Tuesday, July 22, 2014

Well that was Fast...Another Court Rules Federal Exchange Subsidies Can Stand

Below is a link to an article from LifeHealthPro.com outlining the details of a seperate ruling today from another circut court of appeals that upheld the ability for the states using federal exchanges to receive subsidies. This one seems destined for the supreme court.

Click here for the article...

D.C. Appeals Court: Residents in States with Federal Exchanges Ineligible for Subsides

From Business Insurance

Joe Carlson, Modern Healthcare

D.C. appeals court strikes down ACA insurance subsidies for federal exchanges

July 22, 2014 - 10:06am
A federal appeals court has ruled the Obama administration cannot subsidize insurance premiums for nearly 7 million Americans, dealing a serious blow to the Patient Protection and Affordable Care Act.
The ruling sets up an almost-certain appeal to the U.S. Supreme Court.

Two judges with the D.C. Circuit Court of Appeals in Washington ruled Tuesday that the text of the reform law clearly forbids income-tax subsidies to go to low- and middle-income Americans who use one of the 34 federally run insurance exchanges. The tax subsidies have been flowing since the beginning of the year, based on a 2012 interpretation of the law by the IRS.

The actual text of the law says the sliding-scale tax credits are only available for coverage purchased “though an exchange established by the state,” which only 16 states did. IRS officials had claimed the imprecise wording of the law contradicted Congress' overall intent to expand insurance coverage as widely as possible. But that argument did not win the day Tuesday.

“Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges 'established by the State,' we reverse the district court and vacate the IRS's regulation,” the two-member majority wrote.

The ruling was the second dose of bad news for the Democrat-passed reform law this summer. Last month, the Supreme Court dealt a major symbolic blow to the law by ruling in Burwell v. Hobby Lobby Stores that the administration could not force the owners of closely held corporations to defy religious objections and cover contraceptives in their employees' insurance plans. The ruling prompted new legislation to ensure contraceptives are covered without cost for millions of women, but the future of that proposal is far from certain.

Tuesday’s ruling poses a much greater financial threat to the law's internal function, but the decision was not altogether surprising.

During oral arguments in March, the judges seemed to be split along the partisan lines that eventually became the 2-1 vote on Tuesday, with Republican-appointed Judges Thomas Griffith and A. Raymond Randolph voting for the plaintiffs and Democrat-appointed Judge Harry Edwards siding with Obama's IRS.

Judge Edwards filed a dissent saying that that the opinion required a reading of the law that would “crumble” the reform law's overall structure, which shows it was not Congress' intent to have the law interpreted narrowly.

“Reading the ACA as a whole, it is clear that the statute does not unambiguously provide that individuals who purchase insurance from an Exchange created by HHS on behalf of a State are ineligible to receive a tax credit. The majority opinion evinces a painstaking effort — covering many pages — attempting to show that there is no ambiguity in the ACA. The result, I think, is to prove just the opposite.”

The ruling does not automatically doom the subsidies. It's virtually certain that the administration will appeal Tuesday's ruling, either to a full panel of the D.C. Circuit Court or directly to the Supreme Court. Legal experts say the earliest the high court would rule is in the matter as soon as spring 2015 — setting up a period of national uncertainty, since the final word on the subsidies' legality would likely come after the re-enrollment period for next year.

Economists have estimated that a ruling like Tuesday's, in favor of the plaintiffs in Halbig v. Burwell, would eventually cause 6.5 million people nationally to forgo insurance purchased with now-illegal tax credits.

Nearly 7 million people used the exchanges to buy coverage in 2014, and more than 80% of them qualified for a tax credit that averaged about $2,900 per enrollee. Most of them are likely to forgo the coverage rather than pay the full price themselves, legal experts on both sides of the issue say. That would set up a situation where only people with immediate plans to use the insurance — that is, the sick or chronically ill — would be likely to find a way to pay for it. Skewing insurers' risk pools would most likely cause prices to rise, perhaps dramatically.

The ruling could also destabilize non-group insurance markets outside the exchanges.
That's because the reform law required insurance companies to put individuals in the same risk pools for coverage, regardless of whether they use an exchange or not. In other words, the grouping of disproportionately sick individuals in the exchanges could cause non-group premiums to rise outside the exchanges as well, because individuals in each state are in the same risk pool.

The Halbig case is not the only such lawsuit based on the legal theory that the reform law was only supposed to offer subsidies through federal exchanges.

The Competitive Enterprise Institute, which coordinated Halbig v. Burwell, also has a case called King v. Burwell awaiting a decision before judges of the 4th U.S. Circuit Court of Appeals in Richmond, Virginia. In addition, federal lawsuits filed by state officials, Pruitt v. Sebelius in Oklahoma and Indiana v. IRS, are pending in U.S. District Courts in Oklahoma City and Indianapolis.

Traditionally, the Supreme Court waits for two circuit courts to issue split rulings on the same question before taking up a case, though the court is free to accept cases involving urgent national questions if it chooses.

Joe Carlson writes for Modern Healthcare, a sister publication of Business Insurance.

Monday, June 9, 2014

Most employers to keep health benefits for workers but may drop spouses: Survey

 
Posted On: Jun. 09, 2014 2:58 PM CST

Jerry Geisel


Most employers will continue to offer health care coverage to their employees, but some will eliminate coverage for employees' spouses, according to a survey released Monday.

Just 6% of employers surveyed by Willis Group Holdings P.L.C survey say they will not comply with a Patient Protection and Affordable Care Act mandate that requires employers with at least 50 employees to offer coverage to their full-time employees or be hit with a stiff financial penalty. Sixty-two percent said they will comply with the mandate, and 32% said they were undecided.That requirement goes into effect in 2015 for larger employers and in 2016 for smaller firms.“The results of the survey underscore that organizations recognize the value of offering competitive medical benefits to employees and, despite concerns over health care reform, appear poised to continue to offer employer-sponsored health plans as part of a total rewards package,” said Jay Kirschbaum, St. Louis-based practice leader of the Willis human capital practice's national legal and research group, in a statement.On the other hand, 12% of employers already have added a special surcharge or eliminated coverage to employees' spouses if the spouse is eligible for coverage from his or her own employers, while 3% plan to take such action between 2015 and 2018, and 20% will likely do so but haven't set a date yet.The motivation behind such action is financial. Employers can reap significant financial savings when employees' spouses are not covered or are required to pay premium surcharges when they are eligible for coverage through their own employers but don't take it.For example, the average premium in 2013 for employee-only coverage was $5,884, according to the Kaiser Family Foundation in Washington. Adding a spouse easily will double that premium, experts say.

Other findings

The health care reform law also gives employers a further incentive to pare their health plan enrollment numbers.In 2014, employers have to pay a $63 reinsurance fee that is imposed for every health care plan participant, while a $44 per participant fee will be assessed in 2016. The amount of the fee in 2017 — the last year such fees will be imposed — has not been set yet by federal regulators. Revenue generated by the transitional reinsurance program fee will be used to partially reimburse insurers for covering high-cost individuals through health exchanges.The survey also found that just 37% of respondents have calculated the cost of the reform law on their health care plans.That relatively low percentage “demonstrates that for many organizations, determining an accurate assessment of these figures is still a challenge,” the survey said.,Among respondents that have calculated the cost impact, 54% said the law would boost costs between 0% and 5%, while 22% put the increase in the 5% to 10% range.The survey is based on the responses of 1,033 employers, including 36% with between 100 and 499 employees and 26% with less than 100 employees.

Wednesday, June 4, 2014

IRS updates form 720

The IRS has updated the excise form 720 that self-funded companies need to use to pay their PCORI fees.  The fees are due by 7/31/14. The update allows those companies with an 11/1, 12/1 or 1/1 effective date to pay the $2 per member fee based on their second PCORI fee payment. All others who are paying the fee for the first time would still pay $1 per member. The previous version of the form only showed the option of multiplying by $1.

To review the Scott Benefit Services legislative brief on the PCORI fees please follow this link.  For a copy of the updated form and instructions please see below.
 
 
Link to a copy of Form 720:
 
http://www.irs.gov/pub/irs-pdf/f720.pdf

 

Link to instructions to Form 720:


  

Wednesday, May 28, 2014

IRS announces hefty excise tax for employers who reimburse for individual coverage

In a recent Q & A the IRS announced a substantial excise tax for employers who reimburse their employees for the cost of individual policies through an Employer Payment Plan as opposed to establishing a traditional group insurance plan.  See the Q & A below. For addition details you can click here for an article from the New York Times. 

Employer Health Care Arrangements

Q1. What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?
Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.

Q2. Where can I get more information?
On Sept. 13, 2013, the IRS issued Notice 2013-54, which explains how the Affordable Care Act’s market reforms apply to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy.
DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03, and HHS will shortly issue guidance to reflect that it concurs with Notice 2013-54. On Jan. 24, 2013, DOL and HHS issued FAQs that addressed the application of the Affordable Care Act to HRAs.

Monday, May 12, 2014

Full Text of the FAQ XIX

Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of various provisions of the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/ and http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html), these FAQs answer questions from stakeholders to help people understand the new law and benefit from it, as intended.

Updated Department of Labor Model Notices

In general, under the Consolidated Omnibus Budget Reconciliation Act (COBRA), an individual who was covered by a group health plan on the day before the occurrence of a qualifying event (such as a termination of employment or a reduction in hours that causes loss of coverage under the plan) may be able to elect COBRA continuation coverage upon that qualifying event.(1) Individuals with such a right are referred to as qualified beneficiaries.
Under COBRA, group health plans must provide covered employees and their families with certain notices explaining their COBRA rights. A group health plan must provide each covered employee and spouse (if any) with a written notice of COBRA rights "at the time of commencement of coverage" under the plan (general notice). A group health plan must also provide qualified beneficiaries with a notice which describes their rights to COBRA continuation coverage and how to make an election (election notice).
General Notice: The general notice must be furnished to each covered employee (and their spouse if covered under the plan) not later than the earlier of: (1) 90 days from the date on which the covered employee or spouse first becomes covered under the plan or, if later, the date on which the plan first becomes subject to the continuation coverage requirements; or (2) the date on which the administrator is required to furnish an election notice to the employee or to his or her spouse or dependent. The general notice is required to include:
  • The name of the plan and the name, address, and telephone number of someone whom the employee and spouse can contact for more information on COBRA and the plan;
  • A general description of the continuation coverage provided under the plan;
  • An explanation of what qualified beneficiaries must do to notify the plan of qualifying events or disabilities;
  • An explanation of the importance of keeping the plan administrator informed of addresses of the participants or beneficiaries; and
  • A statement that the general notice does not fully describe COBRA or the plan and that more complete information is available from the plan administrator and in the plan's summary plan description (SPD).
Election Notice: The election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives notice that a qualifying event has occurred. The election notice is required to include:
  • The name of the plan and the name, address, and telephone number of the plan's COBRA administrator;
  • Identification of the qualifying event;
  • Identification of the qualified beneficiaries (by name or by status);
  • An explanation of the qualified beneficiaries' right to elect COBRA continuation coverage;
  • The date coverage will terminate (or has terminated) if COBRA continuation coverage is not elected;
  • How to elect COBRA continuation coverage;
  • What will happen if COBRA continuation coverage isn't elected or is waived;
  • What COBRA continuation coverage is available, for how long, and (if it is for less than 36 months), how it can be extended for disability or second qualifying events;
  • How COBRA continuation coverage might terminate early;
  • Premium payment requirements, including due dates and grace periods;
  • A statement of the importance of keeping the plan administrator informed of the addresses of qualified beneficiaries; and
  • A statement that the election notice does not fully describe COBRA or the plan and that more information is available from the plan administrator and in the plan's SPD.
Some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage, such as coverage that is available through the Health Insurance Marketplace (Marketplace). Qualified beneficiaries may be eligible for a premium tax credit (a tax credit to help pay for some or all of the cost of coverage in plans offered through the Marketplace) and cost-sharing reductions (amounts that lower out-of-pocket costs for deductibles, coinsurance, and copayments), and may find that Marketplace coverage is more affordable than COBRA.
The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) specifies that an employer that maintains a group health plan in a State that provides premium assistance(2) for the purchase of coverage under a group health plan is required to notify each employee of potential opportunities currently available for premium assistance in the State in which the employee resides.(3)
The Department of Labor has model notices that plans may use to satisfy the requirement to provide the general notice and election notice under COBRA, and the notice regarding premium assistance under CHIPRA. The COBRA model election notice was revised on May 8, 2013 to help make qualified beneficiaries aware of other coverage options that would soon become available in the Marketplace. Today, DOL is issuing a Notice of Proposed Rulemaking, as well as updated versions of the model general notice and model election notice that reflect that the Marketplace is now open and that better describes special enrollment rights in Marketplace coverage. DOL is also issuing a revised CHIPRA notice with similar updates related to Marketplace coverage.

Q1: Where can I get a copy of the Department of Labor's newest model notices?

The model general notice and model election notice are available on the DOL website at www.dol.gov/ebsa/cobra.html and the model CHIPRA notice is available at http://www.dol.gov/ebsa/compliance_assistance.html. (The model notices are available in modifiable, electronic form). As with the earlier model notices, in order to use the model properly, the plan administrator must complete it by filling in the blanks with the appropriate plan information.
Contemporaneous with the issuance of these FAQs, DOL is also issuing a notice of proposed rulemaking to update its regulations with respect to the COBRA model notices. Until rulemaking is finalized and effective, DOL will consider use of the model notices available on its website, appropriately completed, to constitute compliance with the notice content requirements of COBRA.

Limitations on Cost-Sharing under the Affordable Care Act

Public Health Service (PHS) Act section 2707(b), as added by the Affordable Care Act, provides that a non-grandfathered group health plan shall ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under sections 1302(c)(1) of the Affordable Care Act. Section 1302(c)(1) limits an enrollee's out-of-pocket costs.(4)
For plan or policy years beginning in 2014, the annual limitation on out-of-pocket costs in effect under Affordable Care Act section 1302(c)(1) is $6,350 for self-only coverage and $12,700 for coverage other than self-only coverage. Beginning with the 2015 plan or policy year and for plan or policy years thereafter, the annual limitation on out-of-pocket costs is increased by the premium adjustment percentage described under Affordable Care Act section 1302(c)(4). HHS has proposed that after applying the premium adjustment percentage, the annual limitation on out-of-pocket costs for 2015 would be $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage.(5)
Previous FAQs provided guidance on out-of-pocket maximums.(6) Set forth below are FAQs addressing additional questions about out-of-pocket maximums.

Q2: If an out-of-network provider charges an amount greater than the plan's or issuer's allowed amount, does individual spending for the amount in excess of the allowed amount (also known as balance billing) count toward the out-of-pocket maximum?

The Departments previously stated in an FAQ(7) that if a plan includes a network of providers, the plan may, but is not required to, count out-of-pocket spending for out-of-network items and services towards the plan's annual out-of-pocket maximum. A plan that counts such spending towards the out-of-pocket maximum may use any reasonable method for doing so. For example, if the plan covers 75% of the usual, customary, and reasonable amount (UCR) charged for services provided out-of-network and the participant pays the remaining 25% of UCR plus any amount charged by the out-of-network provider in excess of UCR, the 25% of UCR paid by the participant may reasonably be counted, in full or in part, toward the out-of-pocket maximum without including any amount charged above UCR paid by the participant.

Q3: With respect to the annual out-of-pocket maximum, how should large group market coverage and self-insured group health plans treat an individual's out-of-pocket costs for a brand name prescription drug, in circumstances in which a generic was available and medically appropriate?

As the Departments previously stated in guidance on how to apply annual and lifetime dollar limits under section 2711 of the Public Health Service Act,(8) large group market coverage and self-insured group health plans have discretion to define "essential health benefits." For example, a plan may include only generic drugs, if medically appropriate (as determined by the individual's personal physician) and available, while providing a separate option (not as part of essential health benefits) of electing a brand name drug at a higher cost sharing amount. If, under this type of plan design, a participant or beneficiary selects a brand name prescription drug in circumstances in which a generic was available and medically appropriate (as determined by the individual's personal physician), the plan may provide that all or some of the amount paid by the participant or beneficiary (e.g., the difference between the cost of the brand name drug and the cost of the generic drug) is not required to be counted towards the annual out-of-pocket maximum. For ERISA plans, the SPD must explain which covered benefits will not count towards an individual's out-of-pocket maximum.
In determining whether a generic is medically appropriate, a plan may use a reasonable exception process. For example, the plan may defer to the recommendation of an individual's personal physician, or it may offer an exceptions process meeting the requirements of 45 CFR 156.122(c).
For non-grandfathered health plans in the individual and small group markets that must provide coverage of the essential health benefit package under section 1302(a) of the Affordable Care Act, additional requirements apply.

Q4: If large group market coverage or self-insured group health plan has a reference-based pricing structure, under which the plan pays a fixed amount for a particular procedure (for example, a knee replacement), which certain providers will accept as payment in full, how does the out-of-pocket limitation apply when an individual uses a provider that does not accept that amount as payment in full?

Reference pricing aims to encourage plans to negotiate cost effective treatments with high quality providers at reduced costs. At the same time, the Departments are concerned that such a pricing structure may be a subterfuge for the imposition of otherwise prohibited limitations on coverage, without ensuring access to quality care and an adequate network of providers.
Accordingly, the Departments invite comment on the application of the out-of-pocket limitation to the use of reference based pricing. The Departments are particularly interested in standards that plans using reference-based pricing structures should be required to meet to ensure that individuals have meaningful access to medically appropriate, quality care. Please send comments by August 1, 2014 to E-OHPSCA-FAQ.ebsa@dol.gov.
Until guidance is issued and effective, with respect to a large group market plan or self-insured group health plan that utilizes a reference-based pricing program, the Departments will not consider a plan or issuer as failing to comply with the out-of-pocket maximum requirements of PHS Act section 2707(b) because it treats providers that accept the reference amount as the only in-network providers, provided the plan uses a reasonable method to ensure that it provides adequate access to quality providers.
For non-grandfathered health plans in the individual and small group markets that must provide coverage of the essential health benefit package under section 1302(a) of the Affordable Care Act, additional requirements apply.

Coverage of Preventive Services

PHS Act section 2713 and the interim final regulations relating to coverage of preventive services(9) require non-grandfathered group health plans and health insurance coverage offered in the individual or group market to provide benefits for, and prohibit the imposition of cost-sharing requirements with respect to, the following:
  • Evidenced-based items or services that have in effect a rating of "A" or "B" in the current recommendations of the United States Preventive Services Task Force (USPSTF) with respect to the individual involved, except for the recommendations of the USPSTF regarding breast cancer screening, mammography, and prevention issued in or around November 2009, which are not considered current;
  • Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) with respect to the individual involved;
  • With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and
  • With respect to women, evidence-informed preventive care and screening provided for in comprehensive guidelines supported by HRSA, to the extent not already included in certain recommendations of the USPSTF.(10)
If a recommendation or guideline does not specify the frequency, method, treatment, or setting for the provision of that service, the plan or issuer can use reasonable medical management techniques to determine any such coverage limitations.(11)
These requirements do not apply to grandfathered health plans.(12)

Q5: The USPSTF recommends that clinicians ask all adults about tobacco use and provide tobacco cessation interventions for those who use tobacco products. What are plans and issuers expected to provide as preventive coverage for tobacco cessation interventions?

As stated earlier, plans may use reasonable medical management techniques to determine the frequency, method, treatment, or setting for a recommended preventive service, to the extent not specified in the recommendation or guideline regarding that preventive service. Evidence-based clinical practice guidelines can provide useful guidance for plans and issuers.(13) The Departments will consider a group health plan or health insurance issuer to be in compliance with the requirement to cover tobacco use counseling and interventions, if, for example, the plan or issuer covers without cost-sharing:
  1. Screening for tobacco use; and,
  2. For those who use tobacco products, at least two tobacco cessation attempts per year. For this purpose, covering a cessation attempt includes coverage for:
    • Four tobacco cessation counseling sessions of at least 10 minutes each (including telephone counseling, group counseling and individual counseling) without prior authorization; and
    • All Food and Drug Administration (FDA)-approved tobacco cessation medications (including both prescription and over-the-counter medications) for a 90-day treatment regimen when prescribed by a health care provider without prior authorization.
This guidance is based on the Public Health Service-sponsored Clinical Practice Guideline, Treating Tobacco Use and Dependence: 2008 Update, available at: http://www.ahrq.gov/professionals/clinicians-providers/guidelines-recommendations/tobacco/index.html#Clinic.

Health FSA Carryover and Excepted Benefits

Excepted benefits provided under a group health plan or health insurance coverage generally are exempt from the Health Insurance Portability and Accountability Act (HIPAA) and Affordable Care Act market reform requirements of the Employee Retirement Income Security Act (ERISA), the PHS Act, and the Code.(14) Under previous regulations issued by the Departments, (the HIPAA excepted benefits regulations)(15) health FSAs generally constitute excepted benefits if:
  1. The employer also makes available group health plan coverage that is not limited to excepted benefits for the year to the class of participants by reason of their employment; and
  2. The arrangement is structured so that the maximum benefit payable to any employee participant in the class cannot exceed:
    1. Two times the employee's salary reduction election for the arrangement for the year; or,
    2. If greater, cannot exceed $500 plus the amount of the participant's salary reduction election).
On October 31, 2013, the Department of the Treasury and Internal Revenue Service issued guidance(16) modifying the "use-or-lose" rule for health FSAs to allow up to $500 of unused amounts remaining at the end of a plan year in a health FSA to be paid or reimbursed to plan participants for qualified medical expenses incurred during the following plan year, provided that the plan does not also incorporate a grace period. The guidance provided that the carryover of up to $500 does not affect the maximum amount of salary reduction contributions that the participant is permitted to make under section 125(i) of the Code ($2,500 adjusted for inflation after 2012).

Q6: How is a permissible carryover amount for a health FSA taken into account with regards to the maximum benefits payable limit for health FSAs under the excepted benefit regulations?

Unused carry over amounts remaining at the end of a plan year in a health FSA that satisfy the modified "use-or-lose" rule should not be taken into account when determining if the health FSA satisfies the maximum benefit payable limit prong under the excepted benefits regulations.

Summary of Benefits and Coverage

PHS Act section 2715, as added by the Affordable Care Act and incorporated by reference into ERISA and the Code, directs the Departments to develop standards for use by a group health plan and a health insurance issuer offering group or individual health insurance coverage in compiling and providing a summary of benefits and coverage (SBC) that "accurately describes the benefits and coverage under the applicable plan or coverage." On February 14, 2012, the Departments published final regulations regarding the SBC.(17) At the same time, the Departments published a notice announcing the availability of templates, instructions, and related materials authorized for implementing the disclosure provisions under PHS Act section 2715 for the first year of applicability (that is, for SBCs and the uniform glossary provided with respect to coverage beginning before January 1, 2014).(18)
The Departments stated that updated materials would be issued for later years.(19) The Departments issued FAQs in April 2013 providing guidance for SBCs provided with respect to coverage beginning on or after January 1, 2014, and before January 1, 2015 ("the second year of applicability").(20)

Q7: What templates should plans and issuers use for the SBCs and the uniform glossary required to be provided after the second year of applicability?

An updated SBC template (and sample completed SBC) were made available at http://cciio.cms.gov and http://www.dol.gov/ebsa/healthreform in April 2013 for the second year of applicability. Until further guidance is issued, these documents continue to be authorized. There are no changes to the uniform glossary or the "Why This Matters" language for the SBC. There are also no changes to the Instructions for Completing the SBC (for either group or individual health coverage, as applicable), including the special rule providing that, "[t]o the extent a plan's terms that are required to be described in the SBC template cannot reasonably be described in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is still as consistent with the instructions and template format as reasonably possible."

Q8: Certain specific safe harbors and other enforcement relief were provided by the Departments related to the requirement to provide an SBC and a uniform glossary for the first and second years of applicability.(21) Will this relief be extended?

Yes. As stated in previous FAQs,(22) the Departments' basic approach to Affordable Care Act implementation is to work together with employers, issuers, States, providers and other stakeholders to help them come into compliance with the new law and [to work] with families and individuals to help them understand the new law and benefit from it, as intended. Compliance assistance is a high priority for the Departments. Our approach to implementation is, and will continue to be, marked by an emphasis on assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law."
Until further guidance is provided, previously-issued enforcement and transition relief guidance continues to apply with respect to:
  • Affordable Care Act Implementation FAQs Part VIII, Q2 (regarding the Departments' basic approach to implementation of the SBC requirements during the first year of applicability);(23)
  • Affordable Care Act Implementation FAQs Part VIII, Q5 (regarding use of carve-out arrangements);(24)
  • Affordable Care Act Implementation FAQs Part IX, Q1 (regarding the circumstances in which an SBC may be provided electronically);(25)
  • Affordable Care Act Implementation FAQs Part IX, Q8 (regarding penalties for failure to provide the SBC or uniform glossary);(26)
  • Affordable Care Act Implementation FAQs Part IX, Q9 (regarding the coverage examples calculator);(27) and related information related to use of the coverage examples calculator;(28)
  • Affordable Care Act Implementation FAQs Part IX, Q10 (regarding an issuer's obligation to provide an SBC with respect to benefits it does not insure);(29)
  • Affordable Care Act Implementation FAQs Part IX, Q13 (regarding expatriate coverage);(30)
  • Affordable Care Act Implementation FAQs Part X, Q1 (regarding Medicare Advantage);(31)
  • Affordable Care Act Implementation FAQs Part XIV, Q2 (regarding providing information about MEC and MV without changing the SBC template);(32)
  • Affordable Care Act Implementation FAQs Part XIV, Q3 (removal of the row on the SBC template related to annual limits information);(33)
  • Affordable Care Act Implementation FAQs Part XIV, Q6 (an enforcement safe harbor related to closed blocks of business);(34)
  • Affordable Care Act Implementation FAQs Part XIV, Q7 (regarding the anti-duplication rule for student health insurance coverage);(35) and
  • The Special Rule contained in the Instruction Guides for Group and Individual Coverage.(36)
This guidance supersedes any previous subregulatory guidance (including FAQs) stating that certain enforcement relief for the SBC and uniform glossary requirements is limited to the first or second year of applicability.

Footnotes

  1. For more information on COBRA continuation coverage requirements applicable to group health plans, see "An Employer's Guide to Group Health Continuation Coverage Under COBRA," available at www.dol.gov/ebsa/publications/cobraemployer.html.
  2. The CHIPRA notice requirement applies to an employer that maintains a group health plan in a State that provides premium assistance under a State Medicaid plan under title XIX of the Social Security Act (SSA), or child health assistance under a State child health plan under title XXI of the SSA.
  3. The Department of Labor provided guidance regarding this notice requirement and announced the availability of a model notice on February 4, 2010 at 75 FR 5808.
  4. The annual limitation on out-of-pocket costs is also applied to non-grandfathered individual market coverage through the essential health benefits package requirements of PHS Act section 2707(a). On April 1, 2014, Public Law No. 113-93 was enacted. Section 213 of that law repeals the limitation on deductibles in the small group market that was previously required in this market under section 2707(b) of the PHS Act and section 1302(c)(2) of the Affordable Care Act.
  5. Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond; Proposed Rule, 79 FR 15808 (Mar. 21, 2014).
  6. See Affordable Care Act Implementation FAQs, Part XII, Q2, available at http://www.dol.gov/ebsa/faqs/faq-aca12.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12.html; Affordable Care Act Implementation FAQs, Part XVIII, Q2-Q5, available at http://www.dol.gov/ebsa/faqs/faq-aca18.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html.
  7. See ACA Implementation FAQs Part XVIII, Q4, available at www.dol.gov/ebsa/faqs/faq-aca18.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html.
  8. CMS, Frequently Asked Questions on Essential Health Benefits Bulletin, Q10 (February 17, 2012) http://www.cms.gov/CCIIO/Resources/Files/Downloads/ehb-faq-508.pdf
  9. 75 FR 41726 (July 19, 2010).
  10. "Women's Preventive Services: Required Health Plan Coverage Guidelines" (HRSA Guidelines) were adopted and released on August 1, 2011, based on recommendations developed by the Institute of Medicine (IOM) at the request of HHS. These recommended women's preventive services are required to be covered without cost-sharing, for plan years (or, in the individual market, policy years) beginning on or after August 1, 2012.
  11. See 29 CFR 2590.715-2713(a)(4) and 45 CFR 147.130(a)(4).
  12. In addition, the HRSA Guidelines exempt group health plans established or maintained by certain religious employers (and any group health insurance coverage provided in connection with such plans) from any requirement to cover contraceptive services that would otherwise apply. Additionally, accommodations are available for group health plans (and any group health insurance coverage provided in connection with such plans) established or maintained by certain non-grandfathered, non-profit eligible organizations with religious objections to contraceptive services with respect to the requirement to cover contraceptive services. See 78 FR 39870 (July 2, 2013) and http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/preventive-services-guidance-6-28-2013.pdf.
  13. See, e.g., Public Health Service-sponsored Clinical Practice Guideline, Treating Tobacco Use and Dependence: 2008 Update, available at: http://www.ahrq.gov/professionals/clinicians-providers/guidelines-recommendations/tobacco/index.html#Clinic. See also Centers for Disease Control and Prevention, Coverage for Tobacco Use Cessation Treatments, available at: http://www.cdc.gov/tobacco/quit_smoking/cessation/pdfs/coverage.pdf, for a discussion of scientific evidence regarding barriers for tobacco users accessing proven cessation treatments.
  14. Note, to the extent a health FSA is not excepted benefits, the Departments' interim final rules provide that PHS Act section 2711's annual limits requirements do not apply to health FSAs. See 29 CFR 2590.715-2711(a)(2)(ii) and 45 CFR 147.126(a)(2)(ii). Moreover, to the extent a health FSA is not excepted benefits, but is integrated with other coverage as part of a group health plan and the other coverage alone would comply with the requirements of PHS Act section 2713, the fact that benefits under the health FSA by itself are limited does not violate PHS Act section 2713 because the combined benefit satisfies the requirements. Other market reforms, such as PHS Act section 2719 regarding internal claims and appeals and external review do apply, however, apply to FSA coverage that is not excepted benefits.
  15. See 26 CFR 54.9831-1(c)(3)(v), 29 CFR 2590.732(c)(3)(v), and 45 CFR 146.145(c)(3)(v).
  16. See IRS Notice 2013-71, available at http://www.irs.gov/pub/irs-drop/n-13-71.pdf.
  17. See 26 CFR 54.9815-2715, 29 CFR 2590.715-2715, and 45 CFR 147.200, published at 77 FR 8668 (February 14, 2012).
  18. See 77 FR 8706 (February 14, 2012).
  19. See id. at 8707. See also ACA Implementation FAQs, Part VIII, Q24, available at www.dol.gov/ebsa/faqs/faq-aca8.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
  20. See ACA Implementation FAQs Part XIV, available at www.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html&exittitle=www.cms.gov&fedpage=yes">http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
  21. See ACA Implementation FAQs Part XIV, Q5, available at www.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html&exittitle=www.cms.gov&fedpage=yes">http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
  22. See ACA Implementation FAQs Part I, Q1 (available at www.dol.gov/ebsa/faqs/faq-aca.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs.html); FAQs Part VIII Q2 (available at www.dol.gov/ebsa/faqs/faq-aca8.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html); and FAQs Part IX Q8 (available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html).
  23. Available at http://www.dol.gov/ebsa/faqs/faq-aca8.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
  24. Available at http://www.dol.gov/ebsa/faqs/faq-aca8.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
  25. Available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
  26. Available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
  27. Available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
  28. Available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
  29. Available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
  30. Available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html. See also FAQs Part XIII, available at http://www.dol.gov/ebsa/faqs/faq-aca13.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs13.html.
  31. Available at http://www.dol.gov/ebsa/faqs/faq-aca10.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs10.html.
  32. Available atwww.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
  33. Available atwww.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
  34. Available atwww.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
  35. Available atwww.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
  36. See What This Plan Covers and What it Costs: Instruction Guide for Group Coverage, February 2012 edition (available at http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf and http://www.cms.gov/CCIIO/Resources/Files/Downloads/instructions-group-final.pdf) and What This Plan Covers and What it Costs: Instruction Guide for Individual Health Insurance Coverage, February 2012 edition (available at http://www.dol.gov/ebsa/pdf/SBCInstructionsIndividual.pdf and http://www.cms.gov/CCIIO/Resources/Files/Downloads/instructions-individual-final.pdf).

ACA FAQ XIX - Model COBRA notice update, cost-sharing limitations and preventative services


The Department of Labor’s Employee Benefits Security Administration updated its Affordable Care Act web page with the following: