On January 9, 2014, the Department of Labor issued a new FAQ (Part XVIII) addressing issues arising under the Affordable Care Act, including parity in mental health, women’s preventive services, wellness, and cost sharing limits. This blog highlights the contents of that FAQ.
Coverage of Preventive Services
The ACA requires non-grandfathered plans to cover preventive services without imposition of cost sharing. The definition of preventive services includes evidenced-based items or services that have in effect a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (USPSTF) with respect to the individual involved.
On September 24, 2013, the USPSTF revised its “B” recommendation regarding medications for risk reduction of primary breast cancer in women who are at increased risk for breast cancer. The recommendations now state that clinicians should offer such women risk-reducing medications such as tamoxifen or raloxifene.
Accordingly, for plan or policy years beginning one year after the date the recommendation or guideline is issued (in this case, plan or policy years beginning on or after September 24, 2014), non-grandfathered group health plans and non-grandfathered health insurance coverage offered in the individual or group market will be required to cover such medications for applicable women without cost sharing subject to reasonable medical management.
Sharing Limitations
Non-grandfathered plans must not exceed certain cost-sharing limits. In previous guidance, the government addressed concerns of plans that used multiple service providers to administer benefits subject to cost sharing. It stated that only for the first plan year beginning on or after January 1, 2014 (first year of applicability), the Departments will consider the annual limitation on out-of-pocket costs to be satisfied if:
- The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); and
- To the extent that the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), that out-of-pocket maximum does not exceed the dollar limits on cost-sharing imposed be the ACA.
The FAQ:
- Reiterates that this relief only applies to the first year of applicability.
- Reminds plans that the cost-sharing limits only apply to essential health benefits (EHB).
- Permits plans to divide the limit across multiple categories of benefits if the aggregate total of cost-sharing limits does not exceed the permissible limit. For example, if the out-of-pocket maximum (OOP) for single coverage is $6,350, a plan could have a benefit design that imposed an OOP of $1,000 for prescription drug coverage and $5,350 for all other medical services.
- Clarifies that cost-sharing requirements for EHB from a provider outside a plan’s network of providers are not required to be counted toward the annual limitation on out-of-pocket costs.
- Explains the “cost-sharing” does not include premiums, balance billing amounts for non-network providers, or spending for non-covered services such as cosmetic surgery.
Wellness Programs
Wellness program rules provide that a person must have an opportunity to qualify for a plan reward at least once a year. The FAQ addresses the situation of a health plan that requires tobacco users to participate in a tobacco cessation class to obtain a reward. A participant who is a tobacco user initially declines the opportunity to participate in the tobacco cessation program, but joins in the middle of the plan year. The FAQ provides that the plan is not required to offer the reward until the start of the next plan year.
The rules further provide that, in the case of an outcomes-based wellness program, a plan must defer to the recommendations of a participant’s physician when considering a reasonable alternative standard. If the doctor suggests that an activity-only weight loss program is appropriate, the plan must comply but has a say on which weight loss program should be used.
Fixed Indemnity Plans
Fixed indemnity plans are generally considered excepted benefits and therefore not subject to the ACA. In order for a fixed indemnity policy to be considered an excepted benefit, it must pay on a per-period basis, and that a fixed indemnity policy that pays on a per-service basis does not meet the conditions for excepted benefits. The FAQ points out that a policy that does not meet the requirements for fixed indemnity insurance may still qualify as an excepted benefit if it meets the requirements for “supplemental coverage.” In general, coverage will be considered supplemental if it is in the form a separate insurance policy that:
- Is issued by an entity that does not provide the primary coverage under the plan;
- Is designed to fill gaps in primary coverage, such as coinsurance or deductibles, but does not include insurance that becomes secondary or supplemental only under a coordination-of-benefits provision;
- Costs no more than 15% of the cost of the primary coverage; and
- Does not differentiate among individuals in eligibility, benefits, or premiums based on any health factor of an individual.
Coordination with The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
The MHPAEA required large plans to provide parity in their coverage of mental health and substance abuse disorders. The ACA requires issuers in the small group market to provide essential health benefits (EHB). EHB includes treatment for such disorders. The FAQ provides that, in the case of non-grandfathered small group market coverage, for plan years beginning on or after January 1, 2014, all non-grandfathered small group market coverage must include coverage for mental health and substance use disorder benefits, and that coverage must comply with the Federal parity requirements set forth in the interim final regulations issued in February 2010. The final regulations apply for plan years beginning on or after July 1, 2014 (which, for calendar year plans, is January 1, 2015).
Expatriate Health Plans
Pending further guidance, the government has previously exempted expatriate plans from the requirements of the ACA. An expatriate health plan is an insured group health plan with respect to which enrollment is limited to primary insureds who reside outside of their home country for at least six months of the plan year and any covered dependents, and its associated group health insurance coverage.
The recent FAQ clarified that there must be 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, and also with respect to group health insurance coverage offered in conjunction with the expatriate group health plan. The 12-month period can fall within a single plan year or across two consecutive plan years.