HHS Proposed Rules Address Verification of Employer-sponsored Coverage and Appeals Procedures under Exchanges | Practical Law

HHS Proposed Rules Address Verification of Employer-sponsored Coverage and Appeals Procedures under Exchanges | Practical Law

The Department of Health & Human Services (HHS) has issued proposed regulations addressing various aspects of the health insurance exchanges under the Affordable Care Act (ACA). In addition to rules on Medicaid, the proposed regulations would govern verification of employer-sponsored plan coverage and appeals procedures for employers. The regulations also include procedures for employers to dispute whether individuals are eligible for exchange coverage.

HHS Proposed Rules Address Verification of Employer-sponsored Coverage and Appeals Procedures under Exchanges

by PLC Employee Benefits & Executive Compensation
Published on 17 Jan 2013 • USA (National/Federal)
The Department of Health & Human Services (HHS) has issued proposed regulations addressing various aspects of the health insurance exchanges under the Affordable Care Act (ACA). In addition to rules on Medicaid, the proposed regulations would govern verification of employer-sponsored plan coverage and appeals procedures for employers. The regulations also include procedures for employers to dispute whether individuals are eligible for exchange coverage.
On January 14, 2013, HHS issued proposed regulations addressing issues relating to implementation of the health insurance exchanges under the Affordable Care Act (ACA). Although largely focused on Medicaid and Children's Health Insurance Program (CHIP) issues, the proposed regulations also include rules addressing:
  • Employer verification of an individual's eligibility for employer-sponsored health plan coverage.
  • The procedures for an employer to dispute whether an individual is eligible for coverage under the health insurance exchanges.

Employer Verification of Access to Employer-sponsored Plan Coverage

Individuals who are enrolled in employer-sponsored health coverage or eligible for employer-sponsored health coverage that satisfies affordability and minimum value standards are ineligible to receive advance payments of the premium tax credit (to support the purchase of qualified health plans through the exchanges) or cost-sharing reductions under the exchanges. (For more information on the exchange-related premium tax credits and cost-sharing reductions, see Practice Note, Health Insurance Exchange and Related Requirements under the ACA.) The proposed regulations include procedures for determining whether an individual is eligible for coverage in an employer-sponsored plan, which involves confirming:
  • Whether the individual has access to coverage through the employer.
  • Information regarding the employee's share of the premium amount for, and minimum value of, that coverage.
An individual seeking eligibility for advance payment of the premium tax credit must provide the exchange certain information regarding his access to qualifying coverage in an employer-sponsored plan, including:
  • The employer's contact information and employer identification number.
  • Whether the individual is employed on a full-time basis.
  • Whether the individual's employer provides minimum essential coverage and, if so, the required employee contribution for the lowest-cost plan offered by the employer.
The accuracy of this information must be verified, and in an April 2012 bulletin, HHS discussed strategies for this verification process. The proposed regulations generally build on the process outlined in the bulletin. Under the proposed regulations, an exchange can verify whether individuals have qualifying coverage in an eligible employer-sponsored plan, including whether an individual either:
  • Reasonably expects to be enrolled in an eligible employer-sponsored plan.
  • Is eligible for qualifying coverage in such a plan for the benefit year for which coverage is requested.
In making these determinations, the exchanges can rely on methods that include HHS-approved electronic data sources (including any state-based data sources, for example, relating to a state CHIP). If an exchange cannot obtain information regarding enrollment in, and eligibility for, employer-sponsored coverage, it must undertake a random sampling process that includes:
  • Informing an individual that it will contact any employer identified on the employee's application.
  • Making reasonable efforts to contact the employer to verify whether the individual is enrolled in an employer-sponsored plan or is eligible for qualifying plan coverage.
Information provided by the employer relevant to an individual's enrollment must be used by the exchange in determining the individual's eligibility. If the information changes the individual's eligibility determination, the exchange must notify the employer and the individual of its determination. Also, if the exchange cannot obtain needed information from the employer, it must determine the individual's eligibility based on the individual's attestation about the employer.

Employer Appeals Procedures

The proposed regulations also include an appeals process under which employers can dispute a determination that either the employer:
  • Does not provide minimum essential coverage under its plan.
  • Provides minimum essential coverage, but that coverage is not affordable with respect to the employee identified in the notice from the exchange addressing the employer's potential tax liability.
Under the appeals procedures, employers must be allowed to:
  • Request an appeal within 90 days from the date the notice to the employer informing it of an employee's eligibility for advance payment of the premium tax credit or cost-sharing reductions is sent.
  • Submit relevant evidence to support an appeal request, for example, information addressing whether:
    • an employee is actually employed by the employer;
    • coverage is offered by the employer; or
    • the employee has taken this coverage.
Although employers would not be permitted to elevate an appeal decision by a state-based exchange to HHS, their appeals may be submitted to HHS if an exchange fails to establish a process for employers. On receiving an employer's valid appeal request, the decisionmaker reviewing the appeal must:
  • Notify the employee of the request.
  • Permit the employee to submit additional evidence for consideration.
Other rules addressed in the proposed regulations' employer appeals procedures include:
  • Rules for dismissing an employer appeal.
  • Additional rights for employers requesting appeal (for example, the ability to access information regarding an employee's income).
  • The standards for adjudicating an employer appeal (for example, the review must be conducted by one or more impartial officials).
  • Rules for employer appeal decisions, for example:
    • that the appeal decision include a plain language description of the decision's effect on the employee's eligibility;
    • content requirements for the notice provided to an employer, employee and the exchange of an appeal entity's decision; and
    • that the appeal decision include a plain language description of the decision's effect on the employee's eligibility.
If the appeal decision affects the employee's eligibility, an exchange must promptly redetermine the eligibility.

Practical Impact

As 2014 approaches, employers will want to become familiar with the procedures detailed in these proposed regulations, which offer employers the chance to correct any potentially erroneous information regarding the employer's offer of coverage provided to an exchange as part of an employee's application. Notably, the procedures set out in these proposed rules are separate from the IRS' procedures for determining whether an employer is liable for a penalty under the employer mandate (see Legal Update, IRS Proposed Rules on Employer Mandate Include Transition Relief for Cafeteria Plan Elections).