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Small Business Employee Benefits and HR Blog

DOL Releases New FAQ on ACA Market Reforms

On January 9, 2014 the Department of Labor (DOL) issued an FAQ that provides questions and answers to various Market Reform topics including preventive services, limits on out-of-pocket costs, expatriate plans, wellness programs, fixed indemnity insurance, and mental health.

According to the DOL, the FAQs were prepared jointly by the DOL, Health and Human Services (HHS), and the Treasury. They are intended to answer questions from stakeholders to help people understand the law and benefit from it, as intended.FAQ_ACA_Market_reforms

Here's a summary of the FAQs as they relate to non-grandfathered health plans.

Coverage of Preventive Services and Breast Cancer Prevention for Women

Public Health Service (PHS) Act section 2713 and the interim final regulations relating to coverage of preventive services require non-grandfathered group health plans and health insurance coverage offered in the individual or group market to provide benefits for preventive services, and prohibit cost-sharing requirements.

The FAQ answers the question "On September 24, 2013, the USPSTF issued new recommendations with respect to breast cancer. What changes must plans make to comply with the new recommendations?"

According to the FAQ, beginning September 24, 2014, all non-grandfathered plans will be required to cover breast cancer preventative medications for women who are at increased risk for breast cancer “without cost sharing subject to reasonable medical management.” 

Limits on Cost-Sharing 

In August 2013, the administration released a notice that some lenience would be provided on out-of-pocket maximums in 2014. Specifically, employers and insurers with more than one benefits administrator do not have to combine their members’ out-of-pocket spending into one total until 2015 (see overview here).

The FAQ answers questions about the applicability of the out-of-pocket maximums across different plans or providers.

According to the FAQ, beginning January 1, 2015, all non-grandfathered plans must have a limit on out-of-pocket costs for all essential health benefits (EHB). Those limits, however, do not apply to benefits that have not been deemed an EHB.

Plans and issuers are also 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.

Plans that stretch over a network of providers can, but are not required, to count out-of-pocket spending for out-of-network items and services towards the plan’s annual maximum out-of-pocket limits.

Expatriate Health Plans

The FAQ further defines expatriate health plans as “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.”

Wellness Programs

The FAQ clarifies that if a participant in a tobacco cessation program is provided a reasonable opportunity to enroll in the tobacco cessation program at the beginning of the plan year and qualifies for the reward under the program, the plan is not required (but is permitted) to provide another opportunity to avoid the tobacco premium surcharge until renewal or re-enrollment for coverage for the next plan year.

The FAQ also clarifies that the wellness plan must provide a reward for an individual who qualifies by satisfying a reasonable alternative standard.

Fixed Indemnity Insurance

The FAQ clarified questions on fixed indemnity insurance plans. According to the FAQs, HHS intends to propose amendments 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:

  • 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.

  • There is no coordination between the provision of benefits and an exclusion of benefits under any other health coverage;

  • 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

  • A notice is displayed prominently in the plan materials informing policy holders 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.

Click here to read the full FAQs.

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