DOL’s FAQs Address Various ACA Issues
Posted in: Employee Benefits
The Department of Labor (DOL) continues to address Frequently Asked Questions regarding implementation of various provisions of the Affordable Care Act (ACA). Set forth below is a summary of more recent FAQs.
Summary of Benefits & Coverage (SBC)
Updated guidance has been provided on the SBC, the standard document that must be used by group health plans and health insurance issuers to accurately describe the benefits and coverage offered under the plan. Previous guidance applied for the first year of applicability (coverage beginning before January 1, 2014). The new guidance provides information on updates needed for the second year. The only changes to the SBC template are:
- The addition of a statement as to whether the plan provides minimum essential coverage; and
- The addition of a statement as to whether the plan meets the minimum value requirements.
Minimum essential coverage includes both fully-insured and self-insured employer-sponsored coverage. The minimum value requirements state that the plan’s share of total allowed costs of benefits provided must be at least 60% of such costs. The Centers for Medicare & Medicaid Services (CMS) has provided a Minimum Value Calculator which can be used for an employer-sponsored plan with a standard plan design to determine whether the plan meets or exceeds the minimum value requirements.
If a health insurance plan or issuer is unable to modify the current SBC to add the required new data elements, the DOL has stated that it is permissible to provide a cover letter or similar disclosure stating whether the plan provides minimum essential coverage and meets the minimum value requirements. Model language for this disclosure has been provided by the DOL.
While it was expected that additional coverage examples would be required in 2014, the DOL has determined that it is prudent to maintain only the current examples. The two examples are for having a baby (normal delivery) and managing type 2 diabetes.
Finally, the enforcement relief available for the first year of applicability for the SBCs will continue in the second year. Plan sponsors and health insurance issuers will not be subject to enforcement action (including penalties) if a good faith attempt is made to comply with the SBC requirements. In addition, no enforcement action will be taken against a plan or issuer that removes the SBC row relating to an overall plan limit (since limits on essential health benefits are prohibited for 2014 plan years).
The DOL has determined that expatriate health plans will not have to comply with ACA’s group health plan mandates and insurance market reforms for plan years beginning on or before December 31, 2015. For this purpose, expatriate plans are defined as insured group health plans for which enrollment is limited to insured individuals who reside outside of their home country for at least six months of the plan year and their covered dependents. The DOL is providing this temporary relief in recognition of the fact that expatriate health plans face special challenges in complying with certain provisions of ACA and coordinating compliance with multiple regulatory regimes. The DOL also confirmed that coverage under an expatriate group health plan qualifies as minimum essential coverage.
Limits on Cost-sharing
ACA imposes cost-sharing limits on non-grandfathered group health plans for plan years beginning in 2014. The DOL has provided additional guidance on these requirements.
ACA states that annual deductibles cannot exceed $2,000 for individual coverage or $4,000 for family coverage. The DOL has stated that these maximum deductibles apply only to fully-insured small group market coverage. They do not apply to the large group fully-insured plans or self-funded group health plans of any size, at least until regulations are issued. In addition, there is an exception if the small group health insurance coverage cannot achieve the applicable metal tier (e.g. Bronze plan with 60% actuarial value) without a higher deductible.
ACA also states that out-of-pocket maximums cannot exceed the maximums applicable for qualified high deductible health plans. For 2013, these maximums are $6,250 for individual coverage and $12,500 for family coverage (2014 amounts have not been announced yet). The DOL has stated that this requirement applies to all non-grandfathered group health plans, including fully-insured and self-insured plans in the small and large group markets. The out-of-pocket maximum must apply to all essential health benefits and all cost-sharing (deductibles, copays and coinsurance).
However, transition relief is available for the first plan year beginning on or after January 1, 2014 for plans that use multiple service providers with different out-of-pocket maximums. With this relief, separate out-of-pocket maximums will be permitted as long as each does not exceed the applicable limit. This transition relief is intended to give group health plans additional time to coordinate processes when multiple vendors are used.