Departments Issue New FAQs on Affordable Care Act

 

The U.S. Departments of Health and Human Services, Labor, and the Treasury on Dec. 23, 2010, provided new frequently asked questions about the Patient Protection and Affordable Care Act and the Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.

The first question involved a health plan that does not impose a co-payment for colorectal cancer preventive services when performed in an in-network ambulatory surgery center. The question asked if it would be permissible for the same preventive service provided at an in-network outpatient hospital setting to require a $250 co-payment.

This plan design is permissible, the departments stated. Plans may use reasonable medical management techniques to steer patients toward a particular high-value setting such as an ambulatory care setting. But the plan should accommodate any individuals for whom it would be medically inappropriate to have the preventive service in the ambulatory setting by having a mechanism for waiving the otherwise applicable co-payment for the preventive service provided in a hospital.

In another question, the Department of Labor said employers are not required to comply with the automatic enrollment provisions of Section 18A of the Fair Labor Standards Act until it issues regulations in this area. The department said it intends to complete its rulemaking by 2014.

Group health plans do not have to comply with the 60-day prior notice requirement for material modifications until plans and issuers are required to provide the summary of benefits and coverage explanation according to standards issued by the departments, another question and answer stated. The departments have not yet issued the standards.

A group health plan that normally charges a co-payment for physician visits that do not constitute preventive services may charge this co-payment to individuals age 19 and older-including employees, spouses and dependent children-but waive it for those younger than 19, a question and answer stated.

One question involved grandfathered health plans. Suppose plan terms include out-of-pocket spending limits that are based on a formula-a fixed percentage of an employee's prior year compensation. If the formula stays the same but a change in earnings results in a change to the out-of-pocket limits such that the change exceeds the thresholds allowed under the interim final regulations relating to grandfathered health plans, will the plan relinquish grandfathered status? No. The departments have determined that if a plan or coverage has a fixed-amount cost-sharing requirement other than a co-payment, such as a deductible or out-of-pocket limit, that is based on a percentage-of-compensation formula, the cost-sharing arrangement will not cause the plan or coverage to cease to be a grandfathered health plan as long as the formula remains the same as that which was in effect on March 23, 2010.

Wellness Programs

A number of questions and answers addressed wellness programs. No employment-based wellness program is required to check for compliance with the Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination provisions. A wellness program is subject to the HIPAA nondiscrimination rules only if it is, or is part of, a group health plan.

It does not violate the HIPAA nondiscrimination regulations for a group health plan to give an annual premium discount of 50 percent of the cost of employee-only coverage to participants who adhere to a wellness program that consists of attending a monthly health seminar, a question and answer stated. The departments noted that the rule limiting the amount of the reward for health-contingent wellness programs to 20 percent of the cost of coverage applies only to programs that require satisfaction of a standard related to a health factor to qualify for the reward.

Other examples of wellness programs that do not violate the HIPAA nondiscrimination regulations were provided. In one example, a group health plan gave an annual premium discount of 20 percent of the cost of employee-only coverage to participants who adhere to a wellness program. The program consists of giving an annual cholesterol exam to participants. Participants who achieve a cholesterol count of 200 or lower receive the annual premium discount. Also, the plan provides that if it is unreasonably difficult or medically inadvisable to achieve the targeted cholesterol count within a 60-day period, the plan will make available a reasonable alternative standard that takes the relevant medical condition into account. This wellness program does not violate the HIPAA nondiscrimination regulations because it satisfies the requirement of being available to all similarly situated individuals, the plan provides a reasonable alternative standard and the premium discount is limited to 20 percent of the cost of employee-only coverage.

In another example, a group health plan offers two different wellness programs, both of which are offered to all full-time employees enrolled in the plan. The first program requires participants to take a cholesterol test and provides a 20 percent premium discount for every individual with a cholesterol count under 200. The second program reimburses participants for the cost of a monthly membership to a fitness center. If someone participates in both wellness programs and receives both rewards, the plan is not violating the HIPAA nondiscrimination requirements. The first program must meet five criteria in the regulations, including the 20 percent limit on the amount of the reward. The second program is not based on an individual satisfying a standard that is related to a health factor, so it does not have to satisfy the five criteria in the regulations.

The departments noted that they intend to propose regulations to raise the percentage for the maximum reward that can be provided under a health-contingent wellness program to 30 percent before 2014.

Mental Health Parity and Addiction Equity Act

Other questions and answers concerned the Mental Health Parity and Addiction Equity Act of 2008. Small employers are still exempt from the act's requirements. Although there were changes to the definition of "small employer" for other purposes under the Affordable Care Act, the Employee Retirement Income Security Act and the Internal Revenue Code continue to define a small employer as one that has 50 or fewer employees. Accordingly, the departments will continue to treat group health plans of employers with 50 or fewer employees as exempt from the Mental Health Parity and Addiction Equity Act requirements.

Another question asked how a plan may claim an increased cost exemption. The exemption is available for plans that make changes to comply with the law and incur an increased cost of at least 2 percent in the first year that the law applies to the plan (the first plan year beginning after Oct. 3, 2009) or at least 1 percent in any subsequent plan year (plan years beginning after Oct. 3, 2010). If the cost is incurred, the plan is exempt for the plan year following the year the cost was incurred. A plan that has incurred an increased cost of 2 percent during its first year of compliance can obtain an exemption for the second plan year by following exemption procedures described in the departments' 1997 Mental Health Parity Act regulations. Plans applying for an exemption must demonstrate that increases in costs are attributable directly to implementation of the law.

Allen Smith, J.D., is SHRM's manager of workplace law content.

 

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