As reported, the U.S. Labor Department, the U.S. Department of Health and Human Services and the U.S. Treasury Department (together, the “Departments”) recently issued additional FAQs regarding implementation of the market reform provisions of the Affordable Care Act (ACA). FAQs 6 and 7 include new guidance on the temporary transitional relief issued last year (discussed in our blog post) that applies to plan sponsors of certain insured expatriate health plans and provides a broad exemption from most of ACA’s market reform requirements.
Highlights from the new guidance include:
- Transitional Relief Extended by “At Least” Another Plan Year
The FAQ provides that plans and insurers may rely on the temporary transitional relief at least through plan years ending on or before December 31, 2016 (i.e., 2014 through 2016 for calendar year plans). This effectively extends the transition relief by at least one plan year. Although the transitional relief was not extended indefinitely, it at least eliminates any concern for a while and may be a signal that the Departments intend eventually to make the relief permanent.
- 6-Month Requirement Applies on a Rolling Basis to Expatriates Residing Outside of Their Home Country or the U.S.
To meet the transitional relief, initially, the Departments stated that an expatriate health plan must be limited “to primary insureds who reside outside of their home country for at least six months of the plan year” and their covered dependents. Now, for the purposes of the transitional relief, the Departments define an “insured expatriate health plan” as “an insured group health plan with respect to which enrollment is limited to primary insureds for whom there is a good faith expectation that such individuals will reside outside of their home country or outside of the United States for at least six months of a 12-month period and any covered dependents”.
The FAQ clarifies that the transitional relief extends to an individual residing outside of the U.S., which , effectively, expands the definition of expatriate health plan to allow plans to cover employees who permanently reside in a country outside the U.S. (“foreign locals”). This seems to mean that employers who wish to maintain a single plan for U.S. expatriates and foreign locals may do so and retain the plan’s status as an expatriate health plan for purposes of the transitional relief. The FAQ also clarifies that the six-month requirement is not tied to a plan year and applies on a rolling basis over a 12-month period, which can fall within a single plan year or across two consecutive plan years. This should be welcome relief for employers with plans covering expatriates whose assignments overseas are for periods between plan years. The relief should also streamline employers’ ability to provide coverage to their expatriates.
- Transitional Relief Extended to “Essential Health Benefits” Package (and Other) Requirements
The FAQ also extends the scope of the ex-pat transitional relief to apply to the requirement for insurers in the individual or small group market to cover “essential health benefits”, as long as plans and insurers comply with pre-ACA law rules governing individual and group market rules.
- Additional Guidance Expected
Stay tuned for additional guidance or regulations. The Departments will continue to consider “narrowly tailored” guidance for fully-insured expatriate health plans “that takes into account the ability of such coverage to reasonably comply” with ACA’s market reform and other comprehensive coverage mandates. Fortunately, any new regulations or guidance that is more restrictive will not be applicable to plan years ending on or before December 31, 2016.