On December 16, 2015, the Internal Revenue Service issued Notice 2015-87 containing guidance on a wide-range of topics under the Affordable Care Act (ACA). In addition to providing guidance on affordability and COBRA matters (which will be described in subsequent blogs), Notice 2015-87 builds upon prior guidance to regulate further the use of health reimbursement arrangements to reimburse premiums paid for individual market premiums.

By way of background, as described in IRS Notices 2013-54 and 2015-17, the IRS considers arrangements whereby employers reimburse employees (whether on a pre-tax or after-tax basis) for medical-related costs (including premiums) to be group health plans subject to the ACA’s market reforms. The problem is that, by their very nature, these health reimbursement arrangements (HRAs) and premium payment plans cannot on their own satisfy certain market reforms, such as the required coverage of preventive services or prohibition on annual limits. Therefore, in order for HRAs to be ACA compliant, they must be “integrated” with a group health plan that meets the ACA’s market reforms. Although the IRS allows an HRA to be integrated with a group health plan, including a group health plan not sponsored by the employer sponsoring the HRA, the IRS has unequivocally stated that an HRA cannot be integrated with an individual market plan (subject to the few exceptions described below).

Through new FAQs and final regulations, the U.S. Departments of Labor (“DOL”), Health and Human Services (“HHS”) and the Treasury (the “Departments”) have further clarified various issues related to the preventive care coverage requirement for non-grandfathered group health plans under the Affordable Care Act (“ACA”) as related to preventive care coverage.

Background

The ACA requires that non-grandfathered group health plans provide benefits for certain preventive care without cost sharing, including:

  • Evidenced-based items or services that have a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (“USPSTF”) for the individual (except for breast cancer screening, mammography, and prevention, where there are updated USPSTF standards);
  • Immunizations for routine use recommended by the Advisory Committee on Immunization Practices (“ACIP”) of the Centers for Disease Control and Prevention (“CDC”) for the individual;
  • For infants, children, and adolescents: evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (“HRSA”); and
  • For women: other evidence-informed preventive care and screening provided for in comprehensive guidelines supported by the HRSA

As promised in the FAQ issued on March 30, 2015, the U.S. Departments of the Treasury, Labor and Health and Human Services  (the Departments) have issued final regulations regarding the summary of benefits and coverage (SBC) and uniform glossary for group health plans and health insurance coverage in group and individual markets under the Patient Protection and Affordable Care Act (ACA).  These regulations finalize, with very few changes, the proposed regulations issued on December 30, 2014.  The final regulations state that the Departments anticipate a new SBC template and associated documents will be issued by January 2016 and will apply to coverage that begins or is renewed after January 1, 2017.

These final regulations make changes to the initial SBC regulations, issued on February 14, 2012, and codify certain guidance previously set forth in the FAQs about Affordable Care Act Implementation

As employers and plans prepare for 2016 open enrollment, they must be sure to address in their benefit design and with their third party vendors the new embedded out-of-pocket maximum limitations on individuals that were announced at the end of May by the U.S. Departments of Labor (“DOL”), Health and Human Services (“HHS”) and the Treasury (collectively, the “Departments”).

The Affordable Care Act (“ACA”) requires that non-grandfathered group health plans place limits on the maximum annual cost sharing imposed on plan enrollees for out-of-pocket costs associated with essential health benefits.  For plan and policy years beginning in 2016, the maximum out-of-pocket cost for self-only coverage is $6,850, while the maximum out-of-pocket cost for coverage that is not self-only coverage is $13,700.

On April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act of 2014. The primary purpose of the law is to provide a one-year delay of a 24% reduction in payment rates for physicians who participate in the Medicare program.

Of interest to small employers, Section 213 of the law repeals

On March 5, 2014, the Department of Health and Human Services released a Final Rule addressing, among other things, transitional reinsurance fees payable in the 2014 through 2016 benefit years.

By way of background, under the Affordable Care Act (“ACA”), a transitional reinsurance fee applies to most group health plans. The transitional reinsurance fee is a temporary per capita fee charged to health insurance issuers and third party administrators of self-insured plans that is to be used to help stabilize premiums for coverage in the individual market. The fee is $63 and $44 per covered life for 2014 and 2015, respectively. (The fee for 2016 has not yet been announced.)

Of particular note is that the Final Rule exempted self-insured and self-administered plans from the transitional reinsurance fee for the 2015 and 2016 benefit years. This exemption could apply to any self-insured and self-administered plan, but it is generally perceived that larger multiemployer plans are most likely to satisfy these requirements.