United States: Final Regs On ACA Implementation

Last Updated: January 26 2016
Article by Ron M. Present, CALA, CNHA, LNHA, FACHCA

This past November, the IRS, Department of Labor and Department of Health and Human Services jointly issued final regulations covering a variety of topics related to the implementation of the Affordable Care Act (ACA). Effective for plan years beginning on or after January 1, 2017, these assorted nuggets incorporate agency guidance into a mixture of proposed and interim final regs dating back to 2010. Here are some highlights.

Grandfathered plans

The final regulations maintain the rule that grandfathered status is determined separately as to each "benefit package" under a group health plan. They also add new clarifying examples and adopt existing antiabuse rules that curtail attempts to retain grandfathered status through
indirect plan changes.

Considerable effort is also devoted to describing changes that would cause a plan to lose grandfathered status. The regs address, for instance, decreases in employer contribution rates and changes in co-payments for limited categories of services. Highlighting the continuing relevance of these issues, the agencies estimate that more than 40 million participants and beneficiaries are covered by grandfathered group health plans.

Pre-existing condition exclusions

The final regulations adopt previous guidance on pre-existing condition exclusions. Yet they also clarify that these rules don't prohibit plans or insurers from excluding all benefits for a condition if they do so regardless of when the condition arose relative to the effective coverage date. Nevertheless, the agencies note that other rules and laws — such as the essential health benefit (EHB) requirements — may preclude such exclusions.

Lifetime and annual limits

Group health plans (including self-insured plans) that aren't required to cover EHBs are nonetheless barred from imposing annual or lifetime dollar limits on the EHBs that they do offer. Under the regulations, these plans may define an EHB by reference to:

  • Any of the 51 benchmark plans identified by the states or the District of Columbia, or
  • One of the three largest Federal Employees Health Benefits Program plans.

The final regs address some, but not all, existing guidance for Health Reimbursement Arrangements and other account-based plans that are permitted only if "integrated" with a group health plan that complies with the ACA — including its prohibition on lifetime and annual dollar limits. Specifically, the regulations offer further clarifications and new guidance.

For instance, the regs explain that employers with fewer than 20 employees may be unable to meet the integration test for Medicare Part B and Part D premium reimbursement arrangements (PRAs) provided in previous guidance. The reason: Some insurers won't allow offers of coverage to employees who are eligible for Medicare.

The final regulations allow such PRAs to be integrated with Medicare if employees not offered other group health plan coverage would be eligible for that coverage except for their eligibility for Medicare. And the regs further clarify that a forfeiture of amounts or waiver of reimbursements under an HRA will comply with the integration requirements even if amounts may be reinstated on a future date or upon death (or the earlier of the two dates).

During periods when the HRA is considered forfeited or waived, the individual (for example, a retiree) is treated as not covered by the HRA. This may allow him or her to qualify for a premium tax credit for obtaining coverage from a Health Insurance Marketplace.

Rescissions

Although they don't break new ground, the final regulations remind employers that a rescission (that is, retroactive cancellation or discontinuation of coverage) is considered an adverse benefit determination subject to internal and external appeals procedures. Thus, coverage must remain effective until an internal appeal is completed.

In addition, the regs finalize previous guidance providing that the prohibition on rescissions isn't violated if a plan retroactively terminates coverage because of a failure to pay required contributions. This includes COBRA premiums.

Dependent coverage

Regarding the age 26 mandate, the final regulations clarify that adult children under age 26 must be offered coverage even if they don't live in a particular service area. This requirement, however, doesn't affect the extent to which plans and insurers are required to cover out-of-network services for adult children. Examples illustrate the requirement that coverage of children under age 26 can't vary based on age.

Claims and appeals

The regulations finalize "without substantial change" extensive rules on claims and appeal processes issued in interim and amended interim final regulations, incorporating a long list of clarifying technical guidance. Under the full and fair review rules, a plan that relies on new or additional evidence or a new rationale in making a benefit determination must automatically provide the evidence or rationale to the claimant and give the claimant a reasonable opportunity to respond.

Additionally, the final regulations extend the transitional period for using state "NAIC-similar" external review processes through 2017. (The NAIC acronym refers to the National Association of Insurance Commissioners.) Plans and insurers in a state without an NAIC-compliant external review process, as well as self-insured plans, must follow a process established through previous guidance and finalized in these regulations.

Also, the temporary rule applying the external review process to claims that involve medical judgment and rescissions has been made permanent. Two new items, however, have been added to the list of what's considered a medical judgment.

Patient protections

New clarifications allow health plans to require participants and beneficiaries to select in-network providers within specified geographic limits when designating a primary care provider. In addition, they clarify when and how "balance billing" is permitted for out-of-network emergency care. (Balance billing is billing patients for the excess of the providers' billed charges over benefits covered by the plan and other patient payments, such as co-payments or co-insurance.) Last, the final regs provide that emergency care doesn't have to be sought within a specific timeframe (for instance, within 24 hours of onset).

Breadth and depth

As you can see, these final regulations add both breadth and depth to the wealth of existing information on the ACA's compliance requirements. Fortunately, they largely incorporate previously issued guidance and, as mentioned, aren't effective until 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Ron M. Present, CALA, CNHA, LNHA, FACHCA
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