Appealing Self-Insured Benefits Denials

Appealing Self-Insured Benefits Denials

Big corporations are no stranger to self-insuring their employees. When an employer only contracts with an insurance carrier for insurance services such as enrollment, claims processing and provider networks with a third party administrator, the employer is agreeing to be the party to payout any medical bills incurred by their employees. Keep in mind, that a self-insured employer doesn’t even have to contract with an insurance company to administer such services and can self-administer their self-insurance.

To look up if your employer is self-insured check out this list https://www.dol.gov/owcp/dlhwc/lscarrier.htm , made available by the United States Department of Labor. The page also includes authorized insurance carriers. But I believe that there are many self-insured companies missing from this list. Make sure to ask your employer directly.

How Self-Insured Companies Pay for Medical Bills

Self-insured companies usually set up a trust fund to earmark money, from corporate and employee premium contributions to pay incurred claims and purchase stop-loss insurance that kicks in once claims reach a specific dollar threshold to protect against unpredictable or catastrophic claims.

But what happens if a self-insured employer doesn’t have a fungible trust or a stop-loss insurance plan?

I recently ran into a case where a self-insured company refused to pay out the medical bills of an employee and the questions started to swirl: who does the employee contact, why wasn’t it    covered, can they appeal the denial, who do they appeal to, what does it mean for their work relationship…

The Affordable Care Act put in place a range of plan design and coverage obligations for employer plans but exempted self-insured plans from a range of requirements, like the essential health benefits clause and replaced it with a required minimum value for the health plan. As a result of the requirement exemptions, companies of all sizes have converted their coverage to self-insured plans. From 2011 to 2015 research from the Employee Benefits Research Institute found that self-insured employers increased: Employers with fewer than 100 employees increased self-insurance from 11.9% to 14.2% and employers with 100 to 499 employees increased from 25.3% to 30.1%.

Although the employer is responsible for paying their employees medical bills, when the plans are administered by a third party insurance company it can seem like the third party administrator is the party who should pay and should decide any appeals. But this is not the case and the employer is at the forefront of any decisions regarding their employees medical coverage.

How Do You Appeal?

ERISA provides appeal rights for all employer-sponsored health plans for services that are normally covered under the plan. For example, if covered but denied benefits because they are determined to not be “medically necessary” the decision can be appealed and a decision must be made within 72 hours unless the services were already received and then the employer has 60 days to make a decision. If coverage is still denied the claimant can file a suit in a federal court to obtain coverage.

The detailed coverage benefits of a health plan should be available in the “Summary Plan Description.” As soon as a claim is denied, request a copy of the Summary Plan Description to be sent immediately. ERISA requires that an employer supply the SPD within 30 days of a request and if it isn’t sent to you within that time then the ability to appeal the decision becomes more favorable.

This is just the tip of the iceberg for getting medical coverage approved by a self-insured employer. Contact me directly if you, your company or a loved one is have problems with self-insured claims.

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