On December 20, the Department of Labor updated its list of FAQs on the Affordable Care Act (ACA), adding three more questions to the list. The complete list of FAQs can be found here.
New Special Enrollment Right
The first FAQ deals with the addition of a new HIPAA special enrollment right. Employers should be familiar with the HIPAA special enrollment rights already – these are the rules that allow employees to enroll in a health plan mid-year due to marriage, for instance, or for an employee to switch to a spouse’s plan when the spouse’s open enrollment period is different from the employee’s. Under this guidance, a new special enrollment triggering event has been added: the loss of individual coverage.
Q1: If an individual who enrolled in individual market health insurance coverage, including coverage purchased through a Marketplace, loses eligibility for that coverage, is the individual entitled to a special enrollment period in an employer-sponsored group health plan for which the individual is otherwise eligible and had previously declined to enroll?
Yes. Employees and their dependents are eligible for special enrollment in a group health plan if they are otherwise eligible to enroll in the plan, and at the time coverage under the plan was previously offered, they had other group health plan or health insurance coverage (regardless of whether the coverage was obtained inside or outside of a Marketplace) for which they have lost eligibility. Accordingly, if an individual loses eligibility for coverage in the individual market, including coverage purchased through a Marketplace (other than loss of eligibility for coverage due to failure to pay premiums on a timely basis or termination of coverage for cause, such as making a fraudulent claim or an intentional misrepresentation of a material fact), that individual is entitled to special enrollment in group health plan coverage for which he or she is otherwise eligible. These individuals will be eligible for special enrollment in the group health plan coverage regardless of whether they may enroll in other individual market coverage, through or outside of a Marketplace.
Action Items: Review your plan documents – both for your group health plan(s) and your Cafeteria Plan documents – to determine whether they have to be amended to accommodate this new special enrollment right. Otherwise, this isn't much different than any other special enrollment right that would give an employee a mid-year opportunity to enroll in the plan. Existing procedures should cover any other requirements associated with this change.
Women’s Preventive Services Requirements
The second FAQ addresses updates to the preventive care services that are required to be provided to women without cost sharing under the ACA. On December 20, the Health Resources and Service Administration updated it’s guidelines for women’s preventive healthcare (which can be found here).
Q2: HRSA updated its Women’s Preventive Services Guidelines on December 20, 2016. When must non-grandfathered group health plans and health insurance issuers begin offering coverage for preventive services without cost sharing based on the updated guidelines?
Women’s preventive services are required to be covered without cost sharing in accordance with the updated guidelines for plan years (or, in the individual market, policy years) beginning on or after December 20, 2017.
Until the new guidelines become applicable, non-grandfathered group health plans and health insurance issuers are required to provide coverage without cost sharing consistent with the previous HRSA guidelines and PHS Act section 2713 for any items or services that continue to be recommended.
Action Items: Review the new HRSA guidelines and compare those requirements with your own preventive care services to determine if adjustments need to be made. These changes apply for renewals on or after December 20, 2017 (January 1, 2018 or later for all intents and purposes), giving plan sponsors ample time to update plans, adjust plan documents if required, and implement the changes.
Qualified Small Employer Health Reimbursement Arrangements
Earlier in December, President Obama signed into law the 21st Century Cures Act, which included a new form of Health Reimbursement Arrangements that can be used by small employers (those that don't meet the definition of an Applicable Large Employer (ALE) under the ACA) to reimburse employees for their individual health insurance premiums on a tax-free basis without incurring a penalty.
Prior guidance issued by DOL, HHS and Treasury had prohibited these types of arrangements (which were deemed to be employer payment plans (EPPs), but granted penalty relief for plans that had been implemented prior to July 2015. The Cures Act requires that relief to be extended to plans that were put in place up through December 31, 2016.
Q3: The Cures Act, enacted on December 13, 2016, includes provisions allowing small employers to offer arrangements similar to an HRA or EPP that may be used to pay or reimburse for medical expenses, including coverage on the individual market. How do these provisions of the Cures Act affect the Departments’ previous guidance regarding HRAs and EPPs?
Pursuant to the extension provided under the Cures Act, for plan years beginning on or before December 31, 2016, the excise tax under Code section 4980D will not be asserted for any failure to satisfy the market reforms by EPPs that pay, or reimburse employees for, individual health policy premiums or Medicare Part B or Part D premiums, with respect to employers otherwise eligible for the relief under Q&A 1 of Notice 2015-17. Such employers are also not required to file IRS Form 8928 solely as a result of having such an arrangement for the plan years beginning on or before December 31, 2016.
As noted in Q&A 1 of Notice 2015-17, the relief doesn't extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums. Consequently, the extension of the relief by the Cures Act is similarly limited to EPPs and doesn't extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums. In addition, as an employer-provided group health plan, coverage by an HRA or EPP that isn't a QSEHRA and that is eligible for the extended relief under the Cures Act would be minimum essential coverage. Consequently, a taxpayer wouldn't be allowed a premium tax credit under Code section 36B for the Marketplace coverage of an employee, or an individual related to the employee, who is covered by an HRA or EPP other than a QSEHRA.
Action Items: Employers sponsoring Health Reimbursement Arrangements that allow for individual health insurance premiums to be reimbursed need to ensure their plan complies with all the requirements of the QSEHRA rules and consequently are eligible for this penalty relief. Consult your Assurance representatives for further evaluation. Note that if you're subject to the employer mandate, QSEHRAs aren't an option for you, and the reimbursement of individual premiums through an HRA does represent a violation of the rules, subject to a penalty of $100 per person per day.
In the closing days of the Obama administration, agencies appear to be wrapping up whatever regulations they can realistically publish prior to January 20, and this release is no exception. The new administration under President-elect Trump will no doubt review these and other regulations, so it isn't out of the question that part or all of these new FAQs will be reviewed and potentially changed in the coming weeks and months. Assurance will continue to update you as the situation develops.