Wednesday, April 2, 2014

ACA Deductible Limits Repealed for Small Group Market

On April 1, 2014, President Obama signed the "Protecting Access to Medicare Act of 2014" into law. The new law mainly focuses on Medicare reimbursement rates for doctors. A small, easily-overlooked provision of the law retroactively eliminates the Affordable Care Act's (ACA) annual deductible limit for health plans in the small group market.

The ACA's annual deductible limit was effective for plan years beginning on or after Jan. 1, 2014, but many small employer plans were not required to comply with the limit due to an actuarial value exception created by the Department of Health and Human Services (HHS). The repeal of the ACA's deductible limit is retroactively effective to the date of the ACA's enactment in March 2010. Due to the repeal, small employers will have more flexibility to select health plans with higher deductibles. The new law does not affect the ACA's out-of-pocket maximum, which applies to all non-grandfathered health plans for plan years beginning on or after Jan. 1, 2014.

Monday, February 10, 2014

Employer mandate delayed for 50-99 employers, some rules relaxed for larger companies

To link directly to the Scott Healthcare Reform Bulletin click here.

On Monday the IRS released the final rules regarding Shared responsibility for employers regarding health coverage.  Highlights from the final rules are:

-Employers with 50-99 full time employers do not have to comply with the employer mandate until 1/1/16.

-Employers with 100 full time employees or more will be required to comply in 2015, but based on these new final regulations will only have to offer coverage to 70% of full time employees in the first year.  The requirement will increase to the previously stated 95% in 2016.

-Clarification that the IRS will define a seasonal employee as "an employee in a position for which the customary annual employment is six months or less. The reference to customary means that by the nature of the position an employee in this position typically works for a period of six months or less, and that period should begin each calendar year in approximately the same part of the year, such as summer or winter".

-Provided additional details on the arrangements for temporary staffing agencies.

-The reporting requirements of section 6056 will apply to all employers over 50 employees beginning in 2015. Even to those between 50-99 who will not have to offer coverage.  

-Transition relief to non-calendar year plans was granted so that non-calendar year plans don't have to comply with the employer mandate until the start of their plan year in 2015.

For additional articles on the release follow the links below:

Washington Post

LifeHealthPRO

Wednesday, February 5, 2014

New CBO PPACA Estimates Released

On Tuesday the CBO released its updated 10 year budget and economic outlook. The items that garnered the most media attention were appendix B and C which focused on updated impact of PPACA.

Here are some highlights of the report:

-The net cost from the PPACA coverage provisions between 2015-2024 are expected to be $1.48 trillion.

-The expectation is that the number of nonelderly people who have health insurance will increase by 13 million in 2014.

-Still, according to estimates 31 million nonelderly residents of the US will not have insurance in 2024.

-The CBO and JCT reduced the projected number of people who would be covered through the marketplace in 2014 from 7 million to 6 million.

-It is estimated that 80% of those enrolling in the marketplace will receive subsidies.

-The average subsidy per subsidized enrollee is expected to be $4700

-The number of people expected to be covered through employment-based coverage increased compared to the previous outlook.

-The CBO estimates that PPACA will cause a reduction of roughly 1% in aggregate labor compensation over the 2017-2024 period. Mostly because workers will choose to supply less labor so they can gain or keep eligibility for PPACA subsides.

-The reduction in hours worked represents a decline in the number of full-time equivalent workers of about 2 million in 2017, rising to about 2.5 million in 2024.

Tuesday, February 4, 2014

Changes to "Full Time" definition being proposed by House Committee

By Allison Bell - From LifeHealthPro - for original article click here.

The House Ways and Means Committee is considering a bill that could narrow the scope of the employer health insurance “shared responsibility” requirements.

The committee plans to mark up the mandate bill Tuesday morning.

The bill, H.R. 2575, would change the definition federal agencies use when deciding whether someone is a full-time worker for purposes of health coverage under the Patient Protection and Affordable Care Act.

PPACA defines full-time as at least 30 hours per week.

H.R. 2575, the “Save American Workers Act of 2013” bill, would change the cut-off to 40 hours and would take effect retroactively.

The PPACA group health coverage “play or pay” mandate will require an employer with 50 or more full-time employees to offer a minimum level of group health coverage or else pay a penalty.

House Ways and Means Committee Chairman Dave Camp, R-Mich., has proposed another version of the bill that would change the year title and have the bill be effective after Dec. 31, 2013
.
Rep. Todd Young, R-Ind., the sponsor of H.R. 2575, has rounded up 192 Republican cosponsors for the bill but no Democratic cosponsors.

Sen. Susan Collins, R-Maine, has lined up two Democratic cosponsors for a Senate version of the bill, S. 1188. Sen. Joe Donnelly, D-Ind., helped introduce the bill back in June, and Sen. Joe Manchin III, D-W.Va., came aboard as a supporter in October. The bill also has 11 Republican cosponsors.

Thursday, January 23, 2014

HHS Updates 2014 Federal Poverty Levels

The federal poverty levels (FPL) have been updated as outlined below. The FPL plays a very important role in PPACA as people whose household incomes fall between 100 -400% of the FPL and don't have access to other qualified coverage (such as medicare, medicaid or a qualified employer sponsored plan) may be eligible for a subsidy in the Health care Marketplace.

The FPL is also important to employers who are attempting to structure their employee contributions in a way that will satisfy the federal poverty level safe harbor. If an employer sets the employee only contribution for their health plan below 9.5% of the FPL then they can satisfy this safe harbor and know that their plan will be considered affordable under PPACA guidelines. Based on the 2014 FPL this number would be $92.39.  However, the penalties for not having an affordable plan have been delayed until 2015.

 
2014 POVERTY GUIDELINES FOR THE

48 CONTIGUOUS STATES AND THE

DISTRICT OF COLUMBIA

 
Persons in family/household  Poverty guideline

1 ............................................ $11,670

2 ............................................ 15,730

3 ............................................ 19,790

4 ............................................ 23,850

5 ............................................ 27,910

6 ............................................ 31,970

7 ............................................ 36,030

8 ............................................ 40,090

 

For families/households with more

than 8 persons, add $4,060 for each

additional person.
 
 
2014 POVERTY GUIDELINES FOR
ALASKA
 
Persons in family/household Poverty guideline
1 ............................................ $14,580
2 ............................................ 19,660
3 ............................................ 24,740
4 ............................................ 29,820
5 ............................................ 34,900
6 ............................................ 39,980
7 ............................................ 45,060
8 ............................................ 50,140

For families/households with more

than 8 persons, add $5,080 for each

additional person.
 
 
2014 POVERTY GUIDELINES FOR
HAWAII
 
Persons in family/household Poverty guideline
1 ............................................ $13,420
2 ............................................ 18,090
3 ............................................ 22,760
4 ............................................ 27,430
5 ............................................ 32,100
6 ............................................ 36,770
7 ............................................ 41,440
8 ............................................ 46,110
 
For families/households with more
than 8 persons, add $4,670 for each
additional person
 
To link directly to the Federal Register click here

Monday, January 20, 2014

Delay in non-discrimination rules for fully insured plans (Reuters)


WASHINGTON (Reuters) - The Obama administration is delaying enforcement of a provision of the new healthcare law that prohibits employers from providing better health benefits to top executives than to other employees, the New York Times reported on Saturday.

Tax officials said they would not enforce the provision this year because they had yet to issue regulations for employers to follow, according to the Times.

Internal Revenue Service spokesman Bruce Friedland said employers would not have to comply until the agency issued regulations or other guidance, the newspaper reported.

The IRS was not immediately available to confirm the Times story.

The rollout of the Affordable Care Act, known as Obamacare, has been marked by a number of delays in implementing certain parts of the law. In November, the administration announced a one-year delay in online insurance enrollment for small businesses.

Technical problems with the enrollment website plagued its launch on October 1, but they have largely been fixed and more than 2 million people have signed up for private insurance. The White House hopes to have 7 million people sign up by March 31, the deadline for coverage under Obamacare.

The law, adopted in 2010, says employer-sponsored health plans must not discriminate "in favor of highly compensated individuals" with respect to either eligibility or benefits.

IRS officials said they were wrestling with complicated questions like how to measure the value of employee health benefits, how to define "highly compensated" and what exactly constitutes discrimination, the Times reported.

The ban on discriminatory health benefits was to take effect in 2010. Administration officials said then that they needed more time to develop rules and that the rules would be issued well before this month, when other major provisions of the law took effect.

A similar ban on discrimination, adopted more than 30 years ago, already applies to employers that serve as their own insurers. The new law extends that policy to employers that buy insurance from commercial carriers.

(Writing by Eric Beech; editing by Gunna Dickson)

Thursday, January 9, 2014

PPACA FAQ XVIII - Released today from EBSA

January 9, 2014

Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of the market reform provisions of the Affordable Care Act, as well as FAQs regarding implementation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor, 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.cciio.cms.gov/resources/factsheets/index.html), these FAQs answer questions from stakeholders to help people understand the law and benefit from it, as intended.

Coverage of Preventive Services

Public Health Service (PHS) Act section 2713 and the interim final regulations relating to coverage of preventive services(1) 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 on 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 the 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 the current recommendations of the USPSTF.(2)
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 coverage limitations.(3)
These requirements do not apply to grandfathered health plans.(4)

Q1: On September 24, 2013, the USPSTF issued new recommendations with respect to breast cancer.(5) What changes must plans make to comply with the new recommendations?

The USPSTF recently revised its "B" recommendation regarding medications for risk reduction of primary breast cancer in women. The September 2013 recommendation now says:
The USPSTF recommends that clinicians engage in shared, informed decisionmaking with women who are at increased risk for breast cancer about medications to reduce their risk. For women who are at increased risk for breast cancer and at low risk for adverse medication effects, clinicians should offer to prescribe risk-reducing medications, such as tamoxifen or raloxifene.
Accordingly, for plan or policy years beginning one year after the date the recommendation or guideline is issued (in this case, plan or policy years beginning on or after September 24, 2014), non-grandfathered group health plans and non-grandfathered health insurance coverage offered in the individual or group market will be required to cover such medications for applicable women without cost sharing subject to reasonable medical management.

Limitations on Cost-Sharing under the Affordable Care Act

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) and (c)(2) of the Affordable Care Act. Section 1302(c)(1) limits out-of-pocket costs and, for small group market plans, section 1302(c)(2) limits deductibles.(6)
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. For plan or policy years beginning after 2014, the annual limitation on out-of-pocket costs is increased by the premium adjustment percentage described under Affordable Care Act section 1302(c)(4).
A previous FAQ provided guidance on out-of-pocket maximums for the first year of applicability where a group health plan or group health insurance issuer utilizes more than one service provider to administer benefits that are subject to the annual limitation on out-of-pocket costs.(7) This guidance generally provided that, for group health plans and group health insurance issuers that utilize more than one service provider to administer benefits that are subject to the annual limitation on out-of-pocket costs, only for the first plan year beginning on or after January 1, 2014 (first year of applicability), the Departments will consider the annual limitation on out-of-pocket costs to be satisfied if:
  • The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); and
  • To the extent that the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), that out-of-pocket maximum does not exceed the dollar amounts set forth in section 1302(c)(1) of the Affordable Care Act.

Q2: After this first year of applicability, are plans and issuers subject to PHS Act section 2707 required to apply the out-of-pocket maximum across all essential health benefits?

Yes. For plan years beginning on or after January 1, 2015, non-grandfathered group health plans and group health insurance coverage must have an out-of-pocket maximum which limits overall out-of-pocket costs on all essential health benefits (EHB). Because cost-sharing limits in section 1302(c) of the Affordable Care Act apply only to EHB, plans are not required to apply the annual limitation on out-of-pocket maximums to benefits that are not EHB. To determine which benefits are EHB for purposes of complying with PHS Act section 2707, the Departments will consider self-insured group health plans or large group health plans to have used a permissible definition of EHB under section 1302(b) of the Affordable Care Act if the definition is one that is authorized by the Secretary of HHS.(8) Furthermore, the Departments intend to use their enforcement discretion and work with large group market and self-insured plans that make a good faith effort to apply an authorized definition of EHB. This approach is consistent with the approach the Departments have taken with respect to annual and lifetime limits under PHS Act section 2711.(9)

Q3: Some plans, such as those with multiple service providers, may find it easier to divide the annual limit on out-of-pocket costs across multiple categories of benefits, rather than reconcile claims across multiple service providers. Is this permitted, if the combined out-of-pocket maximum for the year does not exceed the annual limitation under section 1302(c) of the Affordable Care Act?

Yes. Plans and issuers are permitted to structure a benefit design using separate out-of-pocket limits, provided that the combined amount of any separate out-of-pocket limits applicable to all EHBs under the plan does not exceed the annual limitation on out-of-pocket maximums for that year under section 1302(c) of the Affordable Care Act.(10)

Q4: If a plan includes a network of providers, is the plan required to count an individual's out-of-pocket expenses for out-of-network items and services toward the plan's annual maximum out-of-pocket limit?

No. A plan may, but is not required to, count out-of-pocket spending for out-of-network items and services towards the plan's annual maximum out-of-pocket limit. PHS Act section 2707 sets limits on cost sharing with reference to the limitations set forth in section 1302(c) of the Affordable Care Act. Under HHS regulations at 45 CFR 156.130(c) implementing Affordable Care Act section 1302(c), cost-sharing requirements for benefits that are EHB from a provider outside a plan's network of providers are not required to be counted toward the annual limitation on out-of-pocket costs.
With respect to health insurance issuers offering qualified health plans (QHPs) through a Health Insurance Marketplace (Marketplace) only, as noted in the Interim Final Rule on Maximizing January 1, 2014 Coverage Opportunities, 78 Fed. Reg. 76212 (Dec. 17, 2013), HHS strongly encourages QHP issuers to allow enrollees to receive in-network benefits with respect to any provider listed in the version of the provider directory as of the date of that enrollee's enrollment for the beginning months of coverage, in cases where issuers are unable to maintain provider directories in a current status. HHS also urges QHP issuers to temporarily cover non-formulary drugs, as well as drugs that are on a QHP issuer's formulary but typically require prior authorization or step therapy prior to being covered, during the first 30 days of coverage, starting on January 1, 2014. Accordingly, under these limited circumstances, HHS strongly encourages QHP issuers to count enrollees' out-of-pocket expenses on these services and items toward the QHPs' annual maximum out-of-pocket limits.

Q5: Is a plan required to count an individual's out-of-pocket costs for non-covered items or services (such as cosmetic services) toward the plan's annual maximum out-of-pocket limit?

No. A plan may, but is not required to, count out-of-pocket spending for non-covered services towards the plan's annual maximum out-of-pocket costs. The term "cost-sharing" does not include spending for non-covered services. Under section 1302(c)(3) of the Affordable Care Act, the term "cost-sharing" includes:
  • Deductibles, coinsurance, copayments, or similar charges; and
  • Any other expenditure required of an individual which is a qualified medical expense (within the meaning of section 223(d)(2) of the Internal Revenue Code (the Code)) with respect to EHB covered under the plan.
The term "cost-sharing" does not include premiums, balance billing amounts for non-network providers, or spending for non-covered services. Nothing, however, prohibits a plan or issuer from counting such expenses toward the plan's annual maximum out-of-pocket limit, particularly in the circumstances described in Q4 above with respect to QHP issuers.

Expatriate Health Plans

A previous FAQ provided guidance and temporary transitional relief regarding the extent to which expatriate health coverage is subject to the provisions of the Affordable Care Act.(11)

Q6: Can the Departments provide any additional clarification of the definition of an insured expatriate health plan for purposes of the temporary transitional relief, as well as additional clarification of the scope of the relief provided?

Yes. For purposes of the temporary transitional relief, an insured expatriate health plan is an insured group health plan with respect to which enrollment is limited to primary insureds for whom there is a good faith expectation that such individuals will reside outside of their home country or outside of the United States for at least six months of a 12-month period and any covered dependents, and also with respect to group health insurance coverage offered in conjunction with the expatriate group health plan. The 12-month period can fall within a single plan year or across two consecutive plan years.
Also, the earlier guidance only mentioned subtitles A and C of title I of the Affordable Care Act, but the Departments will also consider the requirements of subtitle D of title I of the Affordable Care Act to be satisfied if a plan and issuer of an insured expatriate health plan complies with the pre-Affordable Care Act version of title XXVII of the PHS Act.
The Departments note that coverage provided under an insured expatriate health plan generally is minimum essential coverage under section 5000A of the Code.

Q7: Do the Departments intend to issue regulations or provide additional guidance on insured expatriate health plans?

The Departments continue to consider narrowly tailored guidance with respect to insured expatriate health plans that takes into account the ability of such coverage to reasonably comply with the requirements of subtitles A, C, and D of title I of the Affordable Care Act. The Departments intend that any new regulations or guidance that is more restrictive on plans or issuers will not be applicable to plan years ending on or before December 31, 2016. Insured expatriate health plans may continue to rely on the temporary transitional relief set forth in Affordable Care Act Implementation FAQs Part XIII, Q1 at least through those plan years.

Wellness Programs

On June 3, 2013, the Departments issued final regulations(12) regarding nondiscriminatory wellness programs in group health coverage under PHS Act section 2705 and the related provisions of the Employee Retirement Income Security Act (ERISA) and the Code. The final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20 percent to 30 percent of the cost of coverage, and further increase the maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce tobacco use. The final regulations also address the reasonable design of health-contingent wellness programs and the reasonable alternatives that must be offered in order to avoid prohibited discrimination. In the preamble to the final regulations, the Departments stated that they anticipated issuing future subregulatory guidance as necessary. The following FAQs address several issues that have been raised since the publication of the final regulations.

Q8: A group health plan charges participants a tobacco premium surcharge but also provides an opportunity to avoid the surcharge if, at the time of enrollment or annual re-enrollment, the participant agrees to participate in (and subsequently completes within the plan year) a tobacco cessation educational program. A participant who is a tobacco user initially declines the opportunity to participate in the tobacco cessation program, but joins in the middle of the plan year. Is the plan required to provide the opportunity to avoid the surcharge or provide another reward to the individual for that plan year?

No. If a participant is provided a reasonable opportunity to enroll in the tobacco cessation program at the beginning of the plan year and qualify for the reward (i.e., avoiding the tobacco premium surcharge) under the program, the plan is not required (but is permitted) to provide another opportunity to avoid the tobacco premium surcharge until renewal or reenrollment for coverage for the next plan year. Nothing, however, prevents a plan or issuer from allowing rewards (including pro-rated rewards) for mid-year enrollment in a wellness program for that plan year.

Q9: A plan participant's doctor advises that an outcome-based wellness program's standard for obtaining a reward is medically inappropriate for the plan participant. The doctor suggests a weight reduction program (an activity-only program) instead. Does the plan have a say in which one?

Yes. The plan must provide a reward for individuals who qualify by satisfying a reasonable alternative standard. If an individual's personal physician states that the outcome-based wellness program is not medically appropriate for that individual and recommends a weight reduction program (an activity-only program) instead, the plan must provide a reasonable alternative standard that accommodates the recommendations of the individual's personal physician with regard to medical appropriateness. Many different weight reduction programs may be reasonable for this purpose, and a participant should discuss different options with the plan.

Q10: Paragraph (f)(6) of the final regulations provides sample language that may be used to satisfy the requirement to provide notice of the availability of a reasonable alternative standard. Are plans and issuers permitted to modify this language?

Yes. The final regulations state that the sample language provided in paragraph (f)(6), or substantially similar language, can be used to satisfy the notice requirement. Plans and issuers may modify the sample language to reflect the details of their wellness programs, provided that the notice includes all of the required content described in paragraphs (f)(3)(v) or (f)(4)(v), as applicable, of the final regulations. Additional sample language is available in examples illustrating the final regulations' requirements for outcome-based wellness programs.(13)

Fixed Indemnity Insurance

Fixed indemnity insurance provided under a group health plan meeting the conditions outlined in the Departments' regulations(14) is an excepted benefit under PHS Act section 2791(c)(3)(B), ERISA section 733(c)(3)(B), and Code section 9832(c)(3)(B). As such, it is generally exempt from the health coverage requirements of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code. The Departments have noticed a significant increase in the number of health insurance policies labeled as fixed indemnity insurance.
A previous FAQ provided guidance reiterating that, in order for a fixed indemnity policy to be considered an excepted benefit, it must pay on a per-period basis, and that a fixed indemnity policy that pays on a per-service basis does not meet the conditions for excepted benefits.(15)

Q11: If insurance labeled as fixed indemnity insurance provides benefits other than on a per-period basis, may the insurance nonetheless qualify as excepted benefits?

Yes. With respect to group health insurance coverage that does not meet the definition of fixed indemnity excepted benefits, coverage that supplements other group health plan coverage may, nonetheless, qualify as supplemental excepted benefits under sections 2722(c)(3) and 2791(c)(4) of the PHS Act, sections 732(c)(3) and 733(c)(4) of ERISA, and sections 9831(c)(3) and 9832(c)(4) of the Code. See 26 CFR 54.9831-1(c)(5); 29 CFR 2590.732(c)(5); 45 CFR 146.145(c)(5); the Department of Labor's Employee Benefits Security Administration's Field Assistance Bulletin No. 2007-04 (available at http://www.dol.gov/ebsa/pdf/fab2007-4.pdf); HHS Centers for Medicare & Medicaid Services Insurance Standards Bulletin 08-01 (available at http://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); and Internal Revenue Service Notice 2008-23 (available at http://www.irs.gov/irb/2008-07_IRB/ar09.html).(16)
Furthermore, HHS intends to propose amendments to 45 CFR 148.220(b)(3) that would allow fixed indemnity coverage sold in the individual health insurance market to be considered to be an excepted benefit if it meets the following conditions:
  1. It is sold only to individuals who have other health coverage that is minimum essential coverage within the meaning of section 5000A(f) of the Code;
  2. There is no coordination between the provision of benefits and an exclusion of benefits under any other health coverage;
  3. The benefits are paid in a fixed dollar amount regardless of the amount of expenses incurred and without regard to the amount of benefits provided with respect to an event or service under any other health coverage; and
  4. A notice is displayed prominently in the plan materials informing policyholders that the coverage does not meet the definition of minimum essential coverage and will not satisfy the individual responsibility requirements of section 5000A of the Code.
If these proposed revisions are implemented, fixed indemnity insurance in the individual market would no longer have to pay benefits solely on a per-period basis to qualify as an excepted benefit.
Until HHS finalizes this rulemaking related to these proposed amendments, HHS will treat fixed indemnity coverage in the individual market as excepted benefits for enforcement purposes if it meets the conditions above in States where HHS has direct enforcement authority. For States with primary enforcement authority, HHS encourages those States to also treat this coverage as an excepted benefit and will not consider that a State is not substantially enforcing the individual market requirements merely because it does so.

The Mental Health Parity and Addiction Equity Act of 2008

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) amended the PHS Act, ERISA, and the Code to provide increased parity between mental health and substance use disorder benefits and medical/surgical benefits. In general, MHPAEA requires that the financial requirements (such as coinsurance) and treatment limitations (such as visit limits) imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits.(17) On November 13, 2013, the Departments published final regulations on MHPAEA, which contain some clarifications regarding the statute's protections.(18)

Q12: What was the effect of the Affordable Care Act on MHPAEA?

The Affordable Care Act builds on MHPAEA and provides that mental health and substance use disorder services are one of ten EHB categories. Under the EHB rule, non-grandfathered health plans in the individual and small group markets are required to comply with the requirements of the parity regulations to satisfy the requirement to provide EHB. In addition, section 1563 of the Affordable Care Act extends the protections of MHPAEA to the entire individual market, both with respect to grandfathered and non-grandfathered coverage.(19) Therefore:
  • For non-grandfathered individual market coverage: For policy years beginning on or after January 1, 2014, all non-grandfathered individual market coverage that is not otherwise subject to the HHS transitional policy(20) must include coverage for mental health and substance use disorder benefits, and that coverage must comply with the Federal parity requirements set forth in the interim final regulations issued in February 2010. The final regulations apply for policy years beginning on or after July 1, 2014 (which, for calendar year policies, is January 1, 2015).
  • For grandfathered individual market coverage: Grandfathered individual health insurance coverage is not subject to the EHB requirements and therefore is not required to cover mental health or substance use disorder benefits. However, to the extent mental health or substance use disorder benefits are covered under the policy, coverage must comply with the Federal parity requirements set forth in final regulations for policy years beginning on or after July 1, 2014 (which, for calendar year policies, is January 1, 2015).
  • For non-grandfathered small group market coverage: For plan years beginning on or after January 1, 2014, all non-grandfathered small group market coverage that is not otherwise subject to the HHS transitional policy must include coverage for mental health and substance use disorder benefits, and that coverage must comply with the Federal parity requirements set forth in the interim final regulations issued in February 2010. The final regulations apply for plan years beginning on or after July 1, 2014 (which, for calendar year plans, is January 1, 2015).
Grandfathered small group market coverage is not required to comply with either the EHB provisions or MHPAEA. HHS has also released guidance explaining how the Federal parity requirements will be applied to the Children's Health Insurance Program (CHIP), Medicaid managed-care organizations, and to Alternative Benefit Plans. See the January 16, 2013 letter from CMS to State Medicaid Directors.(21)