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Feb 2014
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February 06, 2014

New Health Care Reform Guidance – Part 2


The government has issued additional Health Care Reform guidance that impacts employer-sponsored group health plans:
 
  •  Breast cancer medication will have to be covered at no cost to participants as a mandated preventive service
  • A clearer definition of which expatriate plans qualify for transitional relief from Health Care Reform requirements
  • Additional fixed indemnity plans that are potentially exempt from Health Care Reform requirements; and
  • Clarification on which group health plans must include mental health and substance abuse coverage


Coverage of Breast Cancer Medication

With plan years beginning on or after Sept. 24, 2014, non-grandfathered group health plans must cover breast cancer medications such as tamoxifen or raloxifene, without cost-sharing, as a preventive measure for women who face an increased risk for breast cancer.  Plans may provide these benefits subject to reasonable medical management, such as a requirement to receive the medication from a network pharmacy and a physician’s determination that the recipient is subject to a higher than normal risk of developing breast cancer.

Expatriate Health Plans Defined


Previous guidance provided a temporary exemption to Health Care Reform insurance mandates for certain expatriate health plans.  The new guidance clarifies that an expatriate health plan is an insured group health plan in which enrollment is limited to a primary insured (and his or her dependents) for whom there is a good faith expectation that the primary insured will reside outside his or her home country or outside of the United States for at least six months of a 12-month period.  The 12-month period can fall within a single plan year or across two consecutive plan years.  Other group health insurance coverage that is offered in conjunction with the expatriate plan also qualifies for this temporary exemption from Health Care Reform mandates.

While an expatriate may be subject to the individual mandate, the guidance notes that coverage under an expatriate plan will generally qualify as minimum essential coverage. That  means that the expatriate will not have to pay to penalties if covered under the expatriate plan.

The federal agencies are considering narrowly tailored guidance that may add limitations to the exemption for expatriate health plans, but employers can rely on this guidance for plan years ending on or before Dec. 31, 2016. 

Fixed Indemnity Insurance Exception

Fixed indemnity insurance plans are generally exempt from many Health Care Reform insurance mandates, but previous guidance made clear that a “fixed indemnity plan” means only a plan that pays a fixed dollar amount per day (or per other period) of illness. Plans that pay fixed amounts on a per service basis (for example, a certain dollar amount or percentage per doctor visits, for prescription drugs, or for medical procedures) did not qualify for this exemption.

The new guidance acknowledges that there are a number of products currently marketed as fixed indemnity insurance that do not meet the fixed indemnity plan requirements.  The U.S. Department of Health and Human Services (HHS) is therefore considering regulations that will treat fixed indemnity coverage in the individual market as exempt from Health Care Reform mandates if it meets all of the following requirements:
 

  • It is sold only to individuals who have other health coverage that is minimum essential coverage (an employer-sponsored group health plan will qualify)
  • There is no coordination between the provision of benefits offered under the indemnity coverage and exclusions under any other health coverage
  • The benefits are paid in a fixed dollar amount regardless of the amount of expenses incurred and without regard to the amount of benefits provided under any other health coverage with respect to an event or service
  • The plan materials include a prominent notice informing policyholders that the coverage does not qualify as minimum essential coverage and will not satisfy the individual responsibility requirements.

Until it issues regulations dealing with this issue, HHS will treat fixed indemnity polices that meet these conditions as exempt from the insurance mandates.  Note, however, that this temporary exemption is clearly available only in states in which HHS has direct authority to enforce Health Care Reform’s market reform provisions (currently, those states are Alabama, Missouri, Oklahoma, Texas and Wyoming).  HHS is encouraging, but cannot mandate, that other states also recognize these policies as exempt from Health Care Reform mandates.

Mental Health and Substance Abuse Coverage

Health Care Reform included mental health and substance abuse services as one of the 10 essential health benefit categories required for non-grandfathered health plans in the small group markets.  The new guidance clarifies that group health plans in the small group market must cover mental health and substance abuse services with plan years that begin on or after January 1, 2014, and must comply with the final mental health parity regulations for plan years that begin on or after July 1, 2014 (which, for calendar year plans, is January 1, 2015). Large group health plans are not required to cover mental health and substance abuse services — but if they do, they must also comply with the mental health parity regulations for plan years that begin on or after July 1, 2014.

If you have questions about the changes, please contact April A. Goff (agoff@wnj.com or 616.752.2154), Norbert F. Kugele (nkugele@wnj.com or 616.752.2186), or any other member of Warner’s Health Care Reform Task Force.

Click here for Part 1.

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