in enrollment); or
• the date on which such coverage would otherwise terminate under the terms of the plan or health insurance coverage. For instance, if a dependent child on medical leave attains the maximum dependent age under the terms of the group health plan, their coverage will terminate.

Comparison to State Law

• This law is similar to a New Hampshire law which was enacted by the New Hampshire Legislature in 2006. The New Hampshire law was named after Michelle Morse, a college student who had to continue her studies on a full-time basis after being diagnosed with cancer in order to avoid losing health coverage under her parents’ plan.
• Since 2006, several other states have adopted their own versions of Michelle’s Law, including California, Maine, Vermont, Virginia and Wisconsin. New York has a similar law, which was enacted in 1999.
• States are entitled to enact more demanding laws, to the extent that they are not inconsistent with HR 2851. State laws generally apply to fully insured plans and, possibly self-funded non-ERISA plans. Self-funded ERISA plans will only be subject to the federal Michelle’s Law.
• HR 2851 applies only when the dependent is eligible under the terms of the plan or health insurance coverage by virtue of his or her student status. It will not have an impact on state laws that generally require coverage for all dependents through a specified age regardless of student status.

Frequently Asked Questions about Michelle’s Law:

1. What is the basic structure of the new law?

This law requires health care plans and issuers of health
insurance coverage to continue coverage for college
students who are forced to take a leave of absence or change
their enrollment status due to serious illness or injury.

2. What types of health coverage are subject to Michelle’s Law?

This law applies to Group and Individual Medical (HMO,
PPO, Indemnity), Pharmacy, Dental, Behavioral Health and
Vision. Michelle’s Law does not apply to Medicare Supplement.
Funding Type: The law applies to fully insured, minimum
premium insured, self-funded non-ERISA and self-funded
ERISA plans.

3. What takes priority – state or federal parity legislation?

Whichever is the more demanding will prevail. The state
laws remain subject to the broad preemption language
in ERISA, and will generally only apply to fully insured
plans, and possibly self-funded non-ERISA plans. Standard
preemption provisions of state law apply; therefore,
Michelle’s Law would preempt state insurance law to the
extent that state law would prevent the application of
Michelle’s Law.

4. The law states that an eligible dependent may continue coverage for up to 12 months. Are we going to cover the entire 12 months, as required by the mandate?

Yes. We will cover the entire 12 months as required by the
mandate. The coverage must continue until the earlier of
the date that is 1 year after the first day of the leave or the
date the coverage would have otherwise terminated.

5. What is the expectation when the 12-month continuance eclipses the dependent’s birth date and puts the dependent over the maximum student age?

Michelle’s Law applies only when the dependent is eligible
under the terms of the plan or health insurance coverage
by virtue of his or her student status. This means that when
the plan’s maximum policy age is met, the student’s coverage
will terminate and they will be offered continuation coverage
through COBRA, state continuation or a conversion policy,
if available.

6. What does the federal law define as the maximum student age?

Michelle’s Law will not have an impact on state laws that
generally require coverage for all dependents, regardless
of student status, through a specified age. Michelle’s Law
applies only when the dependent is eligible under the terms
of the plan or health insurance coverage by virtue of his or
her student status. This means that when the plan’s
maximum policy age is met, the student’s coverage will
terminate and they will be offered continuation coverage
through COBRA, state continuation or a conversion policy,
if available.

7. What defines a serious illness?
Serious illness is defined by medical necessity which is
certified by the dependent’s physician.

8. Are pharmacy benefits considered under medical?

Yes. Pharmacy benefits should be considered under Medical.

9. When do the provisions of the federal Michelle’s Law
go into effect?
The requirements of the new law are effective October 9,
2009, and apply to all policies that are issued or renewed
on or after that date.