On June 10, 2016, the IRS, DOL, and HHS released proposed regulations clarifying when expatriate health coverage qualifies for exceptions under the Affordable Care Act (the “ACA”), when certain coverage will qualify as excepted benefits under the ACA, and how self-insured and large group insured plans should define essential health benefits.
In general, an expatriate health plan will be exempt from the ACA’s plan design requirements; the PCORI, Transitional Reinsurance, and Health Insurer fees; and will qualify as minimum essential coverage for covered individuals subject to U.S. tax law if the following are true:
- At least 95% of the primary enrollees are expatriates (disregarding non-U.S. citizens residing in their home country);
- The insurance carrier or plan administrator in conjunction with a third party administrator meets certain business criteria;
- The plan covers inpatient, outpatient, physician, and emergency services;
- The plan is reasonably believed to meet the ACA’s minimum value requirements; and
- The plan satisfies the ACA’s dependent coverage mandate (i.e., age 26).
The proposed regulations clarify when fixed indemnity, supplemental health insurance, specific disease/illness, short-term insurance, and travel insurance will qualify as excepted benefits for the purposes of being able to avoid mandates under the ACA and other laws.
Essential Health Benefits
The proposed regulations reiterate that self-insured and large group insured plans will be required to define essential health benefits by selecting a state or Federal Health Employee Benefit Program plan as a benchmark plan.
The proposed regulations are available here, and are intended to be effective for plan years beginning on or after January 1, 2017.