Many times correspondence from your benefits carrier gets pushed aside, gets a quick glance or does not get directed to the correct party. This notice is something that you should make sure is directed to the person responsible for insurance plan administration.

If your company sponsored health insurance is provided by a fully insured PPO or HMO plan it will be subject to the provisions of Senate Bill 51 (SB 51) on January 1st, 2006 . It is very important that whomever is in charge of removing employees from your plan after they are terminated or no longer eligible, be aware of this provision.

It requires HMO and PPO contracts with groups to require payment of the insurance premium through the end of the month, in which the group policyholder notifies the HMO or insurer that the enrollee or insured is no longer part of the group and eligible for coverage; and requires benefits coverage through the time period for which the premium was paid. The bill states that the insurer is to be notified of such
removal to prevent retroactive recovery of payments made to physicians for medical services provided in good faith prior to retroactive termination of the employee's health plan coverage.

Simply put, if the company does not report to their insurance carrier the termination of an employee who has been terminated employee or one who is no longer eligible during the month in which the event occurs, the company is responsible for the premium for that employee in subsequent months. In addition that employee is extended coverage until the end of the month in which the carrier received the notification.

In the past carriers would usually backdate the termination of an employee and not charge for subsequent months, as long as it was a reasonable time period. They will no longer be able to do this. With the premiums that are charged today, this could mean your company could be liable for thousands of dollars that would have to be paid on behalf of a employee who is no longer employed. If the employee covered their dependents the cost for even one month could be substantial.

Please make sure everyone on your administrative staff is aware of your carrier's capabilities for adding and terminating employees. This could be a very costly oversight. I suggest you contact your carrier if you have any questions about their procedures.

If you have any questions or would like to discuss, this or any other insurance issues, please contact Bob Barker at:

Fred Brown Insurance Brokerage
8323 Southwest Freeway, Suite 475
Houston , TX 77074
Tel: 713-541-5417
Fax: 713-541-1746
Email: bbarker@fredbrownins.com