On October 9, 2009, an important new Federal law affecting employer-sponsored group health plans will become effective. For calendar-year plans, the law will apply as of January 1, 2010.

The new law is known as â??Michelleâ??s Lawâ? and expands employersâ?? coverage and notice obligations for eligible college students. California already has its own version of Michelleâ??s Law.

New Requirement
All group health plans must allow a college student with a â??serious illness or injuryâ? to remain eligible for active dependent coverage for 12 months, even if he or she no longer qualifies as a full-time student.

The 12 months, however, does not extend coverage beyond another independent event that would end active/dependent status, such as the parentâ??s termination of employment or the student exceeding the planâ??s age limit. COBRA coverage would not be offered until after the 12-month special period has expired, unless the student returns to full-time status and remains eligible under other terms of the plan.

New Notice or Disclosure Requirements
If a health plan requires employees to certify the full-time student status of any dependent, then any description of that requirement must include a notice about the 12-month extension. The notice must be written in a manner that is understandable by the typical plan participant.

The California Twist
Once again California has chosen to do things differently than the Congress. The California law became effective January 1, 2009 so as of October 9, you will now have to wade through both laws.
â?¢ California allows for an extension beyond one year. In the event that the disabling condition persists and the student is chiefly dependent upon the covered employee for support and maintenance then coverage will continue beyond the limiting age upon timely submission of proof to the insurer/HMO.
â?¢ Under the state law, the insurer/HMO can terminate the studentâ??s coverage if it has not received proof of the disabling condition and that the employee is the chief provider of support and maintenance within 60 days of the insurer/HMOâ??s notice that coverage is terminating for loss of student status. Please note that federal law sets no time limit for providing evidence.
â?¢ California law requires all insurers/HMOs offering health care coverage to provide a notice to the covered employee with a dependent 90 days prior to the reaching his/her initial limiting age (e.g. age 19). The notice must include a description of the requirements for extension under Michelleâ??s Law. Coverage will terminate for that dependent absent a showing of student status or that student status was interrupted by a qualifying injury, illness or condition within the 60 day period following the carrier notice.
â?¢ The California law also makes it clear that health care coverage for students cannot terminate solely due to a break in the school calendar.
â?¢ At present, under California law, the insurers and health care service organizations must circulate all appropriate notices including a notice to dependents that are approaching the end of eligibility.

Generally, in California, when State and Federal law conflict, you must follow the law that is more favorable to the employee. Therefore, should any issues develop around Michelleâ??s law, you should check with your legal counsel before making any final decisions.

What You Need to Do Now
If you havenâ??t already done so, you should review your plan document and summary plan description to update and clarify any provisions related to dependents who are full-time college students, including the addition of language about the special 12-month period. You also need to make sure your benefits and human resources staff is trained on how to recognize situations that will trigger these new requirements. It would also be a good idea for employers or plan sponsors to audit the status of dependents under their plan with regard to continuing eligibility for benefits absent any carrier efforts to do so