The Internal Revenue Service, the Department of Labor and the Department of Health and Human Services have published a series of frequently asked questions (FAQs) providing guidance on the implementation of the Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010, as modified by the Health Care and Education Reconciliation Act of 2010 (“Reconciliation Bill” and combined, “Health Care Act”). The FAQs emphasize the attitude of these agencies towards assisting employers and insurers rather than enforcing compliance with the Health Care Act at this time. There are four installments of FAQs issued thus far (Parts I through IV). Most noteworthy among the issues discussed and clarified in these FAQs are the following:
- Insurers must request each plan sponsor to make a representation regarding the plan sponsor’s premium contribution rates for the plan year covered by the renewal as well as their contribution rate on March 23, 2010. The purpose of this inquiry is to determine whether the plan sponsor’s benefit package retains grandfathered status. A similar inquiry will be made by certain multiemployer plans.
- The list of six impermissible changes under the grandfathering regulations is an exhaustive list and any changes other than those would not cause a plan to lose grandfathered status. However, this list may be expanded or clarified in subsequent regulations. We have been advised that revised final regulations on grandfathering are likely to be released in early 2011.
- The requirement to provide a statement regarding a plan’s grandfathered status in all materials provided to a participant will be satisfied if the statement is included in each summary of the benefits distributed by the plan (e.g., summary plan descriptions provided upon initial eligibility, during open enrollment, following renewals or changes of coverage, etc.).
Dental and Vision Benefits
Under HIPAA, dental and vision benefits generally constitute excepted benefits if they: (a) are offered under a separate policy, certificate or contract of insurance; or (b) are not an integral part of the plan. For dental or vision benefits to be considered not an integral part of the plan (whether insured or self-insured), participants must have a right not to receive the coverage and, if they do elect to receive the coverage, must pay an additional premium. The market reform provisions of the Health Care Act do not apply to excepted benefits under HIPAA.
In cases in which the United States Preventive Services Task Force and other agencies have not provided specific guidelines for a particular preventive health service, limitations with respect to the scope, frequency, setting, method or treatment regarding preventive health services covered under a health plan may be established by the plan sponsor based on reasonable medical management techniques and the relevant evidence base.
Other topics the FAQs also cover include: (1) whether changes in benefit package options offered under a plan, offering of wellness programs, and changes in co-payments may impact grandfathering status; (2) the application of the HIPAA statutory exemption for group health plans with less than two participants who are active employees to the Health Care Act; and (3) which “children” must be covered consistent with the adult dependent coverage mandate. Plan sponsors may also find helpful the various fact specific examples provided throughout the FAQs.
Parts I through IV of the FAQs may be found here.