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 Michelle Spreer, Benefits Specialist
CC:	Healthcare Committee
Date:	July 20, 2010
RE:	Request to Implement Age 26 Provisions of Health Care Reform effective September 1, 2010

The Human Resources Division along with the Healthcare Committee (HCC) request approval to implement effective September 1, 2010 a provision in the Patient Protection and Affordable Care Act (PPACA), commonly referred to as “health care reform,” which requires health care plans to extend dependent care coverage to eligible individuals to age 26 regardless of student or marital status.

Current dependent eligibility is unmarried to age 21 and to age 24 for those who are full time students.

Project Description/History. The Patient Protection and Affordable Care Act (PPACA) was signed into law by President Obama on March 23, 2010. One of the provisions of this law requires health care plans to extend dependent care coverage to eligible individuals to age 26, beginning on the first plan anniversary after September 23, 2010.  For the City of Lawrence the required effective date is January 1, 2011.  Cigna implemented this provision early (June 1, 2010) for all its insured plans and many of its self funded clients.  Simultaneously Cigna discontinued its letter verification of student status program. 

The City was scheduled to conduct verification of student status in August 2010 to be effective for continued coverage September 1, 2010. This program is no longer available to the City.

It has been verified by Cigna that the City’s Stop Loss coverage will not be re-underwritten or affected in any way by the early implementation of the age 26 provisions of PPACA.   Human Resource staff doesn’t have data to determine the number of dependents this change will add to the City’s health care program (for 4 additional months prior to the federal law mandate).  Based on the response from Cigna regarding Stop Loss coverage and the minimal amount of additional time the newly eligible dependants would be on the plan the Human Resource staff doesn’t believe this will add any significant cost to the City’s health care plan.

At this time the City will need to either:

1.   Utilize Human Resources staff to internally conduct the eligibility of continued student status for 9/1/10 coverage and remove those who are not in enrolled in school fall 2010.  Those removed from the plan 9/1/10 will be eligible to return to the plan as an eligible dependent 1/1/2011 and may enroll in COBRA for the four months in the interim.  This will also be true for those who have reached our current age limitations prior to 1/1/2011 but have not yet attained age 26. Cigna will provide the list of names for our office but will not do the letters and verification process.

2.   Implement the change in age requirements to meet PPACA early effective 9/1/10.   The Human Resources Division would conduct a mini open enrollment in order to allow those who meet the new age parameters to enroll in the plan as a newly eligible dependant.  The mini open enrollment would consist of an all employee announcement through e-mail, intranet and management team distribution.   There would not be any general employee meetings unless a department requested information be reviewed at a staff meeting.  Employees would also be able to enroll dependents during our regular open enrollment in the fall for January coverage.

Action Request. The Human Resources Division requests approval to implement age provision changes to the City of Lawrence Employee Health Care Plan effective September 1, 2010 and conduct a mini open enrollment August 2-August 20, 2010 in order to allow newly eligible dependents to enroll in the plan effective September 1, 2010.

Cigna underwriting has determined little to no additional risk to the plan for the purposes of stop loss coverage and has extended coverage to the expanded age definition for eligible dependents.