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WASHINGTON-Regulatory agencies are easing employers' burden of complying with a federal law that curbs their ability to deny coverage to employees with pre-existing medical conditions.

That federal law will force tens of thousands of employers to modify their health care plans to meet the new requirements, which are aimed at making it easier for workers to change jobs without fear they will lose coverage for pre-existing conditions.

In general, employers can deny coverage for up to 12 months for new employees' pre-existing conditions. But that exclusionary period must be offset by employees' prior coverage. For example, if a new employee had coverage for six months from a prior employer, his or her new employer could deny coverage for a pre-existing condition for a maximum of six months.

The key to implementing these new requirements-which for many employers will kick in on Jan. 1-is a certification statement indicating how long employees had coverage. Employers will have to provide these certification statements to employees when they lose coverage, such as when they terminate employment.

This certification requirement begins June 1. And many employers are not aware of this deadline.

"You don't have a lot of time to react and get things in order," said Frank McArdle, a consultant with Hewitt Associates L.L.C. in Washington.

But the federal agencies-the Departments of Health and Human Services, Labor and Treasury-involved in implementing the health care portability law, are easing some compliance burdens for a transition period.

In interim regulations released last week, the agencies said that in the case of employees who lost coverage between July 1, 1996, and Sept. 30, 1996, employers only have to provide certification statements to those employees who specifically ask for the statements.

In addition, for those employees who lost coverage between Oct. 1, 1996, and June 1, 1997, employers only have to provide a simple notice. This one-page notice, which is printed in the interim regulations, briefly explains the health care portability law. The notice must tell employees from whom they can get the certification statement. At the bottom of the model notice is a section in which employees can make a request for a certificate of coverage for themselves and for their dependents.

Benefit experts welcome this model notice. "This is a good transition rule. Employers can use a form that has been blessed by the federal government," noted Chip Kerby, a principal with William M. Mercer Inc. in Washington.

Another break involves dependents of employees who request or receive certification statements. Until June 30, 1998, an employer does not have to provide names of dependents, but only the type of coverage-single, employee plus spouse or family coverage-on the certification statement. That flexibility is important because some employers may not have have names of dependents, noted Mary Case, a principal with The Kwasha Lipton Group in Fort Lee, N.J.

While these transition rules-scheduled to be published in the April 8 Federal Register-are welcomed, other provisions in the interim rules are troublesome, benefit experts say.

One chief trouble spot: a requirement that employers give notice to employees within 60 days of any material reduction in benefits or services.

An example of such a reduction in services would be a health maintenance organization that is reducing the size of its network in a certain geographic area, a change that some employers might not even be aware of immediately, noted John Piro, a Hewitt consultant in Rowayton, Conn.

In addition, the agencies failed to provide any guidance on whether corporate wellness plans that charge higher premiums for individuals who engage in certain behavior, such as smoking, violates a provision of the health care portability law that bars discrimination on the basis of health status.