Memorandum

City of Lawrence

Human Resources Division/City Manager’s Office

TO:	David L. Corliss, City Manager Diane Stoddard, Assistant City Manager
FROM:	Lori Carnahan, Human Resources Manager
CC:	Michelle Spreer, Benefits Specialist
Date:	July 26, 2010
RE:	Follow Up Questions to Request to Implement Age 26 Provisions to Healthcare Plan

Commissioner Chestnut asked some follow up questions regarding the proposal to cover certain dependents up to age 26 on the health care plan beginning September 1, 2010, ahead of the federally required date of January 1, 2011.  Specifically he asked why adopt the provision four months before the required date and what provisions will the plan have in place to ensure the dependents meet the eligibility requirements for coverage to age 26. The Patient Protection and Affordable Care Act (PPACA) requires plans to extend coverage for a child of the employee up to the age of 26 unless the child is eligible for coverage under the child’s employer’s plan.  The requirement is effective for our plan beginning January 1, 2011.

We are requesting to implement early because we are not able to equitably apply coverage vs. non-coverage for dependents between the ages of 21 and 24 between now and January 1, 2011.  Cigna has discontinued their age verification letter program which was scheduled to be conducted in August 2010 for September 1, 2010 continued coverage.  Without the verification we would be carrying ineligible dependents that no longer have student status between 9/1/10 and 1/1/11.  We did not feel this was equitable to those who told the truth, dropped coverage and moved to COBRA their dependents that were not returning to school or graduating but leaving those on the plan who did not voluntarily come forward.  We also did not feel it was equitable to have a method to remove those ineligible due to age but not student status for four months.

Regarding verification of dependents for eligibility of other insurance opportunities, we will be requiring that the employee and their adult dependent attest that they are not eligible for other coverage upon enrollment. For those who attest that they have other full time employment, a letter will be sent to the dependent's employer, likely through the dependent to verify eligibility for coverage.  This method is similar to what most plans use for verification when they have a plan with similar rules for spouses.  An audit can be developed to conduct periodically to reaffirm employment and eligibility for alternate coverage. Cigna will do verifications on a rolling 14 months to verify for other insurance coverage as they currently do with spouses.