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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
from Spencer’s Benefits Reports: A health care plan that specifically excludes coverage in residential treatment programs is not compelled to provide such coverage when a state law does not include it in the list of limits establishing parity among mental health conditions and physical health conditions. In Douglas S., Ann C.S. and Laura S. v. Altius Health Plans (No. 09-4130, Nov. 5, 2010), the Tenth Circuit Court of Appeals applied Utah Law Sec. 31A-22-625 to the case because “Sec. 625 meets the two-pronged test of Kentucky Association of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003), and is thus saved from ERISA preemption.”
Laura S., a minor, was a participant in her father’s employer health plan provided by Altius Health Plans. The plan covered various inpatient and outpatient treatments for depression and eating disorders. One of Laura’s medical providers suggested enrolling her in a private residential treatment facility, but on July 24, 2004, her parents received written confirmation from the plan that residential treatment was not covered by the plan.
In October 2004, Laura was admitted for inpatient treatment following attempted suicide. The Altius plan covered this treatment. After an extended inpatient stay, Laura’s treating physicians suggested further inpatient treatment at another facility which would have been covered by the Altius plan. Instead, her parents decided to enroll her in a private residential treatment program at an out-of-network provider, Avalon Hills. She stayed at Avalon Hills for more than three months at a cost of approximately $92,000. “Prior to, during, and subsequent to Laura’s admission to Avalon Hills, Altius denied coverage for the residential treatment,” the court noted.
Plan Provisions
The Altius plan provides various levels of coverage for mental health care, including inpatient care, intensive outpatient therapy, and partial hospitalization, as well as short-term detoxification, psychiatric care, and alcohol and other substance abuse rehabilitation. The plan does not cover mental health treatment provided by non-participating providers, and specifically excludes coverage for residential treatment programs.
The Tenth Circtui pointed out that “[Utah Code] Sec. 625 requires insurers to offer catastrophic mental health coverage that does not impose a heavier financial burden for mental health conditions than for physical health conditions with respect to specified categories of limits—viz., lifetime, annual payment, episodic, inpatient or outpatient service, and maximum out-of-pocket.”
According to the lower court, “Sec. 625 does not prevent Altius from excluding residential treatment as long as the lifetime limit, annual payment limit, episodic limit, inpatient or outpatient service limit, and maximum out-of-pocket limit do not place a greater financial burden on an insured for the evaluation and treatment of a mental health condition than for a physical health condition.” The appellate court concurred, noting that Sec. 625 requires large employers to offer catastrophic mental health coverage, but “is completely silent on the question of whether an insurance company may exclude from its coverage certain treatment options.”
Under the statute, the plan did not place a greater financial burden on the family than if Laura were being treated for a physical condition as long as parity was maintained with respect to the enumerated categories of limits, the appellate court concluded.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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