Who do you have to pay back from a settlement?
North Carolina is one of a few states which does not allow health plans to seek reimbursement from personal injury settlements. Our "anti-subrogation rules," which are insurance rules from the NC Department of Insurance, have many exceptions, however. Medicaid, Medicare, the State Employee Health Plan, and Workers Compensation Insurance are the most common of the exceptions. These folks must be paid back if you get a recovery from your personal injury case. The last exception is for self-funded health insurance plans which are exempted from state law because the federal law of ERISA pre-empts state laws.
ERISA is NOT a lien. It is a contractual right of repayment which obligates the recipient of an employee health plan to repay the plan if a recovery is made from a third party (tort feasor).
Stealth Plans or Health Plans?
It is not always so simple to determine if a Health Plan is actually self-funded. What's worse, is that some non-self-funded Health Plans claim to be self-funded. Thankfully, my friend in South Carolina, attorney and blogger Roy Harmon of Health Plan Law.com, has posted an excellent article on the various ways to determine if a health plan falls under ERISA and can claim a right of reimbursement.
Form 5500: How do you read this thing?
Here is an excerpt from Roy's post about determining what a Form 5500 means:
Often offered as a solution, the inquiring as to the filing of Form 5500’s is a good starting point for determining whether a plan is a self-funded ERISA plan.
The plan participant (perhaps not the participant’s attorney, according to some cases) is entitled to request the most recent Form 5500 under 29 U.S.C. 1024(b)(4). While you wait for the plan administrator to send it (and you do want to ask the “plan administrator” (not the claims administrator), you can check Freeerisa.com and take a look at what is available there. For more information on plan reporting and disclosure requirements, the DOL has published a good resource in the form of a booklet.
The Form 5500 will have a section, Box 9, that indicates the plan funding arrangement. If the form says “general assets of the employer”, that suggests a self-funded plan. If it says “insurance”, its suggests a fully insured plan. (Fully insured plans may still be ERISA plans, but the preemptive force of ERISA Section 514 only applies with its full force and effect in the case of self-funded ERISA plans.)
But evaluation of the Form 5500 is not conclusive.
Roy has some great articles on his website. He generally covers all of the federal cases which address ERISA law, and does a good job of boiling down some complicated law into understandable tid-bits. Of course, ERISA law is not exactly cut and dried, no matter how you look at it, so you really have to make your best guess, and when in doubt, ask a colleague.
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