The federal agencies with regulatory authority over the Affordable Care Act (ACA) have released new proposed regulations covering a variety of topics. The proposed rule was issued jointly by the Department of Labor (DOL), the Department of Health and Human Services (HHS) and Treasury.
Legislation passed in 2014, established that expatriate health insurance coverage is automatically deemed minimum essential coverage for ACA purposes. The law also exempts individuals with expatriate health plans, employer sponsors of expatriate health plans, and expatriate health plan insurers from almost all of the requirements of the ACA. This proposed rule addresses the implementation of that legislation. Of particular note is that an exception to the expatriate plan exemption is that employers and coverage providers still have IRC 6055 and 6056 reporting obligations for any expatriate coverage offered and provided to employees and individuals under these plans. Furthermore, under some circumstances, the plans that cover expatriates who are assigned (rather than transferred back) to work in the United States will also be subject to so-called Cadillac tax.
Lifetime and Annual Limits
The proposed rule provides a clarifying definition of essential health benefits (EHBs) specific to the ACA requirement that annual and lifetime limits cannot be imposed on EHBs offered by large group health plans. For this purpose, the proposed rule would define EHBs as benefits covered by the benchmark plan of a state, including state-mandated benefits considered to be EHBs, or benefits covered by one of the three Federal Employee Health Benefit program plans that may be used as benchmark plans by the states.
Short-term major medical policies are considered to be excepted benefits under both the Health Insurance Portability and Accountability Act (HIPAA) and the ACA and therefore are not generally subject to the federal health reform requirements. The proposed rule would amend the regulatory definition of short-term coverage to prohibit insurers from offering short-term policies for periods longer than three months. Furthermore, the rule proposes that these policies be non-renewable and that insurers provide purchasers with detailed notices about the limitations of these policies during the sales and enrollment process.
Other Excepted Benefits
Regarding fixed indemnity coverage, the rule would require policies to pay a fixed amount per day or other time period of service without regard to the cost of the service or the type of items or services provided. Policies that pay different types of providers’ different amounts or pay for a percentage of provider services could no longer be marketed as excepted benefits. The proposed rule would also require amendments to policy applications, enrollment and reenrollment materials for group and individual policies that include warnings about the limitations of such policies.
Additionally, the proposed rule would require that similar supplemental coverage marketed to employer groups as an excepted benefit must either fill in cost-sharing gaps or cover only services that do not qualify as EHBs according to the EHB standard adopted by the state in which such policies are being marketed.
Finally, the proposal defines travel insurance as coverage for personal risks incurred during planned travel, including trip interruption or cancellation, loss or damage to luggage, or damage to accommodations or rental vehicles. It can also include sickness, accident, disability or death coverage during travel, but only if the health benefits are not offered on a comprehensive, standalone basis and are incidental to other coverage. Travel insurance would be limited to coverage of less than six months and could not be used to cover people employed overseas, such as expatriates or members of the armed forces.