More guidance on federal health reform mandates has been issued by the Departments of Health and Human Services, Labor and the Treasury. This latest round of interim final rules, which will go into effect on August 27, 2010, discuss the ban on pre-existing condition exclusions (PCEs), restrictions on annual and lifetime limits, the prohibition on rescinding an individual’s coverage and certain patient protections. Except as noted below, all of these provisions apply to grandfathered plans. Among the key points:
PCEs: A PCE is a limitation or exclusion of benefits based on the fact that the condition was present before the effective date of coverage. Beginning with the first plan year starting on or after September 23, 2010, PCEs may not be applied to any enrollee under age 19. Effective January 1, 2014, PCEs may not be applied to any enrollee.
Annual Limits: Annual limits on “essential health benefits” may only be applied as follows:
· For a plan year beginning on or after September 23, 2010, but before September 23, 2011: $750,000
· For a plan year beginning on or after September 23, 2011, but before September 23, 2012: $1,250,000
· For a plan year beginning on or after September 23, 2012, but before September 23, 2013: $2,000,000
The term “essential health benefits” will be defined in future guidance, but in the meantime, for enforcement purposes, the regulators will take into account good faith efforts to comply with a reasonable interpretation of the term. Additionally, the guidance indicates that health reimbursement arrangements (HRAs) that are linked to other coverage need not separately meet these limitation requirements and retiree-only HRAs and flexible spending arrangements (FSAs) are likewise not subject to this guidance. The regulators are seeking comments on how a standalone HRA should be handled for purposes of annual limits.
Lifetime Limits: Lifetime limits are not permitted for plan years beginning on or after September 23, 2010. If an individual has already exceeded his or her lifetime limit, but otherwise remains eligible under the plan, you must give them notice of their right to reenroll and allow them a 30-day period in which to reenroll.
Rescissions of coverage: Under recent health care reform legislation, plans may only rescind coverage of an individual if it can show the individual committed fraud or an intentional misrepresentation to gain coverage. The guidance clarifies that rescinding coverage refers only to a cancellation that has a retroactive effect. This interpretation means that employers who discover ineligible individuals on their plans are not barred from removing them from coverage, but may only do so on a prospective basis, unless they can show fraud or intentional misrepresentation.
Patient protections: Health care reform also provides that for plans that have a network of providers, an individual must be able to choose any participating provider as their primary care provider, any participating pediatrician for a child’s care and women cannot be required to obtain preauthorization or referral for OB-GYN care. In addition, emergency room care must be paid on an in-network basis and without any preauthorization. These patient protections do not apply to grandfathered plans.
Have questions? Contact Vigilant!