Health Reform Update: Temporary Relief for Insured Expatriate Health Plans

Posted April 2, 2013 Company News

The DOL, IRS and HHS have jointly issued another Health Reform FAQ, which is Part XIII in the series. This most recent release provides information related to expatriate health plans, which are defined as insured group health plans for employees who reside outside their home country for a period of at least six months of the plan year. The new guidance provides expatriate health insurance plans with temporary transitional relief from complying with some of Health Reform’s requirements, specifically subtitles A and C of PPACA, which contain plan design mandates, Medical Loss Ratio requirements, rate review requirements, pre-existing condition exclusions, excessive waiting periods, rating limitations, non-discrimination requirements, etc.

The transitional relief applies to plan years ending on or before December 31, 2015. In order to be eligible for the transition relief, an expatriate health plan must be in compliance with applicable “pre-health care law” under ERISA, the Code and the Public Health Service Act of 1944. This means that the expatriate health plan is already subject to mental health parity, HIPAA non-discrimination, and ERISA claims procedures. Regulators are continuing to gather information about the special challenges expatriate health plans may face while complying with health care reform requirements.

This particular FAQ provides relief for insured plans only. Final regulations released previously for the temporary transitional reinsurance provision excluded expatriate health plans, but those particular final regulations are absent any reference to insured or self-insured (note: the preamble included statements by commenters that exclusion for the transitional reinsurance fee not be limited to insured plans). Final regulations released for the Patient Centered Outcomes Research Institute Trust Fee, also not included in subtitles A and C of PPACA, use yet another definition, one that does exempt both insured and self-insured expatriate plans if the plans have been adopted to cover primarily employees who are working and residing outside the U.S. These varying definitions for expatriate plans create a certain level of uncertainty for self-insured expatriate group health plan sponsors because based on this new FAQ, self-insured plans don’t appear to qualify for transitional relief from the provisions found in subtitles A and C of PPACA.

 

Expatriate Health Plans

Q1: To what extent is expatriate group health insurance coverage subject to the provisions of the Affordable Care Act?

The Departments recognize that expatriate health plans may face special challenges in complying with certain provisions of the Affordable Care Act. In particular, challenges in reconciling and coordinating the multiple regulatory regimes that apply to expatriate health plans might make it impossible or impracticable to comply with all the relevant rules at least in the near term. For example, independent review organizations may not exist abroad, and it may be difficult for certain preventive services to be provided, or even be identified as preventive, when such services are provided outside the United States by clinical providers that use different code sets and medical terminology to identify services. Further, expatriate issuers may face challenges and delays in communicating with enrollees living abroad, and, due to the complex nature of these plans, standardized benefits disclosures can be difficult for issuers to produce. Expatriate health plans may require additional regulatory approvals from foreign governments, and, in some circumstances, it is possible that domestic and foreign law requirements conflict.

While the Departments gather further information and analyze these challenges to determine what actions may be appropriate regarding the current requirements under the Affordable Care Act, the Departments have determined that, for plans with plan years ending on or before December 31, 2015, with respect to expatriate health plans, the Departments will consider the requirements of subtitles A and C of Title I of the Affordable Care Act satisfied if the plan and issuer comply with the pre-Affordable Care Act version of Title XXVII of the Public Health Service Act.

References to subtitles A and C of Title I of the Affordable Care Act also include the corresponding provisions imported into section 715 of the Employee Retirement Income Security Act (ERISA) and section 9815 of the Internal Revenue Code.

For purposes of this temporary transitional relief, an expatriate health plan is an insured group health plan with respect to which enrollment is limited to primary insureds who reside outside of their home country for at least six months of the plan year and any covered dependents, and its associated group health insurance coverage.

This definition is also the definition of “expatriate health coverage” under 45 CFR 153.400(a)(1)(iii) during this temporary transitional period (that is, for plans with plan years ending on or before December 31, 2015).

Expatriate health plans must, as a condition of this transitional relief, comply with the pre-Affordable Care Act version of Title XXVII of the PHS Act and other applicable law under ERISA and the Internal Revenue Code, including, for example, the mental health parity provisions, the HIPAA nondiscrimination provisions, the ERISA section 503 requirements for claims procedures, and any reporting and disclosure obligations under ERISA Part 1.

The Departments note that coverage provided under an expatriate group health plan is a form of minimum essential coverage under section 5000A of the Internal Revenue Code.

The Departments request comments on and information about the unique challenges that expatriate health plans may face in complying with provisions of the Affordable Care Act, including information about which particular types of plans face these challenges and with respect to which particular provisions of the Affordable Care Act. Please send comments by May 8, 2013 to [email protected].

 

Source: Department of Labor

 

Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.


 

Contributing EXPERT: Shari Herrle