Posts Tagged ‘Affordable Care Act’

Final Rules Released for Summary of Benefits & Coverage

February 9, 2012

Today the Department of Labor released final regulations implementing the Affordable Care Act’s summary of benefits and coverage (“SBC”) requirement.  The rules require  employers sponsoring group health plans to distribute an SBC to employees and participants in certain situations, such as at open enrollment.  The rules were originally supposed to be effective on March 23, 2012; however, the final rules delay the effective date.  The new effective date is (i)  the first day of the plan’s open enrollment period on or after September 23, 2012 for disclosures required to be provided to re-enrollees or late enrollees; and (ii) the first day of the plan year that begins on or after September 23, 2012 for individuals newly eligible for coverage (such as new hires or special enrollees).  For example, a calendar year plan with an open enrollment period beginning November 15 would need to begin complying with the new regulations on November 15, 2012 for re-enrollees and  late enrollees and January 1, 2013 for newly eligible individuals. 

We will provide a detailed summary of the new rules in the coming days.  A copy of the rules and additional DOL guidance can be accessed at


HHS Gives Non-Profit Employers with Religious Objections An Additional Year to Cover Birth Control

January 23, 2012

Last August HHS revised the definition of preventative care that non-grandfathered plans must cover without cost-sharing to include all FDA approved forms of birth control.  The new definition is effective for plan years that begin on or after August 1, 2012.  The rule contained a very limited exemption for “religious employers”, such as churches, but did not include an exemption for  non-profit entities affiliated with religious organizations, such as Catholic hospitals. 

On Friday HHS announced that it was giving non-profit employers who currently do not cover birth control because of religious objections an additional year to comply with the new definition of preventative care services.  Therefore, non-grandfathered group health plans sponsored by non-profit employers affiliated with religious organizations who currently do not cover birth control because of religious beliefs will not have to cover birth control at 100% until their first plan year on or after August 1, 2013. 

A copy of HHS’ press release can be accessed at

SBC Requirements Likely to Be Postponed

November 18, 2011

The Affordable Care Act requires health insurers and employers sponsoring group health plans to implement a new summary of benefits and coverage notice by March 23, 2012.   Proposed rules implementing the new requirement were issued in August.   Over the last three months employers and insurers have questioned whether it is reasonable to expect compliance with the requirements by March 23, 2012 given final rules have yet to be issued.  Yesterday, the Department of Labor clarified in an FAQ that it does not expect employers or insurers to begin implementing the requirements until final rules are published.  The Department of Labor went on to say that regulators intend to give employers and insurers sufficient time after issuing the final rules to be in compliance.   Given the final rules have yet to be issued, it is likely the compliance date will now be sometime after March 23, 2012. 

A copy of the FAQ can be accessed at

HRAs & Annual Limit Restrictions

August 24, 2011

Health reimbursement arrangements (“HRAs”) in effect prior to September 23, 2010 no longer need to apply to HHS for a waiver of the annual limit restrictions in the Affordable Care Act.  Under the Act, group health plans, including HRAs, are subject to annual limit restrictions on essential health benefits until 2014.  Beginning in 2014,  annual limits on essential health benefits are prohibited.  In previous guidance, HHS clarified that an HRA integrated with an underlying medical plan (for example, an HRA subsidizing deductibles or out of pocket maximums imposed by an employer’s major medical plan) complies with the annual limit restrictions if the underlying medical plan complies.  However, stand-alone HRAs (for example, HRAs that reimburse employees directly for insurance premiums or medical expenses) were not addressed and presumably have to comply with the annual limit restrictions.  Until 2014, HHS has allowed plans who by their nature cannot comply with the annual limit restrictions (mini-med plans, HRAs, etc.) to apply for an annual waiver of the restrictions provided the plan was in place prior to September 23, 2010.   In guidance released on Friday, HHS exempts HRAs from the waiver application process, recognizing that by their nature HRAs  have annual limit restrictions far below those required by the Act.  A copy of the guidance is available at   In light of this guidance, stand-alone HRAs no longer need to apply for an annual waiver to be exempt from the annual limit restrictions provided the stand-alone HRA was in effect prior to September 23, 2010.    The new exemption applies only until 2014 at which time the waiver program will end.  HHS will need to issue further guidance on how HRAs will be treated in 2014 when annual limits are no longer allowed on essential health benefits.

Good News for Employers

August 22, 2011

Federal regulators are softening the impact of the employer penalty provisions in the Affordable Care Act.   In its comments in the preamble to the proposed premium assistance rules, the IRS announced upcoming rules that should alleviate the burden of the employer penalty provisions on many employers.  Under the Act, beginning in 2014 employers with 50 or more employees who do not offer any health coverage or who do not offer “affordable” coverage with a “minimum value”  must pay a penalty to the federal government if one of their full-time employees receives a premium assistance subsidy from the federal government.  Coverage is not “affordable” if an employee must spend more than 9.5% of his/her household income on the coverage.   The Act did not provide whether that coverage was limited to single coverage or included family coverage.  Many employers were concerned their coverage would not be affordable because while they paid substantially all of the single premium, they often paid a much lower percentage of the family coverage.  The IRS has announced that it will interpret “coverage” for purposes of the affordability provisions as only single coverage.  Therefore, if an employee’s required contribution for single coverage does not exceed 9.5% of his/her income, even if the required contribution for family coverage exceeds 9.5%, the employee will not qualify for a subsidy and the employer will not be penalized.   This should significantly decrease the number of employees eligible for the subsidy.

The IRS also announced that later this year it expects to issue proposed rules creating an employer safe harbor to the employer responsibility provisions.  Because the Act determines affordability of coverage based on an employee’s household income, it is impossible for an employer to determine whether an employee qualifies for a subsidy and whether the employer will be penalized as the employer does not know an employee’s actual household income, only what the employer pays the employee in wages.  As a result, even if an employer intends to offer affordable coverage to all full-time employees, one or more full-time employees may receive a subsidy and the employer penalized.  To alleviate this problem, the IRS announced it intends to create a safe harbor which exempts an employer from paying a penalty with respect to any employee who receives a subsidy if the employee portion of the single coverage offered by the employer to the employee does not exceed 9.5% of the employee’s current W-2 wages from the employer.  Therefore, an employer will only need to look at the employee’s W-2 income in determining whether it will be penalized based on the coverage offered to that employee.  This should make any penalty an employer pays more predictable and employers should be able to structure coverage to avoid the penalty if they so choose.

In addition to being “affordable”, an employer’s coverage must also have a “minimum value” (60% of total allowed costs) in order for the employer to avoid a penalty.  The IRS announced that it intends to issue rules later this  year that clarify employer coverage may meet this minimum value requirement even if it does not provide coverage of all the essential health benefits listed in the Act and defined by HHS.  For example, pediatric dental is currently listed in the Act as an “essential health benefit.”   It appears that under the IRS’ anticipated rules, employer coverage could still meet the minimum value test even if it does not provide any coverage for pediatric dental benefits.

These comments are welcome news for employers with 50 or more employees as if adopted the rules will decrease the number of employees qualifying for the subsidy and allow the employer to determine in advance whether it will be penalized.  According to the IRS’ comments, the proposed rules implementing these policies should be released later this year.  Employers and interested parties should consider commenting on the rules at that time.

Feds Issue Summary of Benefits and Material Modification Rules

August 18, 2011

 Yesterday the DOL, HHS, and IRS released proposed rules implementing the Affordable Care Act’s requirement that group health plans and insurance issuers provide participants and beneficiaries with a written summary of benefits and coverage (“SBC”).   These rules also discuss a group health plan or issuer’s obligation to notify participants 60 days in advance of any material modifications to the health plan as outlined in the SBC.  Of particular note for employers is the clarification that the 60 day material modification notice will not apply to changes made in connection with an employer’s health insurance renewal, relieving fears that employers would need to change the timing of their insurance renewal processes and open enrollment periods.   Failure to provide an SBC or material modification notice when required results in a fine of $1,000.00 for each participant and beneficiary who failed to receive the SBC.  While these rules are in proposed format, we expect the rules to be finalized prior to their March 23, 2012 effective date.   For more information on the proposed rules, see our in-depth analysis at .  Copies of the proposed SBC templates are available at

CO-OP Program Update

August 10, 2011

The Affordable Care Act established the Consumer Operated & Oriented Plan (“CO-OP”) Program.  The Program makes federal loans available to new consumer run, non-profit private health insurers in an effort to increase competition in the health insurance marketplace.  Last month HHS issued proposed rules and a funding announcement outlining the requirements of CO-OPS and the loan program.  Today HHS held a conference call to answer questions from parties interested in creating a CO-OP.  Those interested in forming a CO-OP should note the following from today’s call:

  • CO-OPs that receive federal funding cannot restrict members to a specific industry but must accept any willing applicant (for example, a trade association could not establish a CO-OP and restrict membership to association members);
  • Members of the CO-OP (who ultimately control the CO-OP) are the individuals covered by the insurance (not the employers offering the insurance);
  • CO-OPs must offer insurance in the individual market and cannot limit their business to the group market;
  • Start up costs incurred prior to the loan award are not reimbursable from loan funds; however, up to $100,000 in costs directly related to establishing the business plan and feasibility study required by the loan application are reimbursable if a loan is ultimately awarded;
  • Prior to submitting an application, the applicant must have initiated discussion regarding licensure with the applicant’s state Insurance Department but does not need to be licensed at the time the application is submitted; and
  • The first application deadline for CO-OP funding is October 17, 2011.  While applications will continue to be accepted through December 31, 2012, funding is limited and could be exhausted prior to that time.

 The proposed rule and funding announcement can be accessed at    Interested parties who have questions about the Program can submit them to   Responses will be provided in the form of Frequently Asked Questions on CMS’ website.

Affordable Care Act Changes Timing of Medicare Part D Notices

August 9, 2011

Susan J. Freed

Employers who sponsor group health plans covering prescription drugs must provide an annual credible coverage notice to participants who are eligible for Medicare Part D. This notice must be provided each year prior to Medicare Part D’s Annual Coordinated Election Period. Previously, this Election Period started November 15 and ran through December 31. The Affordable Care Act changed this Election Period so that beginning in 2011 it now starts on October 15 and runs through December 7.

Because of the change to the Election Period, an employer’s annual Medicare Part D notice should be sent to Medicare Part D eligible plan participants on or before October 14, 2011. Employers should also ensure that their Part D notices have been updated to reflect the new Election Period. A copy of CMS’ updated model notices can be obtained at

Welcome to the Davis Brown Health Care Reform Blog

July 22, 2011

Susan J. Freed

I am a health law and employee benefits attorney at the Davis Brown Law Firm in Des Moines, Iowa.  Our clients include private and governmental employers, self-insured health plans, multiple employer welfare arrangements, agents and brokers and a wide variety of health care providers.

Over the past 16 months we have assisted clients with implementing various portions of the Patient Protection & Affordable Care Act (the “Affordable Care Act”), the federal health care reform legislation passed in March 2010.  Because the act’s requirements are continually evolving and implementation is spread over many years, we are frequently updating clients on new developments and implementation issues.

We’ve developed this blog as a way to provide clients with the most up-to-date information—including updates on the federal government’s implementation of the Affordable Care Act, new regulations, recently issued guidance and enforcement updates.  The blog will also comment on any issues specific to the State of Iowa.

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