Earlier this month, the Departments of Labor, Health and Human Services and Treasury (collectively, the “Departments”) issued a new Frequently Asked Question (“FAQ”) providing transitional relief from the Affordable Care Act’s (“ACA”) group health mandates for certain insured expatriate group health plans. The Departments’ rationale for this transitional relief is expatriate health plans and their issuers may face special challenges in complying with some of the ACA’s requirements including, but not limited to, difficulty in providing or identifying certain preventive services, standardizing benefit disclosures and reconciling conflicts between American and a host location’s laws.
As such, certain insured expatriate health plans will, for plan years ending on or before December 31, 2015, be considered to be in compliance with the ACA’s group health mandates (e.g. dependent coverage to age 26, preventive services without cost-sharing, summary of benefits and coverage and uniform glossary disclosure, etc.) if the expatriate health plan and issuer currently comply with the pre-ACA version of the Public Health Service Act and other applicable laws under ERISA and the Internal Revenue Code. These current requirements include, for example, the mental health parity provisions, the HIPAA nondiscrimination provisions, the ERISA claims and appeals provisions, and any ERISA reporting and disclosure obligations (e.g. Form 5500).
The FAQ also notes that expatriate health plans are a form of minimum essential health coverage under the ACA. This means that an individual covered by an expatriate health plan will not be subject to the individual mandate. In addition, employers will not be subject to the employer mandate penalty if they offer coverage under an expatriate health plan, provided the coverage is “affordable” and meets the minimum value requirement under the ACA.
For purposes of this transitional relief, an expatriate health plan is an insured group health plan with respect to which enrollment is limited to employees who reside outside of their home country for at least six months of the plan year and any covered dependents. Therefore, no transitional relief is available for self-funded health plans providing expatriate coverage and these plans must operate in compliance with the ACA’s requirements.
As a practical matter, employers should review their health plans to identify those that provide coverage to their expatriate population and should consider if such plans are eligible for this transitional relief, or otherwise comply with the ACA.