The three federal agencies that have published regulations on health care reform provisions (U.S. Departments of Treasury, Labor, and Health and Human Services) have furnished additional guidance on certain issues of particular importance to employers and other group health plan sponsors.
A new set of Frequently Asked Questions and Answers addresses specific questions that many plan sponsors have raised. For example:
- The guidance addresses the mandate to cover children up to age 26. Most significantly, a health plan may satisfy this mandate by offering coverage up to age 26 to the children of covered employees who meet the definition of "child" in section 152(f)(1) of the Internal Revenue Code. Under the Code, an employee’s son, daughter, stepson, stepdaughter, and eligible foster child are considered an employee's "child." Although the guidance could be clearer, it does not strictly require a plan to cover every type of child who meets the Code definition. If that is correct, a plan would not be required to offer coverage to, for example, eligible foster children. However, if it does, an eligible foster child must be eligible for coverage up to age 26, regardless of other factors. A plan may require children who do not meet the Code definition to meet conditions that are not based on their relationship with the employee. For example, a plan that covers grandchildren may require that the grandchild live with and receive more than half of his or her support from the employee.
- The new internal claim and appeal requirement to review an urgent claim within 24 hours applies only to the initial claim determination and not to appeals.
- Plans do not need to contract directly with independent review organizations (IROs) to conduct external reviews of appeal denials. Specifically, they may allow their third-party administrators to engage organizations to provide the external review. However, the plan administrator continues to have the legal responsibility to make sure that external review requirements are performed appropriately.
In addition to the FAQs, the U.S. Department of Labor issued a technical release that relieves health plans from meeting certain of the new internal claim and appeal requirements until July 1, 2011. During this grace period, the Department will not take any enforcement action against an employer that is working in good faith to implement these standards, even if that implementation is not complete. The grace period will allow plans additional time to make systems and other changes, for example, to revise claim denial notices to include and explain applicable denial codes and meet other new content requirements. This relief does not extend to the requirement to establish an external review process.
This new guidance follows on the heels of an IRS Notice issued earlier this month on the exclusion of over-the-counter drugs from treatment as a medical expense. This guidance has particular significance for health flexible spending accounts and similar plans, like HSAs and HRAs.
Although we certainly have not seen the last of regulations under health care reform, it appears as if the regulatory agencies have entered a new phase of issuing more targeted guidance.