Understanding the law’s scope begins by mapping a timeline for each provision that will unfold in the upcoming months and over several years. Interpretative guidance and implementation steps from federal regulators, specifically the Department of Health and Human Services (HHS), Department of Labor (DOL), Internal Revenue Service (IRS) and the Centers for Medicare Services (CMS), are currently being drafted.
The HHS and DOL recently released interim rules providing guidance that address initial provisions. The Extension of Dependent Coverage is of particular interest to employees as it expands coverage access to their families. It also demonstrates the scope just one provision can have. The following is a snapshot of the 30 pages of HHS, DOL and IRS guidance that applies to only this one provision of the law:
- Applications to both fully insured and self-funded group health plans
- Financial dependency, living with parent(s), residency, marriage and student status cannot be factors in determining eligibility
- Employers and carriers must provide qualified adult dependents a 30-day special enrollment opportunity even if an enrollment period is not typically available
- Plans may continue to have different coverage tiers, e.g., employee plus child, and charge rates based on the number of enrolled individuals; however, plans cannot charge a surcharge for the addition and coverage of adult dependent children
- When adult dependent children reach age 26 under the plan, if otherwise eligible, dependents will be eligible to elect COBRA continuation coverage
Furthermore, several initial provisions or consumer protections are effective for plan years beginning on or after September 23, 2010 (January 1, 2011 for calendar year plans), such as:
- Ban on lifetime limits (dollar value)
- Raising dependent coverage to age 26
- Restrictions on annual limits
- Elimination of pre-existing condition exclusions for anyone under age 19
- Ban on coverage rescissions
These protections apply to all plans, both “grandfathered” and new. Interestingly, grandfathered plans do not need to comply with select provisions, unlike new plans. Grandfathered rules, however, were established to allow smooth transition to reform requirements and were never intended as permanent exclusions.
The interim final rules, released in June, suggest that most employers will abandon grandfathered status by 2014 as a result of plan flexibility, such as co-payments or carrier changes, which are often necessary to control costs. Thus, employers will need to weigh the cost benefits of future plan changes against retaining a grandfathered status.
These issues will only become more complicated in 2014 with the arrival of state-driven, internet-based healthcare exchanges. These new market options will demand employers to invest resources in understanding plan designs and employee premium contributions and wages; all of which can impact potential employer penalties and employee subsidies.
Health care reform is here to stay. Navigation through its evolving regulatory guidance is at the starting gate and the interim final rule maps indicate a detailed maze is next to come. Inevitable twists will complicate the pathway when interpreting the ongoing releases of provisions. Thus, a network of trusted advisors, who can help discern key communications, forecasts, projections and evaluations, is the surest way to arrive safely at the finishline. •
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