Over the past several months DOL, HHS, and the IRS (collectively, the Agencies) have issued a series of frequently asked questions (FAQs) regarding the implementation of the Affordable Care Act. This guidance generally reflects the Agencies’ view of emphasizing compliance assistance rather than the imposition of penalties on plans working diligently and in good faith to understand and comply with the new law. Although this article highlights only a few important FAQs, all FAQs can be viewed at the following links:
PART I: www.dol.gov/ebsa/faqs/faq-aca.html PART II: www.dol.gov/ebsa/faqs/faq-aca2.html PART III: www.dol.gov/ebsa/faqs/faq-aca3.html PART IV: www.dol.gov/ebsa/faqs/faq-aca4.html PART V: www.dol.gov/ebsa/faqs/faq-aca5.html
- Effective Date of Automatic Enrollment Requirements
The Affordable Care Act requires employers with at least 200 full-time employees to automatically enroll employees for coverage under their group health plans. The Affordable Care Act did not specify an effective date, but most commentators surmised that compliance with the automatic enrollment provisions would not be required until regulations are issued. In recent guidance issued in the form of FAQs, the Agencies confirmed that, until regulations are issued, employers are not required to comply with the automatic enrollment elections. The Agencies intend to complete this rulemaking by 2014; therefore, compliance with this requirement is not expected anytime soon.
- 60-Day Advance Notice of Material Modifications
When a group health plan is modified in a material manner, the Affordable Care Act requires employers to notify employees of the modification at least 60 days in advance of the effective date of the modification. As with the automatic enrollment requirement, the Affordable Care Act did not specify an effective date. In recent guidance issued in the form of FAQs, the Agencies stated that group health plans are not required to comply with this 60-day prior notice requirement until such time as they are required to comply with the act’s requirement to maintain and provide uniform benefit summaries. The act requires employers to begin furnishing these summaries by March 23, 2012; therefore, compliance with the notice requirement pertaining to material modifications will not be required before then.
- Grandfathered Plans
The interim final regulations on grandfathered status require certain participant communications to include a statement that the benefit package is believed to be grandfathered. The FAQs provide that this disclosure statement does not have to be included in every participant communication regarding benefits, but should be included in materials used to inform participants about their benefits so that they can make informed choices regarding health coverage. For example, the disclosure statement should be included in a summary plan description provided to participants when they first become eligible for coverage, or during the annual open enrollment period. Although this FAQ appears to provide some relief from this disclosure requirement, plan administrators should review their participant communications and confirm that the disclosure statement is included with all benefit descriptions provided when participants are making decisions regarding their health care options.
- Dependent Coverage of Children
One of the better-known provisions of the Affordable Care Act is the requirement that group health plans that offer dependent coverage must continue to provide that coverage until the dependent turns age 26. The FAQs address situations where a plan could require additional conditions (such as residency or support) in order to provide coverage to individuals under age 26. The guidance provides that a plan would not fail to satisfy the new law by limiting health coverage for children until the child turns 26 to only those children described in Code Section 152(f)(1) (this includes biological children, adopted children, children placed for adoption, step children, and eligible foster children). However, if a plan provides coverage to children outside this “safe harbor” group, the plan could impose additional conditions on the extended coverage. For example, a plan offering coverage to grandchildren could require that the grandchild be a tax dependent of the participant employee in order to receive coverage under the plan. Plan sponsors should review their plan’s definition of dependent to confirm that the plan’s coverage complies with the new law.