The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (Departments) have issued final regulations governing various provisions applicable to group health plans and insurers under the Affordable Care Act (ACA). The final regulations address the following ACA provisions:

These provisions were the topic of proposed and interim final regulations following the ACA's enactment in 2010, and also have been addressed in numerous sets of FAQ guidance (see Affordable Care Act (ACA) Toolkit). Highlights of the final regulations are addressed below.

The final regulations apply to group health plans and insurers beginning on the first day of the first plan year that begins on or after January 1, 2017. Until the final regulations are effective, plans may continue to comply with the interim final regulations for the various ACA market reforms addressed under the final regulations (see Practice Note, Affordable Care Act (ACA) Overview).

The regulations finalize the Departments' 2010 interim final regulations, as amended, addressing grandfathered health plans, and include clarifications under related FAQ guidance (see Practice Note, Grandfathered Health Plans Under the ACA and Standard Clause, Grandfathered Health Plans Disclosure Statement). Reflecting earlier guidance, the final regulations provide that grandfathered status determinations apply separately to each benefit package, and include other clarifications addressing the benefit package rules (for example, that a health plan's preferred provider organization (PPO), point of service (POS), and health maintenance organization (HMO) options are treated as separate benefit packages for grandfather analysis). The final regulations retain the general requirement that plans include a disclosure regarding grandfathered status in any summary of benefits provided under the plan to participants and beneficiaries (see Standard Clause, Grandfathered Health Plans Disclosure Statement and SPD Compliance Chart for ERISA Plans).

Under the ACA, a group health plan or health insurer offering group coverage generally may not impose preexisting condition exclusions (see Practice Note, Preexisting Condition Exclusions and Coverage Rescissions Under the ACA). The final regulations finalize the Departments' 2010 interim final rules on this topic, without substantial change, and include other clarifications in FAQ guidance issued after the interim final rules were published.

Regarding the ACA's prohibition on lifetime and annual limits (see), the final regulations:

(See Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA.)

The final regulations address how to determine the scope of "essential health benefits" (EHBs) (which cannot be subject to lifetime and annual limits), applicable for years beginning on or after January 1, 2017. Specifically, plans may choose from any of the 51 EHB base-benchmark plans that have been selected as a state's benchmark plan (as opposed to all plans that are potentially authorized). A final list of these plans likely will be published in November 2015.

The final regulations clarify that the lifetime and annual limit prohibitions apply regardless of whether EHBs are provided in-network or out-of-network. The final regulations also include rules for when a health reimbursement arrangement is:

In addition, the final regulations reflect a clarification that the annual dollar limit prohibition applies to health flexible spending arrangements (health FSAs) that are not offered through a cafeteria plan (see Practice Note, Cafeteria Plans and Legal Update, Guidance Addresses the ACA's Impact on EAPs, HRAs and Health FSAs).

The Departments also noted that a waiver program involving annual dollar limits is no longer available and therefore is not reflected in the final regulations.

Under the ACA, plans and insurers must not rescind coverage unless a covered individual commits fraud or makes an intentional misrepresentation (see Practice Note, Preexisting Condition Exclusions and Rescissions Under the ACA). A rescission is a cancellation or discontinuance of coverage that has retroactive effect. The final regulations finalize interim final rules issued in 2010 without substantial change, and reflect FAQ guidance issued to date.

The final regulations clarify that a retroactive cancellation or discontinuance of coverage is not a rescission if it is initiated by either:

Coverage rescissions are eligible for internal claims and appeals and external review for non-grandfathered health plans, regardless of whether the rescission adversely affects a particular benefit at the time of appeal.

The final regulations adopt the Departments' 2010 interim final rules regarding coverage of dependents to age 26 without substantial change, and also incorporate related FAQ guidance (see Practice Note, Coverage for Adult Children to Age 26 Under the ACA).

In finalizing the regulations on this topic, the Departments highlighted an issue involving plans with HMO designs that restrict eligibility by requiring participants and beneficiaries to work, live, or reside in the HMO service area. According to the Departments, these designs may have a disproportionate impact on dependent children (for example, individuals who move out of an HMO's service area to attend college). Under the final regulations, to the extent a plan's eligibility restriction that requires individuals to work, live, or reside in a service area is applied to children, the restriction violates the ACA's coverage to age 26 requirement.

The final regulations adopt the Departments' interim final rules regarding internal claims and appeals and external review, and the Departments' related guidance, without substantial change (see Practice Note, Internal Claims and Appeals Under the ACA). In related guidance, the DOL has proposed updated claims procedures addressing disability benefits, which would adopt many of the enhanced claims procedures added for group health plans under the ACA and its implementing regulations.

As one example of how the ACA's implementing guidance built upon the pre-ACA claims regulations, plans and insurers that wish to rely on new or additional evidence (or a new rationale) in making a benefit determination must now provide the new or additional evidence or rationale to participants as soon as it becomes available.

The ACA's patient protections include rules regarding the designation of primary care providers and benefits for emergency services (see Practice Note, Patient Protections and Clinical Trials Under the ACA). The final regulations adopt the 2010 interim final regulations and an FAQ addressing these rules without substantial change. Among other provisions, the final regulations include a rule under which participants and beneficiaries have the option to designate physicians of various pediatric subspecialties (for example, a pediatric oncologist) as a child's primary care provider without preauthorization from a primary care coordinator.

Also, the final regulations permit plans and insurers to apply reasonable geographic limits regarding which participating primary care providers are considered available, consistent with plan terms and underlying provider contracts.

The final regulations also address certain transition provisions that no longer apply (for example, a rule under which grandfathered plans could exclude coverage for individuals who were not yet age 26 and who were eligible to enroll in a health plan other than the parent's plan).

The final regulations cover a good deal of ground and address key ACA market reforms for group health plans and insurers that were in development for several years after the ACA was first enacted. In many cases, the final regulations make few or relatively minor changes to the existing interim final rules. In other instances, however, particularly regarding the rules for internal claims and external review, the final rules include changes and clarifications with which plans or insurers may not be familiar, and for which updates to plan claims and review procedures may be needed.