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New ACA FAQ Guidance Addresses Cost Sharing, Preventive Care, and Expatriate Plans

Two more sets of tri-agency FAQs have been released, providing additional interpretive guidance on the Affordable Care Act. They are Part XII and Part XIII in the series.

Cost-Sharing Limitations. Part XII includes two important clarifications on the cost-sharing limitations that will apply to group health plans beginning in 2014.

(1) Deductible. The rule that limits the annual deductible under a plan to $2,000 for self-only coverage and $4,000 for family coverage will apply only to non-grandfathered plans in the individual and small-group markets. Grandfathered plans and large-group plans will be permitted to impose higher deductibles. This may be important for large-group plans that want to offer an option with a high deductible that meets the minimum requirements for a 60% actuarial value plan.

(2) Out-of-pocket maximum. The rule that limits overall cost-sharing under a plan to $5,000 for self-only coverage and $10,000 for family coverage will apply to all non-grandfathered plans. So even large-group plans will be limited.

Preventive Care. Part XII also provides detailed guidance on miscellaneous issues related to the requirement for non-grandfathered plans to offer preventive-care services without cost-sharing. Some highlights:

(1) Out-of-network services. Plans generally are permitted to impose cost-sharing with respect to preventive-care services obtained out of network. However, if a service that is required to be covered by the plan is not available through any in-network provider, the plan must cover the out-of-network service without cost-sharing.

(2) Over-the-counter items. Some of the covered preventive-care items include over-the-counter drugs and devices, such as aspirin. A plan is only required to cover these items without cost-sharing when they are prescribed by a healthcare provider for the purpose identified in the preventive-care guidelines.

(3) Polyps. Illustrating the level of detail contained in this guidance, one FAQ clarifies that required coverage of a colonoscopy without cost-sharing includes covering removal of any polyps discovered during the procedure.

Yes, friends, health care reform has broken down many barriers. We are now writing about polyps.

Expatriate Plans. Part XIII provides an important transitional rule for employers that offer separate “expatriate plans,” meaning plans that provide health insurance coverage primarily for employees and their dependents who are residing outside of their home country for at least six months of a plan year. Insured expatriate plans are given until 2016 to begin complying with the ACA’s group-market reforms, so long as they continue to comply with the pre-ACA requirements under Title 27 of the Public Health Service Act, such as the HIPAA portability and nondiscrimination rules and the mental-health-parity requirements.

While this is welcome relief for expatriate plans, it indirectly clarifies that they are otherwise considered subject to the requirements and mandates of health care reform, except to the extent they are specifically exempted. It is also notable that the transition relief applies only to insured expatriate plans. If an employer is offering expatriate coverage on a self-insured basis, this transition relief apparently is not available.

Part XIII also confirms that expatriate coverage is considered a form of “minimum essential coverage,” which means at least two things: (1) employees covered under an expatriate plan will be treated as complying with the individual mandate; and (2) employers offering an expatriate plan will satisfy their obligation under the play-or-pay rules to offer minimum essential coverage.


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Don Berner, the Labor Law, OSHA, & Immigration Law Guy
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Boyd Byers, the General Employment Law Guy
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Jason Lacey, the Employee Benefits Guy
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