The Brazilian agency that regulates health plans (ANS) recently published a resolution that clarifies the controversial Articles 30 and 31 of the Brazilian Health Law, enacted in 1998. These two articles were the legislature’s response to societal demands to increase private health plan access when people leave their jobs, including upon retirement.
Key Details
Under these two articles, employers were required to offer health care coverage to their ex-employees. Unfortunately, this was a simplistic solution to a very complicated problem because access to health insurance for the elderly is not a legal issue, but a financial one. Costs are very high, and elderly people often cannot afford to pay for it. The result was a lot of uncertainty for employers and ex-employees during the last 13 years. Enforcement of the articles has been uneven at best.
To clarify some of the issues raised, in the new resolution effective in February 2012, ANS defines the following key points:
The right to an extended health plan is valid only for contributory plans
The contribution is defined as any fixed value paid by the employee, including discounts from payroll, but not:
Coinsurance or deductibles
Contributions for dependents
The right is extended to all family members registered when the employment contract was in force and does not exclude the possibility of inclusion of a new dependent after leaving or retirement
The former employee will have up to 30 days after leaving employment to decide whether to remain in the plan
To provide former employees with plans, employers may choose to either contract the same plan for current and ex-employees, or separate plans for current and ex-employees
Even if the entire cost corresponding to the age range of the group of retirees is passed on, there will be an indirect subsidy from the employer whenever active employees and retirees are in the same contract, with potential liabilities generated as a consequence
The right is extinguished:
30 days after the former employee leaves the company
When the former employee enters into a new formal employment relation that enables him or her to join another health care plan
When the employer cancels the benefit for current and former employees
Implications for Employers
The situation is complex and urgent for employers. The implications range from expensive liabilities, which may have a significant impact on balance sheets, to employee relation issues that arise when changes to existing plans are deemed necessary. Despite the recent clarifications, solutions are not necessarily easy to determine and execute. Companies that have — or have had in the past — fixed contributions under their benefit plans should be aware of the implications and adapt their health plans to the new rules.
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