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Disclosure: I work for ADP. This information is purely educational, and based on Gov’t Regulation.
Eye On Washington: Health Care Reform
Updated: May 2, 2013
Affordable Care Act (ACA) Update: Departments Release FAQ Guidance on SBC Requirement, other ACA Implementation Issues
On April 23, 2013 and April 29, 2013, the U.S. Departments of Labor, Health and Human Services, and Treasury (the “Departments”) released the fourteenth and fifteenth installments of their “Frequently Asked Questions” (FAQs) on issues related to the Affordable Care Act (ACA). The FAQs are intended to provide guidance and clarification for employers and others as they implement the ACA’s various requirements.
Summary of Benefits and Coverage (SBC)
The Departments previously released final regulations on the ACA’s Summary of Benefits and Coverage (SBC) requirement in February 2012. Under the SBC rule, health insurance carriers and employers that sponsor group health plans are required to distribute a standardized eight-page summary of the plan’s covered services and relevant cost-sharing provisions, generally starting with the open enrollment period for the 2013 plan year. Also in February 2012, the Departments released templates, instructions, and related materials intended to assist employers and health insurance carriers in fulfilling their SBC obligations. Subsequently in 2012, the Departments also issued three sets of FAQs addressing the SBC requirement. The materials released in February 2012 were intended for use with disclosures concerning coverage beginning before January 1, 2014 (i.e., the first year the SBC rule is applied).
The April 23 FAQ contains an updated SBC template and a sample completed SBC, which are intended for use with plan or policy years beginning in 2014 (future guidance is expected to address SBCs for plan or policy years beginning in 2015). The FAQ contains relatively few changes to the SBC template for 2014. Specifically, the new SBC model template includes a statement as to whether the plan provides “minimum essential coverage” (MEC), which is the level of coverage necessary for an individual to satisfy the ACA’s “individual mandate.” The new template also includes a certification as to whether the plan meets the ACA’s “minimum value” requirement (i.e., whether the plan is designed to pay or reimburse, on average, at least 60 percent of participants’ covered medical expenses). The coverage examples and commentary contained in the last two pages of the SBC remain unchanged from prior guidance. The FAQ also includes guidance on how plans and issuers may modify the SBC to reflect the elimination of annual limits on essential health benefits.
The April 23 FAQ also provides that the Departments will not take enforcement action against a plan or insurance carrier for not amending an SBC for the MEC and minimum value disclosures with respect to plan or policy years beginning in 2014 – provided that the SBC is furnished with a cover letter or similar disclosure stating whether the plan satisfies the MEC requirement and whether the plan provides minimum value (the Departments have provided model language for these separate disclosures).
All other safe harbors and enforcement relief provided by the Departments relating to the SBC requirement remain in effect for plan years beginning prior to January 1, 2015 (e.g., relief for expatriate plans and closed blocks of business, and more permissive electronic disclosure rules). In general, the Departments will continue to assist (rather than impose penalties on) plans and insurance carriers that are working diligently and in good faith to comply with the SBC rules.
Expiration of Annual Limit Waivers
Certain employers and health insurance carriers applied for, and were granted, waivers from the ACA’s annual limit requirements. Waivers were approved based on the plan year or policy year in effect when the initial application was submitted. The April 29 FAQ clarifies that waiver recipients who change their plan or policy years will not extend the expiration date of their waivers, which generally expire at the end of the plan or policy year beginning in 2013.
For plan or policy years beginning in 2014, the ACA prohibits a health insurance issuer or non-grandfathered group health plan from discriminating with respect to plan participation or coverage against any healthcare provider who is acting within the scope of that provider’s license or certification under applicable state law. Note that this does not mean that a plan or carrier must contract with a particular provider, nor does it govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.
The April 29 FAQ clarifies that the Departments will not, at least in the near future, issue regulations implementing this rule and that plans and issuers should use a good faith, reasonable interpretation of the law.
Coverage for Individuals Participating in Approved Clinical Trials
For plan or policy years beginning in 2014, the ACA prohibits non-grandfathered individual and group health plans from: (1) denying a qualified participant coverage for an approved clinical trial with respect to the treatment of cancer or another life-threatening disease or condition; (2) denying (or limiting/conditioning) coverage for routine patient costs for items and services furnished in connection with participation in the trial; and (3) discriminating against such participant due to the individual’s participation in the trial.
Generally, a qualified participant is one who is eligible to participate in an approved clinical trial according to the trial protocol with respect to the treatment of cancer or another life-threatening disease or condition; and either: (1) the referring physician is an in-network provider and has concluded that the individual’s participation in such trial would be appropriate; or (2) the participant provides medical and scientific information establishing that the individual’s participation in such trial would be appropriate.
Similar to the provider nondiscrimination rule, the Departments do not expect to issue implementing regulations in the near future. Until further guidance is issued, group health plans and health insurance carriers are expected to implement these requirements using a good faith, reasonable interpretation of the law.
Employers, administrators and insurers who are beginning now to work on their SBCs for the 2014 plan year should review and use the new template, or consider whether the “cover letter” approach contained in the FAQ is advisable and available to them. Employers should discuss the impact of this recent guidance with their legal counsel or other trusted advisor