ACA FAQs Address Wellness Programs, Preventive Services, Expatriate Plans and More

Practical Law Legal Update 5-554-1627 (Approx. 6 pages)

ACA FAQs Address Wellness Programs, Preventive Services, Expatriate Plans and More

by Practical Law Employee Benefits & Executive Compensation

Wellness Programs

In June 2013, the Departments issued final regulations that, among other things, implemented wellness program requirements added under the ACA (see Practice Note, Wellness Programs and Legal Update, Final Wellness Program Rules Include Updated Notice Language). The FAQs address various additional issues relating to wellness programs raised since the final regulations were published.

Mid-year Enrollment in Tobacco Cessation Programs

Under the final regulations, a wellness program may generally impose a premium surcharge on tobacco use if the program meets certain conditions, including offering an opportunity for eligible individuals to qualify for the reward (typically relief from the surcharge) at least once per year.

In the FAQs, the Departments clarify that plans generally need not provide tobacco users an additional opportunity to avoid a tobacco premium surcharge (or another reward) for a plan year if a participant initially declines to enroll in a tobacco cessation program at the beginning of a plan year but enrolls in the cessation program later that same plan year.

Instead, once a reasonable opportunity to enroll has been offered, plans are not required (but are permitted) to provide another opportunity to avoid the tobacco premium surcharge until renewal or re-enrollment for coverage for the next plan year. Plans and insurers may choose to offer rewards (including pro-rated rewards) for mid-year enrollment in a wellness program.

Accommodating Weight Reduction Programs

Under the final regulations, if an individual's personal doctor states that a plan standard for obtaining a reward (including recommendations made by the plan's medical professional) is not medically appropriate for the individual, the plan or insurer must provide a reasonable alternative standard that accommodates the recommendations of the individual's personal doctor regarding medical appropriateness.

The FAQs address the situation where a participant's doctor:

Advises that an outcome-based wellness program's standard for obtaining a reward is medically inappropriate for the participant.
Instead suggests a weight reduction program.

According to the Departments:

The plan has a say regarding which weight reduction program is used.
Many different weight reduction programs may be reasonable for this purpose.
A participant should discuss different options with the plan.

Changing Sample Notice Language

The final regulations included sample language for satisfying the requirement to provide notice of the availability of a reasonable alternative standard. The Departments clarify that plans and insurers can modify this language to provide details of their wellness programs, provided that the notice includes all of the required content specified in the final regulations. Additional sample language, the Departments noted, is available in examples illustrating the final regulations' requirements for outcome-based wellness programs (see Practice Note, Wellness Programs).

Expatriate Plans

In March 2013, the Departments issued an FAQ providing temporary transition relief to expatriate group health insurance plans regarding ACA compliance (see Legal Update, Expatriate Plans Receive Extra Time for ACA Compliance). For purposes of this transition relief, an FAQ indicates that an insured expatriate health plan is:

An insured group health plan for which enrollment is limited to:
- primary insureds for whom there is a good faith expectation that the individuals will reside outside of their home country or the United States for at least six months of a 12-month period (which can fall within a single plan year or across two consecutive plan years); and
- any covered dependents.
Group health insurance coverage offered in conjunction with the expatriate group health plan.

Under the March 2013 FAQ, for expatriate health plans with plan years ending on or before December 31, 2015, the Departments would consider the requirements of subtitles A and C of Title I of the ACA satisfied if the plan and insurer complied with the pre-ACA version of Title XXVII of the Public Health Service Act (PHSA). In an FAQ, the Departments clarify that they will also consider the requirements of subtitle D of Title I of the ACA (addressing qualified health plans) to be satisfied if an expatriate plan or insurer complies with the pre-ACA version of Title XXVII of the PHSA. The Departments also noted that coverage provided under an insured expatriate health plan generally is minimum essential coverage under Section 5000A of the Internal Revenue Code (26 U.S.C. § 5000A).

Regarding possible future guidance, the Departments noted that:

They are still considering additional, narrowly tailored guidance addressing ACA compliance for insured expatriate health plans.
Any new regulations or guidance that is more restrictive on plans or insurers will not apply for plan years ending on or before December 31, 2016, and that insured expatriate health plans can continue to rely on the transition relief in the March 2013 FAQs at least through those plan years.

For analysis of commonly-encountered issues involving expatriates under the ACA, see Practice Note, Expatriate Coverage Under the ACA.

ACA's Effect on Mental Health Parity

The MHPAEA requires increased parity between mental health or substance use disorder benefits and medical/surgical benefits, regarding financial requirements and treatment limits (for example, visit limits) under group health plans and insured coverage. The ACA builds on the MHPAEA to provide that mental health and substance use disorder services are one of ten essential health benefit (EHB) categories.

In the FAQs, the Departments explain that, for non-grandfathered small group market coverage for plan years beginning on or after January 1, 2014:

All non-grandfathered small group market coverage (that is not otherwise subject to an HHS transitional policy) must include coverage for mental health and substance use disorder benefits.
That coverage must comply with the federal parity requirements contained in interim final regulations issued in 2010 (75 Fed. Reg. 5410 (Feb. 2, 2010)). The final regulations apply for plan years beginning on or after July 1, 2014 (January 1, 2015 for calendar year plans).

However, grandfathered small group market coverage is not required to comply with either the EHB provisions or the MHPAEA (see Practice Note, Grandfathered Health Plans Under the ACA).

Cost-Sharing Limits

The ACA provides that annual cost-sharing imposed under non-grandfathered group health plans must not exceed certain out-of-pocket limits (and for small group market plans, certain deductible limits) (see Practice Note, Cost-Sharing Restrictions Under the ACA). In previous FAQ guidance, the Departments addressed out-of-pocket maximums for the first plan year beginning on or after January 1, 2014 (see Legal Update, FAQs Address Cost-Sharing Limits and Coverage of Preventive Services Under the ACA).

An FAQ addresses how the ACA's cost-sharing limits apply for plan years beginning on or after January 1, 2015. For these years, non-grandfathered group health plans and insurance coverage:

Must have an out-of-pocket maximum that limits overall out-of-pocket costs on all EHBs.
Need not apply the annual limit on out-of-pocket maximums to non-EHBs.

The Departments will consider self-insured group health plans or large group health plans to have used a permissible definition of EHB if the definition is authorized by HHS under implementing guidance (which includes 45 C.F.R. Section 156.100). The Departments intend to use their enforcement discretion and work with large group market and self-insured plans that make a good faith effort to apply an authorized definition of EHB.

The Departments also clarified that:

Plans and insurers, including those with multiple service providers, may divide the annual limit on out-of-pocket costs across multiple categories of benefits, rather than reconciling claims across multiple service providers, if the combined amount of any separate out-of-pocket limits applicable to all EHBs under the plan does not exceed the ACA's limits on out-of-pocket maximums.
Where a plan includes a network of providers, plans are not required to (but may) count an individual's out-of-pocket expenses for out-of-network items and services toward the plan's annual maximum out-of-pocket limit.
Plans are not required to (but may) count an individual's out-of-pocket costs for non-covered items or services (such as cosmetic services) toward the plan's annual maximum out-of-pocket limit.

Preventive Services

Under the ACA, non-grandfathered plans and insurers must provide coverage for certain preventive services without cost-sharing (see Practice Note, Coverage of Preventive Health Services Under the ACA). An FAQ reflects how the scope of required preventive services is expanded in response to new guidelines and recommendations. Specifically, on September 24, 2013, the United States Preventive Services Task Force (USPSTF) recommended that clinicians offer to prescribe risk-reducing medications for women who are at:

Increased risk for breast cancer.
Low risk for adverse medication effects.

As a result, an FAQ states that non-grandfathered plans must cover these medications without cost sharing (and subject to reasonable medical management) for plan years beginning on or after September 24, 2014 (that is, one year from the date the recommendation was issued).

ACA FAQs Address Wellness Programs, Preventive Services, Expatriate Plans and More | Practical Law