The Employee Benefits Security Administration (EBSA) has come down on the side of health plan sponsors in several newly posted answers to questions about the Affordable Care Act.
EBSA, an arm of the U.S. Department of Labor, has discussed topics such as application of the rules governing matters such as grandfathered health plans, rescissions and abuse of the mandatory preventive care coverage requirements in a list of answers to frequently asked questions (FAQs) about the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).
EBSA officials say they developed the guidance together with officials responsible for Affordable Care Act implementation at the U.S. Treasury Department and the U.S. Department of Health and Human Services (HHS).
Some employers, trade groups and employer groups have wondered whether the departments will interpret the Affordable Care Act in draconian ways that will force insurers and employers to make absurd benefits decisions or expose them to the risk of facing severe penalties.
“The ongoing guidance the departments are providing reflects our approach to implementation, which emphasizes assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the Affordable Care Act, as well as our commitment to work with families and individuals to make it as easy as possible for them to obtain the protections and benefits of the new law,” officials at EBSA and the other agencies say in an introduction to the FAQs.
In the summer, for example, the agencies developed a list of 6 actions that could cause an existing health plan to lose grandfathered status and become subject to the full brunt of Affordable Care Act mandates.
The 6 actions includes elimination of benefits for a specific condition; an increase in the percentage cost of cost-sharing requirements, such as coinsurance rates; an increase in a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points; an increase in a copayment by an amount that exceeds medical inflation plus 15 percentage points; a decrease in an employer’s contribution rate towards the cost of coverage by more than 5 percentage points; or imposition of annual limits on the dollar value of all benefits below specified amounts.
“Are there other changes to our existing plan/policy that we need to be concerned
could cause it to relinquish grandfathered status?” a commenter asks.
“No,” officials say. “For a plan that is continuing the same policy, these 6 changes are the only changes that would cause a cessation of grandfather status under the interim final regulations.”
In some cases, an employer may be able to change carriers and still keep grandfathered status, officials say.
Another commenter asks about whether an employer can retroactively terminate health coverage based on considerations other than prior medical history.
The Affordable Care Act restrictions on rescissions apply to matters other than fraudulent or intentional misrepresentations about prior medical history, officials say.
If, for example, an employer accidentally provides health care for a part-time employee, the employer cancel the coverage going forward, but it cannot rescind the coverage retroactively, officials say.
“On the other hand,” officials say, “some plans and issuers have commented that some employers’ human resource departments may reconcile lists of eligible individuals with their plan or issuer via data feed only once per month. If a plan covers only active employees (subject to the COBRA continuation coverage provisions) and an employee pays no premiums for coverage after termination of employment, the departments do not consider the retroactive elimination of coverage back to the date of termination of employment, due to delay in administrative record-keeping, to be a rescission.”
Similarly, if a plan helps pay for COBRA for terminated employees but not for ex-spouses, and the plan is not notified of a divorce, a plan can terminate coverage retroactive to the divorce, officials say.
Still another commenter notes that federal agencies have not necessarily discussed the recommended frequency of some of the preventive services they recommend and that must now be covered by non-grandfathered health plans on a first-dollar basis.
“What should my plan do if an individual requests, for example, daily counseling for diet?” a commenter asks.
A plan or issuer can use reasonable medical management techniques, which generally limit or exclude benefits based on medical necessity or medical appropriateness using prior authorization requirements, concurrent review, or similar practices, to determine plan coverage limits, officials say.