In recent months, the Department of Labor (DOL) has increased enforcement activity related to the Affordable Care Act (the ACA), commonly known as “Health Care Reform.” Plan sponsors of group medical plans should be prepared for DOL audits aimed at determining compliance with the ACA. This client update outlines the information and supporting documentation that plan sponsors should maintain.
The DOL is particularly focused on “grandfathered” plans, which are not required to implement all of the ACA’s market reforms. To preserve “grandfathered” status, a plan must not have significantly altered costs and levels of coverage since the ACA’s initial implementation date (September 23, 2010). Plans purporting to maintain grandfathered status should retain the following documentation:
- Documentation that verifies the plan’s “grandfathered” status (i.e. how premiums were divided between the employer and participants, any annual or lifetime limits on benefits, significant modifications to coverage or benefits);
- A copy of the annual participant notice that explains the grandfathered status of the plan.
For all plans, regardless of grandfathered status, the DOL is focused on compliance with the ACA’s market reforms (i.e. limitations on rescissions of coverage and waiting periods, offer of contraception coverage). Plans should maintain, at a minimum, the following documentation:
- Notices regarding a participant’s right to choose a primary care provider;
- Details regarding the elimination of lifetime and annual dollar limits on “essential health benefits” (as defined by the ACA);
- Proof that enrollment rights were offered for dependent children up to age 26;
- If the plan has rescinded the coverage of any participant or dependent, the reasons for the rescission and the communications sent to the affected participant and/or dependent;
- Samples of adverse benefit determinations, updated claims and appeals procedures and third party contracts with independent review organizations;
- Notification regarding availability of contraception coverage with no cost sharing; and
- Proof of compliance with the 90-day waiting period limitation and pre-existing condition rules.
In addition to ACA-mandated compliance measures, the DOL has been asking for proof of compliance with ERISA and HIPAA. Therefore, plan sponsors should be prepared to present the following documentation:
- Certificates of Creditable Coverage for individuals that lost coverage under the plan or requested certificates;
- The Plan’s Newborns’ Act Notice and Women’s Health and Cancer Rights Notice;
- COBRA notices and election forms; and
- Rules regarding compliance with the Mental Health Parity Act.
Given the uptick in enforcement activity and the limited amount of time that the DOL allows to respond, plan sponsors should have all of this information readily available.