"Michelle's Law" Extends Health Care Coverage to Dependent Student during Medically Necessary Leave of Absence

On October 9, 2008, President Bush signed into law “Michelle’s Law,” which amends the Employee Retirement Income Security Act of 1974 (“ERISA”), the Public Health Service Act and the Internal Revenue Code of 1986 to prohibit group health plans from terminating a dependent student’s health care coverage during a medically necessary leave of absence.

Michelle’s Law will apply to plan years beginning on or after October 9, 2009 – meaning January 1, 2010 for calendar year plans. Michelle’s Law will be applicable to any insured or self-insured group plan that offers dependent coverage which is tied to student status. Additionally, the requirements of Michelle’s Law will extend to governmental plans.

Upon written certification by a dependent student’s treating physician that states the dependent is suffering from a serious illness or injury and that a leave of absence (or reduction in student hours) is medically necessary, Michelle’s Law will require that a group health plan continue plan coverage for the dependent student until the earlier of:

1. One (1) year after the first day of the medically necessary leave of absence; or
2. The date on which the coverage under the plan would otherwise terminate.

A dependent student whose benefits are continued under Michelle’s Law will be entitled to the same benefits as if the dependent continued to be a covered student and was not on a medically necessary leave of absence. Additionally, in the event that a dependent student is in a period of coverage under Michelle’s Law and the dependent student has a change in his/her health coverage which results in a loss of plan coverage under one plan, with new coverage being provided under another plan, the new plan must honor the remaining period of leave. For example, if a dependent has been covered under Michelle’s Law for six (6) months with Insurer A and the dependent’s health coverage switches to Insurer B, Insurer B must honor the dependent’s remaining six (6) months of coverage under Michelle’s Law.

Group health plans (or health insurance issuers providing health insurance coverage in connection with a group health plan) will also be required to include, with any notice regarding a requirement for certification of student status for coverage under the plan, a description of the dependent student’s right to continue coverage under Michelle’s Law. This description must be stated in language which is “understandable to the typical plan participant.”

Michelle’s Law will not affect a group health plan that does not offer dependent coverage, or does not link such coverage to student status. Otherwise, any group health plan which links dependent coverage to student status will need to ensure that its plan documents, summary plan descriptions and other plan materials are updated to comply with these new requirements.