PPI in the News Compliance Corner - February 20, 2020 Archive
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On January 31, 2020, CMS announced an additional one-year extension with respect to specific ACA compliance requirements for certain non-grandfathered individual and small group coverage known as “grandmothered” policies. Under the latest extension, states may permit insurers that have continually renewed eligible grandmothered policies since January 1, 2014, to again renew that coverage for a policy year beginning on or before October 1, 2021, provided that the policies end by January 1, 2022.

As background, on November 14, 2013, CMS issued a letter outlining a transitional policy with respect to the health care reform mandates for coverage in the individual and small group markets. Under the policy, state authorities could allow health insurance issuers to continue certain coverage that would otherwise have been cancelled for failure to comply with the ACA requirements. This initiative allowed individuals and small businesses to elect to re-enroll in such coverage. Specifically, the non-enforcement policy provided relief from the following market reforms:

• Community rating
• Guaranteed issue and renewability of coverage
• Prohibition of coverage exclusions based on pre-existing conditions
• Non-discrimination based on health status
• Non-discrimination regarding health care providers
• Comprehensive coverage (i.e., coverage of essential health benefits and the application of maximum out-of-pocket limits)
• Coverage for participation in clinical trials

The transitional policy has been continually extended since the initial announcement, thus permitting grandmothered policies to maintain an exemption from the above-mentioned requirements. However, although the CMS bulletin allows for the temporary continuation of these non-compliant plans at the federal level, the practice must still be approved by state regulators in order for policies to be available in a particular state. Insurers then also have a choice as to whether to keep offering the policies. The bulletin includes a notice to be used in the event a coverage cancellation notice was already sent and the insurer will now be providing an option to the policyholder to continue the coverage.

Accordingly, small employers who are currently covered by such grandmothered policies should be aware of the most recent non-enforcement extension. These employers should work with their advisors and insurers regarding possible renewal of the coverage.

CMS Bulletin  »

On February 3, 2020, the DOL, HHS, and the Department of the Treasury issued two FAQs concerning the application of recent updates to SBC materials.

These agencies are charged with developing standards that group health plans and health insurance issuers can apply when compiling and providing SBCs to plan participants in accordance with the ACA. On November 7, 2019, updates to the SBC template, coverage examples calculator, guide, and narratives for coverage examples were released.

The first FAQ states that group health plans and health insurance issuers must use these updated materials beginning on the first day of the first open enrollment period for plan years beginning on or after January 1, 2021.

The second FAQ clarifies that using the calculator is not mandatory. It is a tool to help group health plans and health insurance issuers to generate the estimated out-of-pocket costs that a consumer can expect to pay under the plan for the coverage examples on the SBC. The calculator makes several assumptions that may not apply to particular plans or policy designs, so the agencies allow the plans and issuers to create their own calculators or to modify the calculator as necessary. However, plans and issuers can use the calculator even when they could develop more accurate methods for generating coverage examples, because it retains its status as a safe harbor.

Employers should be aware of the 2021 updates to SBC materials, their application, and when they must be applied.

2021 Updates to the SBC Template, Calculator, Guide and Narratives »

In January, HHS announced the 2020 federal poverty levels (FPL). The guidelines for the 48 contiguous states is $12,760 for a single person household and $26,200 for a four person household. The guidelines are different for Alaska ($15,950 and $32,750, respectively) and Hawaii ($14,680 and $30,130, respectively).

The FPL plays an important role under the ACA. Individuals who purchase coverage through the exchange may qualify for a premium tax credit if their household earnings are within 100% to 400% of the FPL. Employers wishing to avoid a penalty under the employer mandate may use the FPL affordability safe harbor, which means the cost of an employee's required contribution for employer sponsored coverage does not exceed 9.78% (for 2020), down from 9.86% (for 2019), of the single person FPL. This means that the FPL affordability safe harbor threshold in the 48 contiguous states for 2019 would be $103.99 per month, which is $12,760 divided by twelve and multiplied by 9.78%. As a reminder, the FPL safe harbor is only one of the affordability safe harbors; the other two are the rate of pay and Form W-2 safe harbors.

Employers should consider this adjustment to the FPL when determining whether their coverage is affordable, especially if they're using the FPL affordability safe harbor. The 2020 FPL is applicable beginning January 15, 2020.

FPL Announcement »

On February 6, 2020, HHS issued the proposed annual Notice of Benefit and Payment Parameters Rule for 2021. This Notice is issued annually, and once final adopts certain changes for the next plan year. While the proposed rule primarily impacts the individual market and the Exchange, it also addresses certain ACA provisions and related topics that impact employer-sponsored group health plans. Highlights include:

• Annual Cost-Sharing Limits. As background, the ACA requires non-grandfathered group health plans to comply with an out-of-pocket maximum on expenses for essential health benefits. This maximum annual limitation on cost-sharing for 2021 is proposed to be $8,550 for self-only coverage and $17,100 for family coverage (an increase from $8,150 and $16,300 for self-only/family coverage respectively in 2020).
• Drug Manufacturer Coupons. Stakeholders have broadly responded with confusion on how to treat drug manufacturer coupons in relation to the annual limit on cost-sharing. HHS proposes it will permit – but not require – plans and insurers to count direct support offered by drug manufacturers to enrollees for specific prescription drugs toward the annual limit on cost-sharing. Further, HHS proposes to interpret the definition of cost-sharing to exclude expenditures covered by drug manufacturer coupons.
• Excepted Benefit HRAs. HHS proposes to require that excepted benefit HRAs (EBHRAs) offered by non-federal governmental plan sponsors provide a notice to participants. This proposed notice requirement is in response to comments on recent HRA rulemaking that individuals should receive clear information about their HRAs. The content of the notice would generally be consistent with the content of SPDs required by ERISA and include information such as the conditions of eligibility to receive benefits under the HRA, a description of annual or lifetime limits on benefits under the HRA, and a summary of the benefits.

Once final, employers should review the regulations and implement any changes needed for their 2021 plan year.

Proposed Rule »
Fact Sheet »